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IN THE COURT OF APPEALS FOR THE STATE OF MISSISSIPPI
W.D. RUSSUM
APPELLANT
v.
UNITED PLUMBING & HEATING COMPANY, INC.,
PRICE'S GLASS & MIRROR CO., INC., JAMES THOMAS,
CARR PLUMBING SUPPLY INC., RICKY JACKSON,
TOMMY MEADOWS, PRECISION CEILING LLC, AND
RONNIE DEFOREST
APPELLEES
APPEAL FROM THE DECISION OF THE
RANKIN COUNTY CHANCERY COURT
REPLY BRIEF OF APPELLANT - W.D. RUSSUM
ORAL ARGUMENT REQUESTED
Thomas W. Prewitt (MSB , . .
Post Office Box 2327
Madison, Mississippi 39130
Telephone: (601) 427-2327
ATTORNEY FOR APPELLANT
W.D. RUSSUM
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August11,2008
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TABLE OF CONTENTS
Page
Table of Contents ...................................................................................................................i
Table of Authorities ...............................................................................................................iii
Statement Regarding Oral Argument... .................................. ' .............................................. 1
Introduction ...........................................................................................................................1
A.
So what they "believed they were authorized to act"? ..................................... 1
B.
It's a question of status ...................................................................................2
C.
Resolving contested fact issues and summary judgment don't mix ................ 3
D.
We don't even need a hearing on damages ................................................... 3
E.
Summary of the introduction, recap ................................................................3
Rebuttal Argument. ...............................................................................................................4
I.
II.
III.
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A.
Comments on malice .................................................................. '" .... ..4
B.
The construction lien and lis pendens statutes were
flat out abused ......................................................................................5
C.
The trial court took it even further. ....................................................... 6
United and the Subcontractors reliance on Dethlefs is misplaced .................. 6
A.
Alleged "good motive" is a "so what." ...................................................6
B.
Dethlefsisofnohelp .......... ,................................................................7
The Chancellor should not have disregarded the testimony
contained in the Affidavits ................................................................................8
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Malice is a question offactwhich is not proper for summary judgment... ....... 4
A.
Brand Affidavit. .................................................................................. 10
B.
Russum Affidavit. ............................................................................... 10
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TABLE OF AUTHORITIES
Page
Cases:
Brown v. Watkins, 213 Miss. 365, 373, 56 so. 2d 888,891 (1952) ........................................4
Dethlefsv. Beau Maison Development Corporation, 511 So. 2d 112, 117 (Miss. 1987) ....... 7
Harmon v. Regions Bank, 961 so. 2d 693, 699 (1118) (Miss. 2007) .......................................4
Manderson v. Ceco Corporation, 587 F. Supp. 445, 449 (N.D. Miss. 1984) ......................... 3
Owensv. Kroger Co. , 430 So. 2d. 843 (Miss. 1983) ............................................................ .4
Phelpsv. Clinkscales, 247 So. 2d 819, 821 (Miss. 1971 ....................................................... 5
Statutes:
Miss. Code Ann. §85-7-201 ..........................................................................................3, 12
Rules:
M.R.A.P. 34........................................................................................................................... 1
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Statement Regarding Oral Argument
Preliminarily, it has been argued that Mr. Russum has failed to comply with Rule
34(b) of the Mississippi Rules of Appellate Procedure by failing to include "a concise
statement of the reasons that oral argument will be helpful to the Court." However, due to
the serious impact this decision would have upon Mississippi's jurisprudence should the
trial court's decision be affirmed, special permission for oral argument, as additionally
prescribed by Rule 34(b), should be granted.
Introduction
United's brief fails to fully address the issues that are presently before this Court.
That treatment of the issues is a shame since the wrong done in the trial court is significant
and carries serious ramifications for Mississippi jurisprudence.
Due to the potential
widespread impact of the trial court's decision, these issues are deserving of a serious
analysis. Simply stated, if the trial court's judgment is allowed to stand, two critical issues
will be condoned. First, an improper application of the summary judgment standard will be
affirmed and second, individuals will be able to freely engage in self-help remedies under
the simple guise of "we did it in good faith." Such a result is clearly contradictory to our
established law.
