Lend Lease Asset Mgmt v. Cobra Security, 2004-CA-01485-SCT.
| Decision Date | 13 October 2005 |
| Docket Number | No. 2004-CA-01485-SCT.,2004-CA-01485-SCT. |
| Parties | LEND LEASE ASSET MANAGEMENT, L.P., Authorized Servicer for Lasalle Bank National Association, as Trustee for Chase Commercial Mortgage, and the Receiver, Marilyn Goolsby v. COBRA SECURITY, INC., and Wayne Mills. |
| Court | Mississippi Supreme Court |
John H. Freeland, Michael Reed Martz, attorneys for appellants.
Ralph Stewart Guernsey, David G. Hill, Oxford, attorneys for appellees.
Before COBB, P.J., CARLSON and DICKINSON, JJ.
¶ 1. In this case, the primary issue presented is the validity of a judgment entered by a chancellor against a receiver who refused to pay from receivership funds certain unsecured debt which antedated the receivership.
¶ 2. Aegis Oxford, owner of property known as The Oxford Mall, decided to call it quits. Unable to pay its outstanding $6.5 million debt which was secured by virtually all of its property including rents and accounts receivable, Aegis tendered a deed in lieu of foreclosure to Lend Lease Asset Management, LP, described by the parties as the "authorized servicer for LaSalle Bank National Association, a national banking association, as trustee for the registered holders of Chase Commercial Securities Corporation."1 After refusing to accept the deed in lieu of foreclosure, Lend Lease petitioned the Chancery Court of Lafayette County on April 14, 2003, for the appointment of a receiver "for Aegis Oxford, L.L.C." Aegis filed a Consent to Appointment of Receiver for "the Oxford Mall" and, on April 15, 2003, the Chancery Court of Lafayette County entered an order which included the following provision: "This Court should appoint a receiver for the Oxford Mall2 in order to maintain the property mall (sic) and to avoid potential waste." The chancellor then appointed the previous Mall manager, Marilyn Goolsby, as receiver.
¶ 3. During the course of the receivership, Goolsby collected the rents from Mall tenants and paid certain debts. On advice of counsel, however, she refused to pay amounts due to Cobra Security, Inc. for services rendered prior to the establishment of the receivership.
¶ 4. On May 28, 2003, a notice of foreclosure of the Mall property was published, setting the sale date as June 19, 2003. The day before the foreclosure was to take place, one of Aegis' unsecured creditors Cobra Security, Inc.,3 filed a lawsuit against numerous parties including Aegis and the Receiver. The complaint alleged that the Receiver had not paid $10,208.70 due to Cobra, and that the failure to pay violated the mandate of the chancery court's April 15, 2003, order to "[c]ollect and compromise all demands" and "incur ... the obligations ordinarily incurred by owners of similar businesses." Furthermore, predicting difficulty collecting the bill in the event of foreclosure, Cobra persuaded the chancellor to enter an ex parte order attaching the Oxford Mall. Cobra also filed a lis pendens notice of the litigation. According to Lend Lease, the attachment and lis pendens effectively stopped the foreclosure.
¶ 5. Thereafter, upon the parties' agreement, the chancellor set aside the attachment and lis pendens and, on September 18, 2003, the Mall property was foreclosed. The foreclosure sale resulted in a $2,649,704.49 deficiency which was further secured by a perfected security interest in substantially all of the assets of the Mall, including rents and accounts receivable due from tenants.
¶ 6. On October 17, 2003, the Receiver responded to Cobra's complaint with an answer and a counterclaim. The answer asserted that Chase's secured deficiency of more than $2.7 million rendered Cobra's claims moot, and the counterclaim asserted that Cobra should respond in damages for wrongfully obtaining an ex parte attachment which effectively prevented the foreclosure and damaged a potential tenant contract.
¶ 7. On January 30, 2004, the Receiver amended its previously filed motion for summary judgment to assert that, since the receivership did not even have sufficient funds to satisfy the secured creditors, the claims of unsecured creditors such as Cobra were moot. The motion also asserted that Cobra had been paid all amounts due for services rendered subsequent to the establishment of the receivership, and that collections suits against the Receiver to collect pre-receivership debt were inappropriate.
¶ 8. On August 25, 2003, the matter proceeded to trial. Following Cobra's case-in-chief, Aegis confessed judgment in the amount of $20,076.63. The chancellor deferred his ruling as to all other defendants.
