E-Filed Document Aug 30 2017 17:21:30 2016-CA-01448-COA Pages: 11 IN THE SUPREME COURT OF MISSISSIPPI CASE NO. 2016-CA-01448 BROWN LAKELAND PROPERTIES and CHARLES H. BROWN Appellants v. RENASANT BANK Appellee REPLY BRIEF OF APPELLANTS BROWN LAKELAND PROPERTIES ORAL ARGUMENT NOT REQUESTED ON APPEAL FROM THE CIRCUIT COURT OF RANKIN COUNTY, MISSISSIPPI Submitted by Counsel for the Appellants, Brown Lakeland Properties and Charles H. Brown: Pamela L. Hancock (MSB# 10676) Jeffrey B. McGuire (MSB# 104622) HANCOCK LAW FIRM, PLLC Post Office Box 1078 Ridgeland, Mississippi 39158 Telephone: (601) 853-2223 Facsimile: (601) 853-9693 Email: pamela@hancocklawgroup.com
TABLE OF CONTENTS TABLE OF CONTENTS...2 TABLE OF AUTHORITIES...3 ARGUMENT...4 I. Renasant Bank is not entitled to summary judgment against Charles H. Brown individually...4 II. III. There are genuine issues of material fact that require the denial of summary judgment...6 Renasant s argument regarding notice does not entitle it to summary judgment...9 CONCLUSION...10 CERTIFICATE OF SERVICE...11-2-
TABLE OF AUTHORITIES Cases Allied Steel v. Cooper, 607 So.2d 118 (Miss. 1992)...5, 8 Eller Media Co. v. Mississippi Transportation Commission, 882 So.2d 198 (Miss. 2004)...9 Gulf South Pipeline Company, LP v. Pitre, 35 So.3d 494 (Miss. 2010)...8 Gutierrez v. Gutierrez, 153 So.3d 703 (Miss. 2014)...9 Hartman v. McInnis, 996 So.2d 704 (Miss. 2007)...7 Heigle v. Heigle, 771 So.2d 341 (Miss. 2000)...9 Karpinsky v. American National Ins. Co., 109 So.3d 84, 88 (Miss. 2013)...7 Lakeland Hillsdale Estates, Inc. v. Galloway, 473 So.2d 461 (Miss. 1985)...9 Mississippi State Highway Commission v. Franklin County Timber Co., 488 So.2d 782 (Miss. 1986)...8 Mississippi Valley Title Insurance Co. v. Horne Construction Co., Inc., 372 So.2d 1270 (Miss. 1979)...9 Myles v. Cox, 217 So.2d 31 (Miss. 1968)...6, 8 Newsom v. Newsom, 557 So.2d 511 (Miss. 1990)...5, 8 Rebelwood, Ltd. v. Hinds County, 544 So.2d 1356 (Miss. 1989)...8 Weyburn v. Watkins, 90 Miss. 728, 44 So. 145 (1907)...5 Publications Black s Law Dictionary 414 (6 th ed. 1991)...7-3-
ARGUMENT I. Renasant Bank is not entitled to summary judgment against Charles H. Brown individually. Renasant argues that it is entitled to summary judgment against Charles H. Brown, individually, as a result of the guaranty he executed with Renasant. Renasant seemingly concedes that issues may and do exist with regard to the grant of summary judgment in their favor against Brown Lakeland Properties, and as such, have shifted their focus to the individual debtor. Importantly, the Appellants have never been heard to argue that a debt was never owed to Renasant, or that the debt is a fiction or invalid. The argument by Appellants has always been, and remains, that a genuine disagreement - and inherently, a genuine issue of material fact - exists between the parties as to what the amount owed pursuant to the original contract currently is. Summary judgment is wholly inappropriate, even in light of a personal unlimited guaranty, when the party against which the repayment is sought, can and has advanced argument and evidence supporting his theory that the amount for which the lender seeks repayment is incorrect at best, and a question to be determined by an unbiased jury, at minimum. That is to say, that even if a jury ultimately determines that the guaranty executed by Charles H. Brown in favor of Renasant Bank obligates him to repay Renasant Bank individually, that the amount of the same is a question for the same jury. Renasant summarily asserts that the defense of fairness of sales price is only available to Brown Lakeland Properties as the actual borrower, and not to Charles H. Brown individually, as the guarantor, ostensibly based on the language of the subject guaranty, which importantly does not waive fairness. Even still, this position ignores the obvious issue, however, that an individual guarantor is only liable to cover the indemnified borrower up to the actual amount owed to the -4-
lender. The argument, as presented by Renasant, would apply to an issue of non-payment, not one of proof, which Appellants do not necessarily contend. Essentially, a continuing guaranty, as described by Renasant, is a mechanism whereby it is extremely difficult, if not impossible, for an individual guarantor to escape repayment, but the amount to be repaid still must be shown and proven. The converse would be absurd. Banks could simply refuse to allow guarantors the ability to alleviate any of the burden when a loan got behind, and then call the note without any consideration as to whether the amount owed is what is actually owed. The practice is predatory. Again, the present matter creates issues for a jury that are simply not appropriate for summary judgment, and require the impartial consideration of a struck jury. Renasant has failed to prove as a matter of law that it is entitled to the amount it alleges, in that its conduct surrounding the subject foreclosure sales goes beyond a consideration of fairness of price, but to one of fairness of dealing, as was discussed in Appellants original brief. Appellants have submitted a purchase offer and affidavit that show that a bona fide purchaser was