A. So what they "believed they were authorized to act"?
Much of United's Statement of Facts Relevant to the Issues is correctly offered
without citation of authority since it is a figment of United and the Subcontractors' hopes
and desires, rather than record evidence addressing the issues before the Chancellor. As
illustrated in Mr. Russum's brief, the underlying reality is that United and the
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Subcontractors were never authorized by the Bankruptcy judge or the Bankruptcy Code
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to take any action allegedly on behalf of the rest ofthe creditors. This issue was presented
factually, and the law providing that no such right existed towards United and the
Subcontractors was presented to the Chancellor. However, United seeks to avoid the
obvious consequences of being on the wrong side -of the facts and the law and instead
argues basically that, being laymen, United and the Subcontractors, "believed" that they
had a right to act because the Bankruptcy Court wasn't protecting their alleged interest or
acting quick enough.
Somehow, that belief was sufficient to let them slide by the
consequences of their improper, malicious actions.
The "good faith belief' argument could be made in the face of almost any wall built
to protect the rights of others but it has never, and should never, be validated. Imagine the
chaos if the word in the industry becomes "do what you want but do it with a good attitude
and you'll be able to escape the consequences whether you had a right or not." This Court
was entitled to more than a simple statement of that position.
B. It's a question of status
Likewise, little is made of the glaring fact that the plain language of the statutes
absolutely require a status which never, ever, existed in United and the Subcontractors.
Before a construction lien can be filed, a claimant must have had a contract with the Owner
and must have an interest in the property of another. In order to be protected, the lis
pendens statute absolutely requires a pending lawsuit in which United and the
Subcontractors claimed an interest in the property of another.
Neither status existed at any time and the Chancellor's willingness to create such
a position where none could possibly exist was error. This error requires the judgment to
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be reversed and justifies this Court to render here in favor of Mr. Russum. Since the facts
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are in and since United and the Subcontractors can never prove the existence of these
underlying requisites to their defense, the liability issue should be resolved here.
C. Resolving contested fact issues and summary judgment don't mix
Finally, by any standard known to the Bar and announced in the cases, the
Chancellor was not authorized to make factual determinations on the issue of damages.
Mr. Russum states under oath that United and the Subcontractors financially damaged
him. This testimony is supported with written documents. Yet, finding as a fact that he
could not have been damaged, the Chancellor held that Mr. Russum in fact had not been
damaged. That determination is absolutely forbidden by the status of the record and the
standard which must be applied when considering motions for summary judgment. A
hearing on the merits to determine each of these factual issues was warranted.
D. We don't even need a hearing on damages
The entire question of damages is not however required to be resolved by the
Chancellor after a hearing on the merits. The expungement statute itself carries its own
penalty. Mississippi's case law, interpreting the subject statute (Miss. Code. Ann. § 85-7201 (1972 & Supp. 2003)), states that the statute "makes a wrongdoer liable to the person
wronged for a fixed sum without reference to the damage inflicted by the commission of
the wrong ... " Manderson v. Ceco Corporation, 587 F. Supp. 445,446 (N.D. Miss. 1984).
E. Summary of the Introduction, Recap
United and the Subcontractors' brief fails to effectively and thoughtfully address
these and many more of the issues which are reflected in the Court's decision to award
summary judgment against the injured Mr. Russum.
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Though many issues remain
unaddressed by United and the Subcontractors, the major issues which need further
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attention in Mr. Russum's reply brief include: 1) Malice is a question of fact which is not
proper for summary judgment determination, 2) United and the Subcontractors' reliance
on Dethlefs is misplaced, and 3) although the affidavits are uncontested, the Chancellor
should not have disregarded the testimony contained in the Affidavits.
REBUTTAL ARGUMENT
I. Malice is a question of fact which is not proper
for summary judgment determination
A. Comments on malice
The Chancellor wasn't supposed to fact find and when he did, he was flat wrong.
