Rives v. Ishee

• Decision Date: 08 March 2022
• Docket Number: 2020-CA-01328-COA
• Citation: 335 So.3d 1098
• Parties: William O. RIVES, II and Richard T. Rives, Appellants v. Jason G. ISHEE and GB Brookhaven, LLC, Appellees
• Court: Mississippi Court of Appeals

335 So.3d 1098

William O. RIVES, II and Richard T. Rives, Appellants

v.Jason G. ISHEE and GB Brookhaven, LLC, Appellees

NO. 2020-CA-01328-COA

Court of Appeals of Mississippi.

March 8, 2022

ATTORNEY FOR APPELLANTS: GEORGE CAYCE NICOLS, Madison

ATTORNEY FOR APPELLEES: C. BRENT JONES, Ridgeland

EN BANC.

McCARTY, J., FOR THE COURT:

¶1. Two partners sued a third over their deal to open a restaurant. They alleged they were locked out of profits in a breach of contract. However, they did not file suit until over three years after they learned they would not receive any money from the restaurant. The trial court dismissed the suit as untimely. Finding no error, we affirm.

FACTS

¶2. William and Richard Rives had a company that leased property by railroad tracks in downtown Brookhaven. In 2014 the brothers struck a deal with Jason Ishee to open a Georgia Blue restaurant in the spot. The three partners created a joint company called R.I.R., LLC, which would run the restaurant, and they signed an operating agreement and memorandum of understanding that set up the company's duties and financial obligations.

¶3. The Rives brothers alleged they next gave up their lease and negotiated a new one for the Georgia Blue restaurant. The brothers were to put up $75,000 to set up the new restaurant, and Ishee was to stake another $75,000.

¶4. The arrangement did not work the way the Rives brothers thought it would. They alleged that immediately after signing the various documents, they "offered to immediately tender" the $75,000, but Ishee declined. The Riveses then claimed "they offered to pay the $75,000 investment approximately ten more times over the following months." Each time, Ishee told them he would let them know if he needed the money, but declined to accept it.

¶5. The following spring, in 2015, the new restaurant opened in Brookhaven after the brothers and Ishee had worked to renovate the space. After a few months of not seeing any money from Georgia Blue, the brothers became concerned. In August 2015, they asked Ishee if they could look over the restaurant's finances.

¶6. The response to this request came from Ishee's lawyer. He told the brothers that they hadn't contributed their $75,000, so they could not see the documents. A few months later, Ishee unilaterally dissolved the R.I.R. company in a filing with the Secretary of State.

PROCEDURAL HISTORY

¶7. About a year later, the Rives brothers filed a lawsuit against Ishee and the Georgia Blue parent company. The suit was not pursued and grew stale; it was dismissed for want of prosecution. There was no appeal from that dismissal.

¶8. On April 5, 2019, the brothers again filed suit against Ishee and Georgia Blue. In this second lawsuit, they specifically alleged that Ishee's "refusals to accept the Plaintiffs[’] contribution amounted to a breach of contract" and that "Ishee compounded this breach by refusing to grant Plaintiff[s] access to the financial records of the restaurant and by refusing to pay distributions to the Plaintiffs as required[.]" The brothers also claimed it was a breach of contract for Ishee to dissolve their joint company. They sought a judgment "for breach of contract and quantum meruit[.]"

¶9. Just twelve days later, the defendants responded with a motion to dismiss. The motion, notable for its brevity, argued that the second lawsuit was time-barred. In a hearing before the chancery court, counsel for Ishee pointed out that by the very language of the Riveses’ own complaint the conduct they alleged constituted breach occurred more than three years before they filed suit. In fact, counsel argued the alleged breaches happened almost five years before they filed suit, if indeed the refusal to accept the $75,000 stake was a breach.

¶10. From the Bench, the trial court held that the "statute of limitations applies, in that the matter is outside the time period for prosecution as it relates to these facts and circumstances." This dismissal of all claims was reduced to an order, from which the Rives brothers sought reconsideration; and from the denial of that request, they filed a notice of appeal.

STANDARD OF REVIEW

¶11. "When considering a motion to dismiss, this Court's standard of review is de novo." Scaggs v. GPCH-GP Inc ., 931 So. 2d 1274, 1275 (¶6) (Miss. 2006). "[T]he allegations in the complaint must be taken as true and the motion should not be granted unless it appears beyond doubt that the plaintiff will be unable to prove any set of facts in support of his claim." Id .

