MLD Cmty. Dev. v. Dillon

• Docket Number: 2022-CA-00802-COA
• Decision Date: 28 November 2023
• Parties: MLD COMMUNITY DEVELOPMENT, LLC APPELLANT v. DR. JERRY WAYNE DILLON D/B/A JERKETT ENTERPRISES, LLC, JERKETT, EAGLES NEST APPELLEE
• Court: Mississippi Court of Appeals

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MLD COMMUNITY DEVELOPMENT, LLC APPELLANT
v.
DR. JERRY WAYNE DILLON D/B/A JERKETT ENTERPRISES, LLC, JERKETT, EAGLES NEST APPELLEE

No. 2022-CA-00802-COA

Court of Appeals of Mississippi

November 28, 2023

DATE OF JUDGMENT: 08/08/2022

COURT FROM WHICH APPEALED: PIKE COUNTY CHANCERY COURT HON. DEBBRA K. HALFORD TRIAL JUDGE:

ATTORNEY FOR APPELLANT: JARROD DILLON MUMFORD

ATTORNEY FOR APPELLEE: JOHN JAMIL McNEIL

BEFORE WILSON, P.J., McDONALD AND LAWRENCE, JJ.

McDONALD, J.

¶1. This case deals with a land contract dispute in Pike County. MLD Community Development (MLD), a limited liability company comprised of brothers and sisters of the appellee Dr. Jerry Dillon, brought suit against Dillon in the Pike County Chancery Court to enjoin his use of land where a lodge-style resort "Eagle Lodge" is located. After the chancery court entered an order on March 7, 2022, compelling arbitration, MLD filed subsequent motions to compel pre-arbitration meetings, as required by the land contract. The chancery court granted one of these motions on July 7, 2022, but on August 8, 2022, the chancery court entered its third and final order reiterating that the court had already compelled arbitration, rescinding its July 7, 2022 order concerning pre-arbitration meetings

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for lack of both subject-matter and personal jurisdiction, and dismissing the case. MLD appeals, raising the sole issue of whether the chancery court had subject matter jurisdiction over the land-contract dispute.

FACTS AND PROCEDURAL BACKGROUND

¶2. Approximately twenty-three years ago, Dillon, who lived in Illinois, acquired thirty-four acres of land in Pike County, Mississippi, from his father and mother, Monroe and Lavern Dillon. Dillon developed the land and its seven-acre lake into a lodge-style resort that he dubbed "Eagle Lodge."^[1] Dillon secured a mortgage on the property in order to finance the development of Eagle Lodge. However, in 2005, Hurricane Katrina damaged the property and wracked the tourism industry on the Mississippi Gulf Coast for years, causing Dillon's property to lose business and visitors.

¶3. In late 2012, Dillon defaulted on the mortgage, and the bank began foreclosure proceedings. At this point, Dillon's siblings noticed the foreclosure proceedings in the local newspaper. In early 2013, they formed MLD Community Development LLC (dedicated to the siblings' parents Monroe and Lavern Dillon) to save the land that held a special place in their family heritage.^[2] On November 6, 2013, Dillon signed a warranty deed conveying the

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property to MLD, which in turn refinanced and began to pay off the mortgage, preventing foreclosure.

¶4. Over three years later, on December 15, 2017, Brenda Holmes (representing MLD) entered into the "Eagle Lodge Loan Assumption Agreement" with Dillon for the "sole purpose of retiring loan # 4994646 held at First Bank, MS located in McComb, Mississippi in exchange for the ownership of the 34 aces and lodge located at 1086 J.J. Carters Road, Magnolia, Mississippi 39652." The terms of the loan assumption agreement included:

Jerry Dillon agrees to assume referenced loan and exclusively occupy and take possession of the premises of Eagle's Lodge and accompanying 34 acres throughout the terms of the assumption agreement under the following conditions $20,000.00 in increments of $10,000.00 to be satisfied within or by the end of December 2018; promptly provide funds to satisfy the monthly note; meet bank's requirement to maintain property insurance and all other expenses/taxes thereunto. As soon as practical, Jerry Dillon will pay off loan agreement held between MLD (Brenda Dillon Holmes guarantor) and First Bank MS or refinance said loan agreement relieving Brenda Dillon Holmes and her Associates of any and all liability for said loan, in addition to, relinquishing any and all ownership to said lodge and 34 acre property located at 1089^[3] J.J. Carters Road to Jerry Dillon. This agreement provides all rights of ownership which includes the right to refinance said loan, or pay in full existing loan without any encumbrances from the former loan holder(s). It is further acknowledged and agreed that if said property note becomes delinquent (30 plus days past due) then this control is null and void and property reverts to former owners.