His findings were clearly erroneous for two reasons. First, and fundamental to this appeal,
the Chancellor applied an erroneous legal standard by engaging in fact finding during the
summary judgment stage. In reciting his findings and conclusions, the Chancellor stated
"the fact that these defendants here were claimants in the bankruptcy court, that they
pursued alongside the examiner a claim that this may have been a fraudulent conveyance
I think totally eliminates any notion that the filing of the lis pendens on September the 5th ,
2006, was malicious." (T. at 117; R.E. at 3). However, such a finding is clearly erroneous
and contrary to Mississippi's longstanding case law. "Because malice is a jury question,
Owens v. Kroger Co., 430 So.2d 843 (Miss. 1983), summary judgment is improper 'unless
only one conclusion may reasonably be drawn from the evidence.'" Harmon v. Regions
Bank, 961 So. 2d 693, 699 m18) (Miss. 2007) (quoting Brown v. Watkins, 213 Miss. 365,
373,56 SO.2d 888, 891 (1952)). The maliciousness of United and the Subcontractors'
actions will be discussed momentarily.
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Such a determination was the product of the Chancellor'S engagement in the factfinding process which is clearly improper for summary judgment. What makes this ruling
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even more egregious is that malice is usually not readily demonstrated by direct proof,
thereby requiring a thorough investigation by the fact finder into all of the surrounding
circumstances. This Court has previously defined malice as it relates to slander of title,
holding "Malice exists in the mind and usually is not susceptible of direct proof. The law
determines malice by external standards; a process of drawing inferences by applying
common knowledge and human experience to a person's statements, acts, and the
surrounding circumstances." Phelps v. Clinkscales, 247 So. 2d 819, 821 (Miss. 1971). In
light of the nature of malice, testimony and evidence as to the occurrences should be
presented to the fact-finder for a determination of whether or not a party acted with malice.
However, without hearing one bit of trial testimony, the Chancellor made the determination
that United did not so act. The Chancellor's findings were improper at the summary
judgment stage and in and of themselves, warrant reversal.
B. The construction lien and lis pendens statutes were flat out abused
With the abuses to the construction lien and lis pendens statutes, it was manifest
error to find that United and the Subcontractors' actions were excusable. As is fully
addressed in Mr. Russum's initial brief, the construction lien put in place by United failed
to meet the statutorily required elements since it a} had absolutely nothing to do with any
pending legal action, b} the property was located in an adjacent county and was the
personal property of Russum, c} United and the Subcontractors performed no work on the
subject property and d} the contract dispute which gave rise to the Hinds County, Second
District litigation was between United and the Subcontractors, and Wee Care and
concerned the Wee Care facility there. In trying to rationalize this course of conduct to the
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trial court, counsel for United and the Subcontractors confessed irregularities in the lien
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and contends that United and the Subcontractors engaged in this self-help remedy without
the advice of counsel. Such conduct is akin to a landlord padlocking a tenant's personal
property. Then when a replevin action is filed, counsel comes before the court stating that
such conduct was done without advice of counsel and the landlord should not be
responsible for his or her actions. Such an egregious proposition cannot be condoned by
this Court.
C. The trial court took it even further
In light of such outrageous conduct, the Chancellor allowed United and the
Subcontractors to take this a step further. It is uncontested that the same day that the
construction lien was removed, United and the Subcontractors immediately filed their lis
pendens. United and the Subcontractors contended to the trial court, and continue to
contend on appeal, that they were simply acting as a steward for all unsecured creditors
in Wee Care's bankruptcy proceeding and that such conduct was not the result of malice.
However, United and the Subcontractors achieved exactly what they sought through the
Bankruptcy Court - for the Examiner to file a lis pendens. These filings occurred eight days
from one another.
However, it is undisputed that United and the Subcontractors' lis
pendens remained in effect for five months and ten days (they were represented by
counsel throughout this time period), which singularly raises the question of whether their
filing was the product of innocence as they contend. (T. at 113; R.E. 3).
Thus, an
argument of innocence just doesn't wash. This ruling was an act of forgiveness. Such
clear error alone also warrants reversal of the Chancellor'S grant of summary judgment.
