Ruff v. Estate of Ruff

• Citation: 989 So.2d 366
• Decision Date: 21 August 2008
• Docket Number: No. 2007-CA-01189-SCT.,2007-CA-01189-SCT.
• Court: Mississippi Supreme Court
• Parties: Guy "Phil" RUFF, Jr. v. The ESTATE OF Guy P. RUFF, Sr., Myra Eason Ruff, in her capacity as Executrix of the Estate of Guy P. Ruff, Sr., Margaret Anne Ruff Cargo, in her capacity as Executrix of the Estate of Guy P. Ruff, Sr., and David Clifton Ruff, in his capacity as Executor of the Estate of Guy P. Ruff, Sr.

989 So.2d 366

Guy "Phil" RUFF, Jr. v. The ESTATE OF Guy P. RUFF, Sr., Myra Eason Ruff, in her capacity as Executrix of the Estate of Guy P. Ruff, Sr., Margaret Anne Ruff Cargo, in her capacity as Executrix of the Estate of Guy P. Ruff, Sr., and David Clifton Ruff, in his capacity as Executor of the Estate of Guy P. Ruff, Sr.

No. 2007-CA-01189-SCT.

Supreme Court of Mississippi.

August 21, 2008.

Edwin H. Priest, Tupelo, attorney for appellant.

Stephan L. McDavid, Jackson, attorney for appellees.

Before WALLER, P.J., DICKINSON and RANDOLPH, JJ.

WALLER, Presiding Justice, for the Court.

¶ 1. Guy "Philp" Ruff, Jr., received a personal loan from his parents Puddie E. Ruff and Guy P. Ruff, Sr., now deceased. Ruff defaulted on payments under the original loan agreement, a subsequent bankruptcy consent order, and a later consent order entered in the chancery court. The Estate of Guy P. Ruff, Sr., filed a quitclaim deed in lieu of foreclosure following Ruff's failure to make timely payment under the terms of the chancery court's consent order. Ruff sought injunctive relief, which the chancellor denied. Finding no abuse of discretion, we affirm.

FACTS

¶ 2. In June 2000, Guy "Philp" Ruff, Jr., (hereinafter "Ruff") executed two promissory notes in exchange for a loan of approximately $281,000 from his parents, Guy P. Ruff, Sr., and Puddie E. Ruff. The purpose of this loan was to enable Ruff to complete the development of his 298-acre cattle farm and bring all of his debts current. Ruff developed the farm for the benefit of Big Oaks Farm, LLC, in which he owned Class A and Class B shares. As consideration for his efforts, Ruff received "development fees" as well as distributions on his B shares.

¶ 3. Ruff failed to make any payments on the promissory notes. As a result, on May 22, 2002, Ruff's father filed a complaint against him in the Chancery Court of Benton County. On March 28, 2003, a default judgment was entered against Ruff for his failure to cooperate in discovery. Ruff's father obtained an equitable lien against the farm, compensatory damages in the amount of $357,678, and attorney fees and expenses in the amount of $4,600.

¶ 4. On February 4, 2004, one day before the scheduled foreclosure on the farm, Ruff filed for bankruptcy. Ruff's father filed a motion for relief from the automatic stay. On August 26, 2004, the bankruptcy court entered a consent order settling the motion for relief from the automatic stay (hereinafter the "Bankruptcy Consent Order"). Under this order, Ruff granted his father a third deed of trust on the farm property and a security interest in the cattle. He further agreed to pay $16,500 per quarter to satisfy the remaining balance on his father's prior judgment. At the same time, Ruff assigned to his father the cash proceeds from his B shares. He also executed an assignment of all his financial interests in Big Oaks. This assignment was to be held in escrow by attorney Stephan L. McDavid, who served as counsel for Ruff's father, and would not become effective unless Ruff defaulted on his quarterly payments and failed to cure. So long as Ruff fulfilled his obligation to pay, he retained his right to collect distributions on his A shares, as well as any development fees owed to him from Big Oaks.

¶ 5. Following the Bankruptcy Consent Order, Big Oaks terminated Ruff's services on its behalf. Consequently, Ruff no longer received development fees or distributions on his B shares.

¶ 6. Ruff eventually defaulted on the quarterly payments and was sent a notice of default on March 21, 2005. On June 22, 2005, after more than sixty days had passed without cure, McDavid sent Ruff a notice of intent to release the assignment of all funds, disbursements, or income from Big Oaks. On July 19, 2005, the Estate of Guy P. Ruff, Sr.,¹ presented the assignment to Big Oaks with instructions that all previously withheld and future disbursements due Ruff be directed to the Estate (hereinafter the "2005 Assignment").²

¶ 7. As the Estate once again began execution on the farm, Ruff filed a Motion for Preliminary Injunction.³ On February 8, 2006, the chancery court entered a Consent Order of Dismissal with Prejudice Based on Settlement of All Claims (hereinafter the "Chancery Consent Order"). Under the terms of this order, Ruff agreed to pay $2,000 each month. Ruff also executed a quitclaim deed in lieu of foreclosure to the Estate, to be held in escrow by McDavid. If payment was not received by the fifth day of the month, McDavid was entitled to file the quitclaim deed on the sixth day. The order also stated that "[e]xcept as specifically stated herein, the Note and Deed of Trust, and all obligations under the same and the [Bankruptcy Consent Order] remain in full force and effect. Nothing in this Order shall be deemed to otherwise modify any other obligations of the parties."

