W. Jasper Consol. Sch. Dist. v. Rogers

• Decision Date: 07 February 2023
• Docket Number: 2021-CA-00171-COA
• Parties: WEST JASPER CONSOLIDATED SCHOOL DISTRICT APPELLANT v. CHARLES THOMAS ROGERS AND WILLIAM MICHAEL ROGERS APPELLEES
• Court: Mississippi Court of Appeals

WEST JASPER CONSOLIDATED SCHOOL DISTRICT APPELLANT
v.
CHARLES THOMAS ROGERS AND WILLIAM MICHAEL ROGERS APPELLEES

No. 2021-CA-00171-COA

Court of Appeals of Mississippi

February 7, 2023

DATE OF JUDGMENT: 11/02/2020

COURT FROM WHICH APPEALED: JASPER COUNTY CHANCERY COURT, SECOND JUDICIAL DISTRICT HON. ROBERT M. LOGAN JR. TRIAL JUDGE:

ATTORNEYS FOR APPELLANT: RANCE N. ULMER TERRY L. CAVES RISHER GRANTHAM CAVES

ATTORNEYS FOR APPELLEES: MARC E. BRAND T. JACKSON LYONS

BEFORE BARNES, C.J., McDONALD AND McCARTY, JJ.

BARNES, C.J.

¶1. The West Jasper Consolidated School District (West Jasper) appeals from the Jasper County Chancery Court's judgment finding that the school district had breached sixteenth section lease terms by failing to follow the applicable law in making rent adjustments. West Jasper requests that this Court reverse and render the chancery court's judgment because the court (1) lacked subject matter jurisdiction; (2) employed an erroneous standard of review; (3) erred in determining the Appellees had not materially breached the leases' terms; and (4) "erred by substituting its judgment in place of the Board's decision regarding the

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determination of a reasonable annual rental rate." West Jasper also requests that we remand to the chancery court for adjudication of "the issue of attorney's fees." Finding no error, we affirm the judgment.

STATEMENT OF FACTS

¶2. Thomas and Charlene Rogers were the parents of the Appellees Charles Thomas Rogers (Charles) and William Michael Rogers (Michael) (referred to collectively as the Rogerses). Thomas held sixteenth section leases for approximately 240 acres in Louin, Mississippi, with the Jasper County Board of Education for several decades prior to December 20, 1988. The land was primarily used for running cattle.

¶3. On December 20, 1988, Thomas and Charlene signed a new forty-year sixteenth section lease-classified as farm-residential-for 159.5 acres with Jasper County Board of Education, which is now West Jasper. Charles and Michael (the Appellees) also signed a forty-year sixteenth section lease with West Jasper-classified as farm-residential-for the remaining 79.5 acres.^[1] The 159.5-acre tract and the 79.5-acre tract are contiguous parcels. On the property line between the properties is a culvert and a concrete bridge where cows can travel to and from each parcel.

¶4. Each lease contained a rent-adjustment clause (paragraph 3), which provided:

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At the 10th, 20th, and 30th anniversary dates of the commencement of this lease agreement, lessor shall have a reappraisal of the subject property, at its expense, and a redetermination of a reasonable annual rental. The lessor shall notify lessee of the reappraisal in writing a minimum of ninety (90) days prior to said anniversary dates. The reappraisal shall establish the fair market value of the property. Buildings and other improvements upon the property and not owned by Lessor shall be excluded from the reappraisal evaluation.^[2] The amount of the annual rent so determined as of the 10th anniversary date shall be paid annually for the next 10 years, and the annual rent so determined as of the 20th anniversary date shall be paid annually for the next 10 years, and the annual rent so determined as of the 30th anniversary date shall be paid annually for the balance of the lease term

The annual lease payments were due on July 28, the anniversary date of the leases. During the first ten years, the annual-lease rental amount for the 79.5-acre parcel was $395; for the 159.5-acre parcel, it was $739. In 1998, West Jasper increased the rental payment for both leases with no objection by the Rogerses.

¶5. Both leases also contained the following provision (paragraph 5) addressing assignments and subleases:

Lessee may freely assign this lease in its entirety . . . In the event of an assignment, sublease, or other transfer of possession, lessee shall, within 30 days after the transfer, give notice in writing and provide a true copy of the instrument evidencing such transfer to the Lessor. If these requirements are not timely met, Lessor, upon discovery of the assignment, may declare a forfeiture of this lease. Lessee may not assign, transfer, sublease, or sell any part of the leased property without prior approval of the lessor.