The loan assumption agreement stated that the lease period would begin on January 1, 2018, and end when the loan was paid in full or refinanced. The agreement also required Dillon to obtain any appropriate licenses for any business conducted on the property, pay all utilities,

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and enter the property "as is" with the right to remodel and improve the facility as he saw fit. The contract was to be governed under Mississippi law and could only be modified in writing by both parties. Lastly, the agreement included indemnity and dispute-resolution clauses. The dispute resolution clause provided:

Any dispute resolution will be first given an exhaustive 3 meeting minimum attempt before a third party is solicited, (An Arbitrator), by agreement to referee a resolution according to the rules of the American Arbitration Association, such proceeding to be held in Magnolia, MS. It is hereby acknowledged and agreed that arbitration shall be the final means of dispute resolution relative to this agreement.

¶5. After several months, Dillon defaulted on the bank loan payments.^[4] The bank once again started foreclosure proceedings. However, in March 2021, MLD was able to refinance the loan for a second time, and MLD once again began paying the mortgage. At this time, MLD continued as if the loan assumption agreement had become null and void because Dillon had defaulted on the mortgage. However, Dillon continued to conduct business on the property, including selling plate dinners and day-fishing passes and planning events at Eagle Lodge.

¶6. On March 15, 2021, without MLD's knowledge or consent, Dillon executed a quitclaim deed, conveying the property to himself and signing it on behalf of MLD.

Complaint and Process

¶7. On June 23, 2021, MLD filed a complaint in the Pike County Chancery Court. MLD sought a preliminary and permanent injunction directing Dillon to cease and desist any and

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all operations at Eagle Lodge; to refrain from taking anything from the building other than personal items; to refrain from defacing the building in any way; and to obtain written permission from MLD if he wished to use the property. MLD further sought to enjoin Dillon from filing frivolous court documents, namely any future quitclaim deeds signed by Dillon. Lastly, MLD requested payment of back rent for Dillon's occupancy of Eagle Lodge since his first default on the loan, reimbursement of taxes paid by MLD during his occupancy, all attorney's fees, and court costs. MLD attached to its complaint a copy of the loan assumption agreement, the warranty deed transferring the property from Dillon to MLD, and a copy of the quitclaim deed that Dillon had signed on behalf of MLD purportedly transferring the property back to him.

¶8. A summons was issued to Dillon, who was personally served while he was in Pike County, as evidenced by the process server's return.

Dillon's Motion to Dismiss

¶9. Dillon, pro se, filed a motion to dismiss the complaint on July 19, 2021. Dillon claimed that MLD failed to properly serve him by delivering the complaint and summons to the wrong address. He further alleged that the complaint failed to state a claim upon which relief could be granted and that the sole remedy in this case was arbitration in accordance with the loan assumption agreement.

¶10. Dillon retained counsel who filed an amended motion to dismiss on January 17, 2022. In the amended motion to dismiss, Dillon argued that MLD was barred from bringing this action based on the res judicata effect of filings in the Pike County Justice Court and County

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Court. The amended motion did not allege any failure to properly serve Dillon.

Dillon's Answer and Motion to Compel Arbitration

¶11. Dillon filed his answer and counter-claim ten days later. In his answer, Dillon pleaded that MLD failed to state a claim for which relief could be granted, that the statute of limitations had passed, and any other affirmative defenses that might become evident upon further discovery. Dillon admitted to signing the warranty deed conferring Eagle Lodge to MLD in 2013. However, Dillon claimed that the loan assumption agreement conferred ownership of Eagle Lodge to him, and as part of a counter-claim, he sought a declaratory judgment from the chancery court to "declare him Jerry Dillon as the rightful owner" of Eagle Lodge. In the counter-claim, Dillon specifically pleaded that "[j]urisdiction and venue are proper in this Court, as this matter concerns the title to real property located in Pike County, Mississippi."

¶12. On the same day that he filed his answer and counter-claim, Dillon also filed a motion to refer the case to arbitration. In the motion, Dillon quoted the language of the loan assumption agreement, which stated that the parties would discuss any dispute at least three times before they solicited an arbitrator to conduct arbitration under the rules of the American Arbitration Association. Dillon argued that no meetings had been held and that no arbitrator had been solicited. Thus, Dillon argued that the case should be referred to arbitration.

Court Hearing on Dillon's Motions

¶13. The court heard both Dillon's motion to dismiss and his motion to compel arbitration

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on February 9, 2022. After arguments, the court entered an order bifurcating the trial and denying preliminary injunctive relief. The chancery court stated in its order that at the outset of the trial set for March 9, 2022, the court would decide whether or not the loan assumption agreement was in effect between the parties, and, if so, whether...