¶ 8. Ruff made timely payments from February 2006 through November 2006, but failed to do so in December 2006. Around December 2006, the Estate received notice that the Bank of Holly Springs, which held a second deed of trust on the farm, was about to foreclose.⁴ Based on Ruff's failure to make the December payment and the potential foreclosure, McDavid sent notices of default to Ruff on December 28 and 29, 2006, informing him that the quitclaim deed had been filed and that all personal property, including the cattle, would be sold. Ruff was prohibited thereafter from using or accessing the farm property. To protect its interest in the farm, the Estate paid the Bank of Holly Springs note current.

¶ 9. On January 19, 2007, Ruff filed a Motion for Preliminary and Mandatory Injunction, Temporary Restraining Order and for Permanent and Mandatory Injunction. Ruff asserted that he had not made the December 2006 payment because he reasonably believed that the November 2006 disbursement on his A shares had been applied toward his debt to the Estate pursuant to the 2005 Assignment. Ruff argued that he stood to suffer immediate and irreparable injury because the Estate had interfered with his ability to care for the cattle, and because the Bank of Holly Springs' note contained an acceleration clause effective upon any transfer of interest.

¶ 10. Following a hearing, the chancellor denied Ruff's motion on June 27, 2007, in a written order, without making findings of fact. Ruff now appeals to this Court.

STANDARD OF REVIEW

¶ 11. This Court reviews a chancellor's decision to deny an injunction for abuse of discretion. Elec. Data Sys. Corp. v. Miss. Div. of Medicaid, 853 So.2d 1192, 1207-08 (Miss.2003). This Court "will not disturb the factual findings of a chancellor when supported by substantial evidence unless [we] can say with reasonable certainty that the chancellor abused his discretion, was manifestly wrong, clearly erroneous or applied an erroneous legal standard." Biglane v. Under the Hill Corp., 949 So.2d 9, 13-14 (Miss.2007) (quoting Cummings v. Benderman, 681 So.2d 97, 100 (Miss.1996)). Where the chancellor makes no specific findings, this Court proceeds on the assumption that the chancellor resolved all fact issues in favor of the appellee. City of Picayune v. Southern Reg'l Corp., 916 So.2d 510, 519 (Miss.2005) (citing Newsom v. Newsom, 557 So.2d 511, 514 (Miss.1990)).

DISCUSSION

I. Whether the chancellor abused his discretion in denying Ruff's request for a mandatory permanent injunction.⁵

¶ 12. Ruff argues that he is entitled to an injunction because the Estate gained an unconscionable advantage, and he suffered irreparable harm, due to his mistaken belief that Big Oaks' November 2006 distribution satisfied his December 2006 payment to the Estate. To prevent the intolerable injustice of him losing his farm and cattle based on a mere mistake, Ruff submits that the quitclaim deed in lieu of foreclosure should be set aside and the parties should be allowed to return to the status quo under the terms of the Chancery Consent Order.

¶ 13. For a permanent injunction to issue, "a party must show an imminent threat of irreparable harm for which there is no adequate remedy at law." Punzo v. Jackson County, 861 So.2d 340, 347 (Miss.2003) (quoting Reynolds v. Amerada Hess Corp., 778 So.2d 759, 765 (Miss.2000)). A mandatory injunction is a harsh remedy that is not favored by courts, and should be used only in cases of great necessity. Punzo, 861 So.2d at 348 (quoting Pattillo v. Bridges, 247 So.2d 811, 812 (Miss.1971)).

¶ 14. Equity prevents an intolerable injustice where a party has gained an unconscionable advantage by mistake and the mistaken party is not grossly negligent. Rotenberry v. Hooker, 864 So.2d 266, 271 (Miss.2003). The general rule provides that:

[W]here the mistake is of so fundamental a character, that the minds of the parties have never, in fact, met; or where an unconscionable advantage has been gained, by mere mistake or misapprehension; and there was no gross negligence on the part of the plaintiff, either in falling into the error, or in not sooner claiming redress; and no intervening rights have accrued; and the parties may still be placed in statu quo; equity will interfere, in its discretion, in order to prevent intolerable injustice.

Rotenberry, 864 So.2d at 271 (emphasis added) (quoting Miss. State Building Comm'n v. Becknell, 329 So.2d 57, 60-61 (Miss. 1976)).

¶ 15. Ruff does not seem to argue that the mistake was of such fundamental character that the parties' minds never met. Instead, he contends that "[a]ll four prongs set forth in Rotenberry are met and supported by the substantial evidence...."

¶ 16. The Estate, on the other hand, disputes that a mistaken belief caused Ruff's failure to make the December 2006 payment. But even assuming that he was mistaken, the Estate argues that Ruff is not entitled to an injunction. The Estate maintains that a chancellor is not required to grant injunctive relief on a finding of a unilateral mistake, even if one party will incur some injustice. Rather, the...