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On October 20, 2006, Thomas and Charlene assigned their lease (159.5 acres) to Charles and Michael, who also assigned their lease for the 79.5 acres to their parents. Michael averred that the assignments were done "to ensure that the 16th Section leases would remain in our family and would go to the last surviving family member in the leases." Charles also stated that the assignments were for estate-planning purposes and that the attorney who drafted the lease assignments was to deliver them to the West Jasper Board. However, there is no evidence in the record that West Jasper was given notice of those assignments or that the assignments were recorded with the chancery clerk's office.

¶6. Meanwhile, the West Jasper Board of Trustees (Board) had passed a policy in 2004, charging seven percent of the fair market value appraisal of all property as the lease rental payment. Despite the Board's recent policy change, Mike Avary, who was West Jasper's newly hired sixteenth section land manager, used an appraisal from the Jasper County Tax Assessor's office and increased the rental value in 2008 to $1,869.70/$11.69 per acre for the 159.5 acres and $760.90/$9.57 per acre for the 79.5 acres. The Rogerses did not object to this rental adjustment.

¶7. In 2017, before the thirtieth anniversary of the leases, the Board appointed licensed appraiser Lonnie Reynolds to appraise the subject parcels. His appraisal valued the 79.5 acres at $275,000 and the 159.5 acres at $225,000. For both parcels combined, Reynolds valued the two properties at $500,000 and at $3,459 per acre. On June 30, 2017, the Board sent notices of the reappraisal to the Rogerses, informing them that the annual lease payment

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for each lease was going to be determined by multiplying the appraised value of each property by seven percent. The Rogerses immediately contacted Avary, who told them that this appraisal figure was in accordance with the Board's policy passed in 2004. However, the Rogerses did not raise any objection regarding the appraisal before the Board itself.

¶8. On April 2, 2018, Avary sent the Board and the school district superintendent a letter, stating that the Rogerses' annual lease payments would be increased from $1,869.70 ($11.69 per acre) to $15,750 ($98.44 per acre) for the 159.5- acre parcel and from $760.90 ($9.57 per acre) to $19,250 for the 79.5-acre parcel ($242.12 per acre). On April 10, 2018, the Board voted to increase the rental payments, and notices were sent to the Rogerses of the increased annual rental payments beginning in July 2018. According to Charles, the Rogerses responded by contacting an attorney and hiring an appraiser named J.E. Smith "to do us an appraisal as far as 16th section statutes governing farm residential lease contracts." Smith appraised the parcels at only $10 to $15 per acre.

PROCEDURAL HISTORY

¶9. On July 3, 2018, the Rogerses filed suit in chancery court against West Jasper, seeking injunctive and declaratory relief. The chancery court granted the Rogerses' request for a preliminary injunction on September 4, 2018, ordering West Jasper to refrain from terminating the Rogerses' sixteenth section lease (subject to the Rogerses posting a $35,000 cash bond). On November 8, 2018, the Rogerses filed an amended complaint adding the

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Mississippi Secretary of State as a party.^[3] The Rogerses filed a second amended complaint on March 25, 2019, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of quiet enjoyment.

¶10. On June 27, 2019, West Jasper filed a motion in limine "to limit evidence regarding setting the fair market rental value to appraisal and not allow the plaintiffs to present evidence of comparative analysis or comparison with the private sector." On July 26, 2019, West Jasper filed a partial motion for summary judgment on the Rogerses' claims of "breach of implied terms of their leases." The Rogerses conceded that this claim, which was covered under the Mississippi Tort Claims Act, "should be dismissed but not with prejudice." The chancery court granted West Jasper's motion for partial summary judgment but dismissed the claim without prejudice, finding that the claim of breach of implied covenants raised in the amended complaint related back to the original complaint. West Jasper's motion in limine was denied.

¶11. In late 2019, both Thomas and Charlene died, and the Appellees became the successors in interest to the 159.5-acre parcel held by their parents. The Appellees filed a motion for substitution of parties, attaching copies of the assignment of leases in 2006. West Jasper responded by arguing that the lease assignments did not comply with the leases'

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requirements and "violate[d] the amount of acreage a lessee of 16th Section property can hold, in effect the plaintiffs created a new lease . . . comprising 240 acres[.]" On November 14, 2019, the Board voted to forfeit the leases based on these assignments.

¶12. A hearing was held on November 15, 2019. John Evans, another appraiser hired by the Appellees, testified that he had appraised the subject parcels at issue and calculated that the fair market rent for the parcels was $1,400 per year ($17.61 per acre) for the 79.5 acres and $2,850 per year ($17.87 per acre) for the 159.5 acres. Evans further opined that the West Jasper appraisal rate did not reflect a fair market rental value and was "excessive." Avary admitted in his testimony that an appraisal of fair market rental value was not done.

¶13. Subsequently, on December...