¶ 9. On June 14, 2004, the chancellor issued a Judgment and Order of the Court, stating that the issues before the court were:
the validity of the debt allegedly owed to Cobra Security by The Receiver and/or Aegis, ... if Lend Lease [was] entitled to damages based on Miss.Code Ann. § 11-13-35, ... [and] the actions of Marilyn Goolsby, Receiver, from the time of her appointment on April 15, 2003, to the posting of the bond on July 16, 2003, to determine if the receivership was valid and whether Goolsby was actually acting in the capacity of a receiver ... [and] the validity of the Receiver's actions in paying certain vendors/creditors and not others.
¶ 10. The chancellor held that Cobra had a valid judgment against the Receiver as well as Aegis in the amount of $20,076.63. The chancellor further held that since Cobra was a judgment creditor, it had a higher priority than other creditors to a Toyota Tacoma Truck. Therefore Cobra's proposed execution on the vehicle was allowed, and its value would reduce the $20,076.63 judgment.
¶ 11. The chancellor further held that Lend Lease was not due damages because the statute under which they were claimed was inapplicable and because the parties waived any claim for damages by entering into the Agreed Order which set aside the attachment and allowed the foreclosure. The chancellor held that both the receivership and foreclosure sale were valid, but that Chase's $2,649,704.49 deficiency resulting from the foreclosure was unsecured debt with no priority over any other debt. The basis for this ruling was that "[n]o claim or pleadings have been filed by the mortgage company to assert their right to such a judgment or priority."
¶ 12. Within the judgment, the chancellor stated that the priority of claims among the creditors would be:
4. Unsecured debt.
The chancellor further held that "[a]ll other claims by any party not specifically mentioned are hereby denied." The chancellor subsequently entered the judgment against both Aegis and the Receiver.
¶ 13. Although a notice of appeal was filed by both the Receiver and Chase, only the Receiver submitted a brief, presented oral argument, and pursued the appeal.
¶ 14. In her appeal, the Receiver raises two issues. The first issue is whether the chancellor erred in granting a judgment to Cobra while the second issue is whether Cobra should be held liable for obtaining an ex parte order attaching the Mall and stopping the foreclosure. Our standard of review for both issues is the same. The chancellor's findings of fact are conclusive unless we find he abused his discretion, Miller v. Pannell, 815 So.2d 1117, 1119 (Miss.2002), and his conclusions of law are reviewed de novo. Saliba v. Saliba, 753 So.2d 1095, 1098 (Miss.2000).
The wrongful attachment claim
¶ 15. We begin by addressing the Receiver's second issue which we find is moot. Any damage accruing from the attachment of the Mall and delay of the foreclosure accrue to the benefit of Aegis's secured creditor, Chase. We fail to see any harm visited upon the Receiver as a result of the delay in foreclosure. Thus, we shall not address the issue further.
The damage claim against the Receiver
¶ 16. As to the first issue, the Receiver makes three arguments asserting that the chancellor ignored the law and the security agreements to give Cobra a judgment in this case. To support her position, the Receiver provides three arguments: (i) Cobra had no security interest in the rent proceeds5 from the Mall and whatever claim it may have had against Aegis was extinguished by the foreclosure; (ii) the chancellor erred in finding that the Receiver failed to act in good faith; and (iii) the chancellor erred in ordering her to pay contract damages and attorney's fees to Cobra, based on Cobra's contract with Aegis Oxford.
¶ 17. However, we find the true question to be whether Cobra had any legal claim against the Receiver, justifying a recovery of damages. Because we find no such legal claim existed, we need address no other issues raised.
¶ 18. The Receiver argues that Cobra had no right to any pre-receivership income of Aegis Oxford because the same fell under the perfected security interest of Chase, who had both a deed of trust covering the property and a perfected security interest covering all other property of Aegis Oxford. We find the issue to be different. The question is not whether Cobra had a claim against the rents, rather the question is whether Cobra may recover from the Receiver for refusing to pay Cobra's pre-receivership invoices.
¶ 19. In establishing the receivership, the chancellor charged the Receiver with certain obligations and powers. The obligations were simply "to maintain the property mall (sic) and to avoid potential waste." In order to fulfill these obligations, the chancellor granted to the Receiver the following powers:
(1) Take charge and keep possession of all real and personal property pledged as collateral for the Loan (2) Take charge and keep possession of all bank accounts currently held in the name of the Borrower or the Mall;
(3)...
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