II. United and the Subcontractors' reliance upon Dethlefs is misplaced
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A. Alleged "good motive" is a "so what."
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United and the Subcontractors contend that the Dethlefs decision excuses their
actions, however, this case is readily distinguishable from the case sub judice. In the
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Dethlefs decision, the trial court found that "Certain communications published in due
course of a judicial proceeding are absolutely privileged and will not sustain an action for
slander of title." Dethlefs v. Beau Maison Development Corporation, 511 So 2d 112, 117
(Miss. 1987). However, in the Dethlefs decision, the lis pendens was filed on property that
was the subject of the litigation. Here, United and the Subcontractors were unsecured
creditors of Wee Care, and at their behest, had an Examiner appointed by the Bankruptcy
Court.' Any authority to take action against the subject Rankin County property was
properly vested in the Examiner, not United and the Subcontractors. However, United and
the Subcontractors chose to engage in a course of self-help remedies. Were these self-
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help actions the product of an honest belief held by United? Or were these actions taken
as a motive to spur the Examiner to take faster action? Or, were these self-help remedies
carried out with malice over the ongoing Second District litigation? These are genuine
issues of material fact, which are to be determined by the fact-finder. Such findings are
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improper at the summary judgment juncture.
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S. Dethlefs is of no help.
However, regardless of United and the Subcontractors' reason for filing the lis
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pendens, the Chancellor's reliance upon the Dethlefs decision is misplaced.
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The
Chancellor misconstrued the Supreme Court's statement that "certain communications
published in due course of a judicial proceeding are absolutely privileged and will not
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'Wee Care and Mr. Russum strongly contend that they owe United and the Subcontractors
nothin9. however. United and the Subcontractors are listed as a creditor of the bankruptcy
estate.
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upon which United and the Subcontractors rely, Judge Ellington stated that:
But once you decide to step through the door of the bankruptcy
court, the world changes. And it cannot be run that way anymore. I
would understand something that had been done if it had been done
in the first month or two of this bankruptcy. But these issues and
whether construction claimants are is (sic), you know, ifthey lose their
case, it doesn't matter how this money was spent. But if they win their
case and get a judgment entitled to money, they want all the money
that should have been kept in this corporation.
If the litigation had been concluded before they ever filed
bankruptcy, and if Mr. Russum and his corporation won, you know,
don't (sic) really matter. But they, as claimants, although it's
unliquidated and undetermined, but when you're in bankruptcy,
claimants have got a right to have the corporate funds preserved and
spent properly. And as I said, the issues came up initially about how
I would say insiders, family members, longtime employees were being
treated, how credit cards were being used, how all these things were
not being done properly. And, you know, it came up from the
beginning. We had hearings and, you know, status conferences in
chambers and so forth.
And then there was a motion to appoint, and an order
appointing an examiner. And the motion to appoint a trustee was
filed - this is the one we had today, I believe June 15, 2005. And
we, after conference with parties, they agreed to just go on and
appoint an examiner to let the examiner look over things to
dispel a lot of - or maybe confirm a lot of concerns.
(R. at 111 -112; R.E. 6).
Judge Ellington's statements are clear, no authority was granted to United and the
Subcontractors to file a lis pendens, but rather, such authority resided solely with the
Examiner. However, United and the Subcontractors pervert Judge Ellington's language
to contend that the aforementioned language somehow grants authority unto them
approving their actions. As the Court can clearly see, this is simply untrue. So how does
Judge Ellington's language relate to the Affidavit testimony?
Mr. Brand's Affidavit
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addresses this topic.
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His testimony directly disputes United and the Subcontractors' position and in and
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of itself creates a genuine issue of material fact sufficient to preclude summary judgment
Although the Court is urged to read both the Brand Affidavit and the Russum Affidavit, the
highlights of each follow:
A. Brand Affidavit
ML Brand testified that United and the Subcontractors' representations are simply
not true, The bankruptcy court never found that United "had a right to protect the assets
of the bankruptcy estate," ML Brand explains that had this occurred, the authority would
have been made a part of the record and appeared on the docket of the court, However,
there is no such record of any such authorization in the bankruptcy proceedings, Further,
such authority does not exist under the Bankruptcy Code, the Bankruptcy Rules or
available case law. (R. at 355; RE 8), Yet, without the benefit of citation to relevant
authority, the Chancellor found and concluded to the contrary.
