Pike Cnty. v. Indeck Magnolia, LLC

• Decision Date: 25 April 2012
• Docket Number: Civil Action No. 3:11CV57TSL–MTP.
• Citation: 866 F.Supp.2d 589
• Parties: PIKE COUNTY, MISSISSIPPI by its BOARD OF SUPERVISORS, Plaintiff v. INDECK MAGNOLIA, LLC, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

866 F.Supp.2d 589

PIKE COUNTY, MISSISSIPPI by its BOARD OF SUPERVISORS, Plaintiff

v.INDECK MAGNOLIA, LLC, Defendant.

Civil Action No. 3:11CV57TSL–MTP.

United States District Court,

S.D. Mississippi,

Jackson Division.

April 25, 2012.

Wayne Dowdy, Dunbar D. Watt, Dowdy Cockerham & Watt, Magnolia, MS, J. Brad Pigott, Pigott, Reeves, Johnson, P.A., Jackson, MS, for Plaintiff.

Robert T. Higginbotham, Jr., James Wilbourn Vise, Massey, Higginbotham, Vise & Phillips, PA, Flowood, MS, for Defendant.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of plaintiff Pike County Board of Supervisors for partial summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant Indeck Magnolia, LLC (Indeck) has responded to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes the motion is well taken and should be granted.

The present litigation concerns a certain parcel of land owned by Indeck and located in Pike County, Mississippi. Indeck purchased the property from Pike County on October 15, 2008 for the purpose of constructing and operating a wood pallet manufacturing facility. Under the terms of the parties' Agreement to Convey, Indeck had two years within which to “begin to construct and operate” the facility, failing which Pike County had the right to re-purchase the property for Indeck's original purchase price of $128,400. On December 22, 2010, Pike County filed suit against Indeck in the Chancery Court of Pike County, Mississippi seeking to enforce its alleged contractual right to repurchase the property since, according to Pike County, Indeck had failed “to construct and operate” by the October 15, 2010 deadline established in the contract. Contemporaneously with filing suit, the County filed a lis pendens notice in the Pike County Chancery Court land records. Indeck removed the case to this court on the basis of diversity jurisdiction, then filed its answer, along with a counterclaim against the County for breach of contract, breach of the implied duty of good faith and fair dealing, and conspiracy to interfere with contractual relations. Indeck alleged that Pike County's actions in filing the lawsuit and lis pendens notice violated the contract, as the County had agreed to a modification extending the two-year deadline, and it alleged further that the County's actions were undertaken in an effort to block Indeck's planned sale of the subject property to a third party, Investar Redevelopment LLC.¹

In support of its request for partial summary judgment, Pike County argues that since it is undisputed that there is no entry in any minutes of the Pike County Board of Supervisors authorizing or approving an amendment to the Agreement to Convey for the purpose of extending the two-year deadline by six months, or by any other period or for any other purpose, then as a matter of law, there was never any legally effective amendment to the Agreement to Convey.² In response, Indeck argues that because it justifiably relied to its detriment on actions by Pike County officials which led Indeck to believe that the County had agreed to extend the deadline for invoking its repurchase right, then the County is estopped from asserting the statute of frauds or the minutes requirement as a bar to enforcement of the County's alleged agreement to extend the contract. More specifically, Indeck contends that in a telephone conversation on August 16, 2010, Pike County representative Britt Herrin communicated to Indeck's president, Gerry DeNotto, that the County had agreed to a six-month extension to allow for a sale of the property to Investar; that in reliance on the County's express assurances that the County had agreed to this six-month extension and would not attempt to enforce any purported deadline prior to that time, Indeck's parent company entered into a contract with Investar on September 16, 2010 to sell Indeck to Investar for $1.7 million; and that refusal to enforce the County's agreement to a six-month extension would virtually sanction the perpetuation of fraud and result in injustice by potentially permitting Pike County to reacquire the property with millions of dollars in improvements for $128,400 at the expense of Indeck and Investar. See C.E. Frazier Constr. Co., Inc. v. Campbell Roofing and Metal Works, Inc., 373 So.2d 1036, 1038 (Miss.1979) (elements of promissory estoppel are: (1) the making of a promise, even though without consideration, (2) the intention that the promise be relied upon and in fact is relied upon, and (3) a refusal to enforce it would virtually sanction the perpetuation of fraud or would result in other injustice).