DISCUSSION

¶12. The Riveses make two arguments on appeal. First, the brothers argue that their breach-of-contract claims were not filed past the statute of limitations; and second, they argue their claim for quantum meruit was not time-barred.

I. The claims for breach of contract are time-barred.

¶13. Causes of action for breach of contract are subject to the three-year statute of limitations. White v. White , 325 So. 3d 666, 675-76 (¶39) (Miss. Ct. App. 2019). However, if the claim is one that "involve[s] latent injury," then "the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury." Miss. Code Ann. § 15-1-49(2) (Rev. 2019).

¶14. As set out in the facts above, this was the second complaint the Riveses filed. In general, "filing a complaint tolls the statute of limitations and permits a plaintiff to refile his or her case if this case is dismissed without prejudice and time remains on the statute of limitations." Knight v. Knight , 85 So. 3d 832, 836 (¶24) (Miss. 2012). However, "a statute of limitations is not tolled during a proceeding that is dismissed ultimately for failure to prosecute, regardless of whether the dismissal is initiated by the clerk, the judge, or a party." Thornhill v. Ingram , 178 So. 3d 721, 727 (¶28) (Miss. 2015). Because the Riveses’ first complaint was dismissed for lack of prosecution, the statute of limitations was not paused during its pendency.

¶15. By the express allegations in their own complaint, the Rives brothers admit there were no latent injuries. They were well aware that Ishee had repeatedly declined to accept their tender of the $75,000 capital investment. By their own allegations, Ishee's refusal to accept the investment "amounted to a breach of contract," which they alleged he had done "approximately ten" times in 2014 and 2015. They further alleged these underlying breaches were "compounded ... by refusing to grant [them] access to the financial records of the restaurant and by refusing to pay distributions to [them] as required" by their written agreements.¹

¶16. Yet even when accepting the allegations in the second complaint as true, all of those alleged breaches occurred during or before the "August of 2015" date when the Riveses contended Ishee's lawyer responded by denying them access to financial records. The actual date of the lawyer's response and the written response itself is not in the record. However, even assuming the response occurred on August 31, 2015—the last day of the month—the second complaint was not filed until April 5, 2019. This means it was filed over seven months after the three-year limitations had run on these alleged breaches.

¶17. Therefore, by the plain language of precedent and statute, the chancery court was correct to find the claims for breach of contract barred by the running of the statute of limitations.

¶18. The Riveses attempt to salvage their claims by arguing they also alleged harm from Ishee's unilateral dissolution of their joint R.I.R. company, which the Secretary of State filed on April 7, 2016. They point out that their second complaint was filed on April 5, 2019, just within three years of the date of the company's dissolution.

¶19. For almost a century now, our Supreme Court has held "[i]n the case of a breach of contract, the cause of action accrues at the time of the breach, regardless of the time when the damages from the breach occurred; this is the general rule." Johnson v. Crisler , 156 Miss. 266, 125 So. 724, 724-25 (1930) ; Young v. S. Farm Bureau Life Ins. Co. , 592 So. 2d 103, 107 (Miss. 1991) (reiterating the rule in Johnson ).

¶20. The Johnson rule was applied by this Court when we examined the claim by a professor at Mississippi Valley State University that she had been wrongfully fired. Black v. Ansah , 876 So. 2d 395, 396 (¶3) (Miss. Ct. App. 2003). While it was "undisputed that the University notified [her] of its employment decision by letter dated May 28, 1999," the professor's last day at work was May 11, 2000. Id . at 398 (¶17). She argued this later date was when the statute began to run. Id .

¶21. We found that there was "no reason to conclude that a person with known and measurable harm that awaits solely the passage of time to inflict itself, may not sue because of that futurity until the time has passed." Id . at 399 (¶19). In other words, once notice of the breach has been received, then the time to file suit accrues. As a result, we found the professor's suit was time-barred. Id . at 400 (¶23).

¶22. Applying Johnson and Black to this case, the fact that Ishee later dissolved the R.I.R. company does not save the Riveses’ claims from the three-year time-bar. The dissolution of the company is like the professor's last date of employment in Black . The breaches alleged by the Rives brothers were Ishee's refusals to accept their capital investment "approximately ten" times throughout 2014 and 2015, the denial of access to financial records in "August of 2015," and refusal to pay them distributions from the restaurant's profits. All of these events occurred months before the April 7, 2016 dissolution of the company.

¶23. As a result, the dissolution of the company was a mere formality that does not change the time of the breach. The business venture was clearly dead months before then, with the fatal act being Ishee's lawyer's response in "August of 2015" denying the Riveses access to the financial papers of...