ML Brand additionally testifies that creditors, absent specific delegation by the
Bankruptcy Court, do not have the authority to act on behalf of the bankrupt's estate, Such
a delegation of authority is not present in Wee Care's bankruptcy proceeding. (R. at 355),
How then did the Chancellor grant summary judgment?
B. Russum Affidavit
ML Russum's Affidavit also presents many issues of material fact relevant to this
matteL As described by him, the subject property is Russum's personal property which he
purchased years ago. (R. at 295; R.E. 9), Because he was the sole shareholder of Wee
Care, he transferred the property to Wee Care for use as additional collateral to secure a
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loan extended to Wee Care, (R at 295).
After the subject property was no longer
necessary to secure the loan, Wee Care transferred the property back to him. (R. at 295).
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The transfer of the property back to Mr. Russum occurred in 1999, years before Wee Care
entered into a contract with United and therefore, years before United and the
Subcontractors could have possibly had an interest in the property. (R. at 296 - 296).
Mr. Russum further testifies that he did not agree to "sue himself' and United's
characterizations as such are incorrect. (R. at 295). Rather, it was his understanding that
the Complaint was filed in order to allow the Bankruptcy Court to rule on the validity of the
"transfer back" of the property. (R. at 296).
Additionally, Mr. Russum testifies that the Hinds County Circuit Court ruled he was
entitled to summary judgment concerning allegations of personal liability to United and the
Subcontractors. (R. at 294; 323).
Also, Mr. Russum testifies that due to the actions of United and the Subcontractors,
a cloud was created on his title which collapsed the sale of the subject property, resulting
in several hundred thousand dollars in damages to him. (R. at 299).
Thus, the Affidavit testimony of Mr. Russum and Mr. Brand alone illustrate that there
are genuine issues of material fact which must be submitted to the fact-finder for a
determination. However, the Chancellor completely disregarded this testimony, dismissed
such testimony as "crafty lawyering" and granted summary judgment in favor of United.
It cannot be stressed enough that such findings were clearly erroneous for purposes of
summary judgment.
Conclusion
The Court should reverse the Chancellor's decision to grant United and the
Subcontractors' Summary Judgment on all of Mr. Russum's claims and judgement should
be entered for Mr. Russum. Additionally, the trial court should be instructed that actual
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damages resulting from the slander of title are to be determined, and that the issue of
liability pursuantto Miss. Code Ann. § 85-7-201 (1972 &Supp. 2003) is fixed atthe amount
of the claim asserted by United, $690,000, that United and the Subcontractors'
Counterclaim be dismissed, and finally, that Mr. Russum be awarded all costs and
attorneys' fees incurred in the pursuit of this matter.
THIS the 11th day of August, 2008.
W. PREwln, (MSB
AnORNEY FOR ApPELLANT W.o. RUSSUM
HUMA::;
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THOMAS W. PREWITT
Mississippi Bar. No. 4489
7720 Old Canton Road, Suite A
Madison, Mississippi 39110
Post Office Box 2327
Madison, Mississippi 39130-2327
Telephone: (601) 427-2327
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CERTIFICATE OF SERVICE
I, THOMAS W. PREWITT, do hereby certify that I have mailed, via United States
Mail, postage fully prepaid thereon, a true and correct copy of the above and foregoing
Reply Brief of Appel/ant W.D. Russum to:
Chancellor Dan H. Fairly
Rankin County Chancery Court
Post Office Box 1437
Brandon, Mississippi 39043
William W. Fulgham, Esq.
WILLIAM W. FULGHAM, PLLC
P.O. Box 321386
Flowood, Mississippi 39232
THIS, the 11th day of August, 2008.
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