prepared to pay Ten Dollars ($10.00) per square foot (or $435,600.00 per acre) for the vacant Rankin County lot, and that those same purchasers were interested in purchasing a larger section of land from the same parcel. That purchaser was Veracity, LLC, to whom the whole tract was later sold by Renasant at a lower price, representing merely twenty-seven percent (27%) of what the value of the tract would have been had Appellants been allowed to sell to Veracity, LLC according to the terms of the original purchase agreement and subsequent request to purchase more land. [The Mississippi Supreme Court has] long followed the rule of thumb of about forty percent of fair market value first articulated in Weyburn v. Watkins, 90 Miss. 728, 44 So. 145 (1907). Allied Steel v. Cooper, 607 So.2d 118 (Miss. 1992) (citing Newsom v. Newsom, 557 So.2d 511 (Miss. 1990) and -5-
Myles v. Cox, 217 So.2d 31 (Miss. 1968)). By example, a price of thirty-six percent (36%) of fair market value at a foreclosure sale has been found to be inadequate. Id. Renasant contends in its brief that a purchase offer is not a reliable or acceptable means of valuation for land, ostensibly because the same is done at arms length, and one of the parties can back out at any moment. The problem with this assertion is that, in this instance, Appellants had no authority to compel the sale to go through, and were at the mercy of Renasant to accept. Renasant, as it were, of course, squashed the deal, and later sold the same parcel and more to the same buyers at a lower price. Had the original sale gone through, the amount owed under the note would have not only been mitigated, but perhaps extinguished. That being the case, Renasant would be correct in its assertion that a purchase offer is a speculative method of valuation, but the fact that their overt actions led to the cancellation of the purchase offer herein that provided the valuation that they seek to squash creates a fact question for a jury, and not a legal question. It is really rather simple. Renasant asserts that the purchase offer can not be offered to prove value. Even so, it can be offered to prove to a jury that Renasant did not properly mitigate, or that it actively interfered with a business relationship between Appellants and a third-party. For these reasons, the grant of summary judgment should be reversed. II. There are genuine issues of material fact that require the denial of summary judgment. Renasant contends that Appellants have failed to establish that any fact issues exist, for want of hard proof of the same. The Mississippi Supreme Court recently clarified the summary-judgment standard, explaining that [t]he movant bears the burden of persuading the trial judge that: (1) no genuine issue of material fact exists, and (2) on the basis of the facts established, he is entitled to -6-
judgment as a matter of law. Karpinsky v. American National Ins. Co., 109 So.3d 84, 88 (Miss. 2013). The Supreme Court further stated that [t]he movant bears the burden of production, if, at trial, he would bear the burden of proof on the issue raised. In other words, the movant only bears the burden of production where [he] would bear the burden of proof at trial. Id. at 88 89. Appellants are not required to try their case at the summary judgment level. Id. It is perfectly reasonable for Appellants to assign error, and to preserve the ultimate evidence for the same for trial, not in a furtive or lazy manner, as Appellees would suggest, but just as a matter of efficiency to preserve resources while Appellants await the result of the instant appeal. Appellants are not to be punished for preserving resources to obtain alternative appraisals and the like for trial, should the same prove necessary. That is to say, Appellants have clearly pointed out myriad issues with not only the price paid by Renasant for the parcels, but in the methods used by Renasant to obtain the purchase prices that they deemed fair. As was stated in Appellants original brief and herein, a purchaser was willing and able to purchase the Rankin County property at an amount higher than what was ultimately paid to Renasant for the property, as evidenced by the purchase agreement, request to buy the whole parcel, and eventual purchase of the parcel from Renasant. The Appellee must establish that its bids at the foreclosure sale[s] represented the fair market value of the property. Hartman v. McInnis, 996 So.2d 704 (Miss. 2007). Fair market value is defined as [t]he amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Black s Law Dictionary 414 (6 th ed. 1991). The determination of -7-