It is a “fundamental and inviolable policy” of the State of Mississippi that the exclusive means by which a county government may enter a contract or amend or alter any contract entered by the county is through public action by the county's board of supervisors, which action “must be evidenced by an entry on its minutes.” Williamson Pounders Architects, P.C. v. Tunica County, Miss., 681 F.Supp.2d 766, 772 (N.D.Miss.2008), aff'd,597 F.3d 292, 296–297 (5th Cir.2010). For more than a century, the Mississippi Supreme Court has consistently and routinely held that “boards of supervisors and other public boards speak only through their minutes and their actions are evidenced solely by entries on the minutes.” Thompson v. Jones County Cmty. Hosp., 352 So.2d 795, 796 (Miss.1977). The court in Thompson explained:

A board of supervisors can act only as a body, and its act must be evidenced by an entry on its minutes. The minutes of the board of supervisors are the sole and exclusive evidence of what the board did. The individuals composing the board cannot act for the county, nor officially in reference to the county's business, except as authorized by law, and the minutes of the board of supervisors must be the repository and the evidence of their official acts.

Thompson, 352 So.2d at 796 (quoting Smith v. Board of Supervisors, 124 Miss. 36, 41, 86 So. 707, 709 (1920) (emphasis added)). See also Board of Supervisors v. Dawson, 208 Miss. 666, 672, 45 So.2d 253 (1950) (holding that “boards of supervisons [sic] can bind counties, or districts therein, only when acting within their authority and in the mode and manner by which this authority is to be exercised under the statutes, and that their contracts, and every other substantial action taken by them must be evidenced by entries on their minutes, and can be evidenced in no other way”) (quoting Lee County v. James, 178 Miss. 554, 559, 174 So. 76, 77 (1937)). The court has described its justifications for its rigidity respecting the minutes requirement as follows:

“(1) That when authority is conferred upon a board, the public is entitled to the judgment of the board after an examination of a proposal and a discussion of it among the members to the end that the result reached will represent the wisdom of the majority rather than the opinion or preference of some individual member; and (2) that the decision or order when made shall not be subject to the uncertainties of the recollection of individual witnesses of what transpired, but that the action taken will be evidenced by a written memorial entered upon the minutes at the time, and to which all the public may have access to see what was actually done.”

Rawls Springs Util. Dist. v. Novak, 765 So.2d 1288, 1291–92 (Miss.2000) (quoting Lee County v. James, 174 So. at 77). Because of the minutes requirement, “oral contracts can not be formed by or enforced against county boards of supervisors.” Williamson Pounders, 681 F.Supp.2d at 771 (citing Butler v. Bd. of Supervisors for Hinds County, 659 So.2d 578, 581 (Miss.1995)). And, since a board's “minutes are the exclusive evidence of what the board did, ... parol evidence is not admissible to show what actions the board took.” Myers v. Blair, 611 So.2d 969, 972 (Miss.1992) (quoting Noxubee County v. Long, 141 Miss. 72, 106 So. 83, 86 (1925)).

In this case, it is undisputed that there is nothing in the minutes of any meeting of the Pike County Board of Supervisors which records or refers to any agreement to amend the Agreement to Convey. Notwithstanding this, Indeck argues that the County representative's assurance to Indeck that the Board had approved an extension estops the County from denying its agreement to amend the Agreement to Convey to extend the deadline for Indeck's performance (or from asserting the statute of frauds to avoid enforcement of such agreement). In the court's opinion, Indeck's reliance on estoppel as a basis to deny the County's motion is foreclosed by the minutes requirement.

The Mississippi Supreme Court has held that the minutes requirement is to be strictly adhered to, even where doing so would result in apparent injustice. Urban Developers LLC v. City of Jackson, Miss., 468 F.3d 281, 299 (5th Cir.2006) (citing Butler, 659 So.2d at 581 (discussing Mississippi's “past strict adherence to the requirement that a board of supervisors only be bound by a contract entered upon its minutes”), and Warren County Port Comm'n v. Farrell Constr., 395 F.2d 901, 904 (5th Cir.1968) (describing the Mississippi requirement as “stringent”)). See also Williamson Pounders, 597 F.3d at 296–97, 298 (observing that “[t]he Mississippi Supreme Court requires ‘strict adherence’ to having a writing placed upon the minutes in order to bind a board of supervisors” and noting Mississippi Supreme Court's “insistence that the requirement of a minute entry must be enforced even if it might seem to lead to an injustice”)(quoting Butler, 659 So.2d at 581–82). Thus, in Urban Developers LLC, supra, the Fifth Circuit rejected the plaintiff's assertion of estoppel as a means to overcome Mississippi's minutes requirement, stating,

The general rule ... is that “[s]uch contracts when so entered...