Clark v. Parker ( 1999 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 99-60023
Summary Calendar
_____________________
GLENDA CLARK; ET AL.,
Plaintiff-Appellant,
GLENDA CLARK; FRANK SMOTHERS;
JEFF CLARK; JAN CLARK; IVY
INVESTMENTS, INC.; ROBERT WILLIAMS,
Plaintiffs-Appellants,
versus
D. C. PARKER; ET AL.,
Defendants,
D. C. PARKER; RICHARD B. FLOWERS;
LLOYD LINK; BETTY LINK; LINK &
ASSOCIATES,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Mississippi
(1:97-CV-210-B-D)
_________________________________________________________________
August 30, 1999
Before JOLLY, JONES, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Glenda Clark, Robert Williams, Frank Smothers, Jeff Clark, Jan
Clark, and Ivy Investments, Incorporated (“Ivy”) appeal the
district court’s granting of summary judgment for D. C. Parker,
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
Richard B. Flowers, Lloyd Link, Betty Link, and Link & Associates.1
The appellants argue that the district court erred when it
concluded that as a matter of law their claims were barred by the
applicable statutes of limitations.2 Further, the appellants argue
that the district court erred in granting summary judgment for
Parker and Flowers based on the appellants’ claims of fraudulent
misrepresentation. As we find no error on the part of the district
court, we affirm for essentially the same reasons.
The general background facts are largely undisputed, and we
take the liberty of adopting in part the district court’s
recitation of those facts. Parker and Flowers are farmers and
landowners who own land at and around Mhoon Landing in Tunica
County, Mississippi. Initially, when casino gambling was legalized
in Mississippi, Mhoon Landing on the Mississippi River was the
closest point to Memphis, Tennessee, where a casino could be
legally constructed. Parker and Flowers sold or leased various
parcels of property on Mhoon Landing and announced plans to develop
roads and other infrastructure in the area. By September 1993, one
1
The attorneys representing D. C. Parker and Richard B.
Flowers filed the motion for summary judgment. Lloyd Link, Betty
Link, and Link & Associates who are representing themselves pro se
filed a letter motion asking that they be allowed to join in Parker
and Flowers’s motion for summary judgment. This letter motion was
granted by the district court.
2
The claims of common law fraud, breach of contract, and
breach of fiduciary duty were alleged against each of the named
defendants. The claims of violation of federal and state
securities law were alleged against Lloyd Link, Betty Link, and
Link & Associates.
2
casino was in operation at Mhoon Landing and others were in the
process of being constructed.
In August 1993, Lloyd Link approached Glenda Clark, Jeff
Clark, Jan Clark, and Robert Williams about the potential for
development in Tunica County as a result of the casino boom. In
early September, Link notified them that he had located 5.0 acres
of land in Tunica County. The property was owned by a Mr. Sugar.
On September 2, Link obtained a contract on behalf of the Clarks
and Williams for the sale of the Sugar property. On or about that
same date, the Clarks, Robert Williams, and various other investors
formed Ivy Investments, which was officially incorporated in
Alabama on October 14, 1993.
On September 29, the proposed sale on the Sugar property fell
through. Link informed Ivy Investments that they could purchase
5.5 acres on Mhoon Landing for $250,000 from Parker and Flowers.
Link had already scheduled a closing and had given Parker and
Flowers a check for $50,000 as a down payment.3 The members of
Ivy, based on Link’s representation as to the desirability of the
property, and based on Parker and Flowers’s representation
concerning their intention of developing infrastructure, voted to
purchase the Mhoon Landing property.
On October 3, members of Ivy met with Lloyd and Betty Link to
make arrangements for the closing. The president of Ivy
3
Parker and Flowers deny ever receiving this $50,000.
3
Investments, Loye Russell, expressed some concern about Link and
voiced his intention to attend the closing. Link immediately
insisted that Russell be removed from the group. The other members
of Ivy Investments complied with Link’s request, rather than risk
jeopardizing the deal. Link and Glenda Clark bought Russell’s
shares in Ivy Investments. Link insisted that no member of Ivy
attend the closing. On October 4, Link and his wife, Betty,
attended the closing. Betty signed the closing statement on behalf
of Ivy.
The purchase price as indicated on the original closing
statement was $200,000. On the closing statement, which Link
delivered to Ivy, the purchase price had been altered to state
$250,000. The typeset of the purchase price on the altered closing
statement received by Ivy was clearly different from that in the
remainder of the document. In deposition, Glenda Clark admits that
in November 1993, she noticed the obvious difference in the typeset
of the purchase price. Although she admits that she suspected that
the document had been altered, she waited until February 1997 to
obtain a copy of the original closing statement from the closing
attorney.
Jeff Clark admits that he likewise noticed the differences in
the typeset in the closing statement that Link delivered to Ivy.
Like Glenda Clark, he took no steps to quell his suspicions.
Further, Jeff Clark admits in deposition that he was suspicious
4
about Link from the start, and that he felt he was double dipping.
He similarly failed to act on these suspicions.
After the closing, Ivy began making preparation for the
construction of a hotel, but construction never began. Although
Parker and Flowers maintained that the area was being developed, it
would have been clear to any onlooker that little development was
occurring. Not long after the sale of the property, the
legislature changed the statutory scheme regulating the permissible
locations of casinos. As a result, Mhoon Landing was no longer the
closest point to Memphis upon which a casino could be constructed.