fair market value is a question for the trier of fact, and this Court will respect the trial court s findings of fact when they are supported by reasonable evidence in the record and are not manifestly wrong. Allied Steel v. Cooper, So.2d 118 (Miss. 1992) (citing Newsom v. Newsom, 557 So.2d 511 (Miss. 1990) and Myles v. Cox, 217 So.2d 31 (Miss. 1968)). To not allow Appellants the opportunity to present the argument regarding Veracity LLC s purchase offer to a jury is patently unfair. Additionally, as was also stated in Appellants original brief, the methods used to appraise the subject properties were deficient as a matter of law, most notably in the instance whereby the parcel containing the bowling alley was not compared to any bowling alleys for comparable values, and the actual appraisal report stated that the value for the parcel was based on the assumption that the property would not be used as a bowling alley in the future, even though the parcel and attached structure still operate as a bowling alley to this day. As to determining fair market value of real property, the Supreme Court has stated that Three standards are accepted in determining fair market value for real property: (1) the cost approach, (2) the income-capitalization approach, and (3) the market-data or comparative sales approach. Gulf South Pipeline Company, LP v. Pitre,35 So.3d 494 (Miss. 2010) (citing Rebelwood, Ltd. v. Hinds County, 544 So.2d 1356 (Miss 1989) and Mississippi State Highway Commission v. Franklin County Timber Co., 488 So.2d 782 (Miss. 1986). These approaches do not, considered singly, establish value. Each rather is one approach to value, with the appraiser s estimate of value being, in the end, an opinion which is the product of a reconciliation of the indications yielded by the three approaches. Id. Certainly, when appraising an owner s interest in commercial property, all three methods of valuation could be relevant and useful and, at a minimum, should be -8-
concerned. Eller Media Co. v. Mississippi Transportation Commission, 882 So.2d 198 (Miss. 2004). Once more, the issue of valuation again provides an issue to be presented to a jury, as there is simply no reasonable scenario whereby it can be said that no disagreement over the material fact of the value of these parcels exists. This is really a small representation of the whole, as there is disagreement between the parties as to essentially all matters regarding the foreclosures, ones that constitute more than the sour grapes -type scenario that Renasant would imply in its brief. Regardless, the Mississippi Supreme Court has held that Issues of fact sufficient to require denial of a motion for summary judgment obviously are present where one party swears to one version of the matter in issue and another says the opposite. Heigle v. Heigle, 771 So.2d 341 (Miss. 2000). That alone creates an issue, if not issues, for a jury, and if the issues before the jury are those of value, then summary judgment is inappropriate as to both Appellants, as Charles H. Brown, as guarantor, is only liable for the amount that can be proven against the borrower, Brown Lakeland Properties. For these reasons, the grant of summary judgment should be reversed. III. Renasant s argument regarding notice does not entitle it to summary judgment. Renasant asserts that Appellants waived their right to demand or notice of the foreclosure, and essentially admits in its brief that it provided no notice to Appellants prior to the foreclosure proceedings. The record does not contain evidence that demand has ever been made for the deficiency on the second mortgage, which is required under Mississippi law before a mortgagee can collect a post-foreclosure deficiency. Gutierrez v. Gutierrez, 153 So.3d 703 (Miss. 2014) (citing Lakeland Hillsdale Estates, Inc. v. Galloway, 473 So.2d 461 (Miss. 1985) and Mississippi Valley Title -9-
Insurance Co. v. Horne Construction Co., Inc., 372 So.2d 1270 (Miss. 1979)). To this point, Appellants would state that Renasant s arguments are purely legal in nature and for that reason, Appellee should have been precluded from obtaining a grant of summary judgment. The issue of whether or not notice was provided is essentially uncontested, and Appellants would concede that as such, this particular issue is a legal matter. Fact issues more than sufficient to survive summary judgment have been presented and advanced herein and in Appellants original brief. For these reasons, the grant of summary judgment should be reversed. CONCLUSION For the foregoing reasons, the Court should reverse and remand the judgment of the Circuit Court of Rankin County, Mississippi, and tax all costs of this appeal to the Appellees. Respectfully submitted, BY: /s/ Pamela L. Hancock Pamela L. Hancock (MSB# 10676) Attorney for Appellants Of Counsel: Pamela L. Hancock (MSB# 10676) Jeffrey B. McGuire (MSB# 104622) HANCOCK LAW FIRM, PLLC Post Office Box 1078 Ridgeland, Mississippi 39158 Telephone: (601) 853-2223 Facsimile: (601) 853-9693 -10-
CERTIFICATE OF SERVICE I, Pamela L. Hancock, do hereby certify that I have this day electronically filed the foregoing Brief of the Appellants with the Clerk of the Court using the MEC system, which issued electronic notification of such filing to: Scott R. Hendrix, Esq. R. Brannon Kahlstorf, Esq. MITCHELL, MCNUTT & SAMS, P.A. Post Office Box 7120 Tupelo, Mississippi 38802 Further, I hereby certify that I have also this day mailed a hard copy to the following persons not notified by the MEC system by United States mail, first class postage prepaid: Honorable Steve S. Ratcliff, III Circuit Court Judge, District 20 Post Office Box 1626 Canton, Mississippi 39046 SO CERTIFIED, this the 30 th day of August, 2017. BY: /s/ Pamela L. Hancock Pamela L. Hancock (MSB# 10676) Attorney for Appellants -11-