Following the change of law, the much ballyhooed casino industry at
Mhoon Landing vanished like a ghost into the night. As a result,
Parker and Flowers had no reason to develop the infrastructure, and
Ivy never built its proposed hotel. On July 7, 1997, nearly three
years and nine months after the sale of the Mhoon Landing property,
Ivy filed this civil action alleging common law fraud, breach of
contract, breach of fiduciary duty, and violations of Rule 10(b)(5)
of the Securities and Exchange Act of 1934 and Mississippi
securities law.
Mississippi Code Annotated § 15-1-49 provides a three-year
statute of limitations for matters arising out of written contracts
or misrepresentations. Mississippi Code Annotated § 15-1-29
similarly provides for a three-year limitation of actions on
matters arising out of unwritten contract. Claims arising out of
securities fraud have a two-year statute of limitation under both
5
Mississippi state and federal law. Miss. Code Ann. § 75-71-725;
Felts v. National Account Systems Ass’n. Inc., 469 F. Supp. 54, 64
(N.D.Miss. 1978)(holding state statutes of limitation applicable to
federal securities claims).
There is no question that Ivy’s claims, absent an applicable
tolling mechanism, are time barred. Ivy points to Mississippi’s
doctrine of fraudulent concealment for relief, codified as follows:
If a person liable to any personal action should
fraudulently conceal the cause of action from the
knowledge of the person entitled thereto, the cause of
action shall be deemed to have first accrued at, and not
before, the time which such fraud shall be, or with
reasonable diligence might have been, first known or
discovered.
Mississippi Code Ann. § 15-1-67. To assert a valid claim of
fraudulent concealment, the movant must demonstrate that the
defendant concealed the conduct complained of, and as a result of
this concealment, the movant was unable to discover the facts
forming the basis of his claim despite the exercise of reasonable
diligence. See State of Tex. v. Allan Constr. Co., 851 F.2d 1526,
1528 (5th Cir. 1988). Here, for the applicable statutes of
limitation to be tolled, we will have to find that through the
exercise of reasonable diligence, Ivy could not have discovered the
fraudulent concealment of their causes of action until at least
July 7, 1994.4
4
As to claims pursuant to federal and state securities law,
the relevant date is July 7, 1995.
6
We are in agreement with the district court that Ivy has
produced no evidence from which a reasonable person could believe
that Ivy could not have discovered its alleged causes of action
until July 7, 1994. Any claim of fraudulent concealment arising
out of the failure to develop infrastructure at Mhoon Landing
should have been discovered by the lack of progress by Parker and
Flowers in developing the area long before July 7, 1994. Ivy
states in its brief that following the purchase of the Mhoon
Landing property, various members of Ivy applied for a motel
franchise, rented a trailer in Tunica County, and established
business contacts in the Tunica area. These visits to Tunica
County provided ample opportunity for members of Ivy to visit the
Mhoon Landing site and to discover the lack of development.5
As to any claim of fraudulent concealment arising out of the
apparent alteration of the closing statement delivered by Mr. Link
to Ivy, we hold that it should have been discovered long before
July 7, 1994. In deposition, Glenda Clark stated that she realized
the document appeared to be altered and became suspicions as early
as November 1993. The members of Ivy were in Tunica County on
numerous occasions and could easily have reviewed the original
closing statement to see if their copy had been altered. Jeff
5
The members of Ivy assert that they made reasonable efforts
to discover Parker and Flowers’s misrepresentations by frequently
stopping by Parker’s office and inquiring about the status of Mhoon
Landing. Had the members of Ivy made the short journey from
Parker’s office to the site of the Mhoon Landing property, they
would have discovered that no development was in fact taking place.
7
Clark also admits in deposition that he noticed the inconsistencies
in the typeset on the closing statement well before July 7, 1994,
but failed to investigate the cause. Other red flags that should
have warned Ivy of potential trouble were Mr. Link’s insistence
that none of its members attend the closing, and Mr. Link’s request
that Loye Russell be removed from the group after expressing his
concerns about him. In sum, we are in agreement with the district
court that through reasonable diligent effort, Ivy should have
discovered these causes of action long before July 7, 1994.
As to Ivy’s claim that Parker and Flowers fraudulently
concealed their true intentions regarding the development of Mhoon
Landing, we hold that any statements made by Parker and Flowers
regarding future developments were merely promises of future
conduct and can only be the basis for a claim of fraudulent
misrepresentation in a narrow situation. The Mississippi Supreme
Court has made clear that in cases of fraud, based on a promise of
future conduct, the movant must show that the promise was made
“with [the] present intent not to perform.” Bank of Shaw v. Posey,
573 So. 2d 1360 (Miss. 1990). As such, to succeed on their claim of
fraudulent concealment regarding Parker and Flowers’s promise to
develop the infrastructure of Mhoon Landing, Ivy must show that
Parker and Flowers did not intend to develop Mhoon Landing at the
time the property was purchased. We are in agreement with the
district court that Ivy has failed to produce any evidence that
Parker and Flowers did not intend to develop Mhoon Landing at the
8
time the property was purchased. It was due to the change in the
statutory scheme regulating the permissible locations of casinos,
not the fraudulent intentions of Parker and Flowers, that led to
their failure to develop infrastructure at Mhoon Landing.
We are in full agreement with the district court that Ivy has
failed to meet its burden of proof and has failed to raise any
genuine issue of material fact for trial. The judgment of the
district court is
A F F I R M E D.
9