IN THE SUPREME COURT OF MISSISSIPPI
N O. 2013-CT-00554-SCT ERNEST LANE, III, AND TRUSTMARK NATIONAL BANK, CO-EXECUTORS OF THE ESTATE OF JAMES OLDRUM SMITH, JR.

v. RONALD D. LAMPKIN
ON WRIT OF CERTIORARI DATE OF JUDGMENT: 03/19/2013 TRIAL JUDGE: HON. GEORGE W ARD TRIAL COURT ATTORNEYS: HARRIS H. BARNES, III DAVID W

. MOCKBEE COURT FROM W HICH APPEALED: W A RREN COUNTY CHANCERY COURT ATTORNEYS FOR APPELLANTS: HARRIS H. BARNES, III JAMES W ILLIAM JANOUSH ATTORNEYS FOR APPELLEE: DAVID W

. MOCKBEE D. W ESLEY MOCKBEE COLEMAN M. MOCKBEE LANDMAN TELLER, JR. NATURE OF THE CASE: CIVIL - OTHER DISPOSITION: REVERSED AND REMANDED - 10/08/2015 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC. KITCHENS, JUSTICE, FOR THE COURT: ¶1. Lim estone Products, Inc. (Lime s t o n e), jointly owned by Ronald (Ronnie) Lam pkin and Jam es Oldrum (J.O.) Sm ith, J r., operated with a line of credit personally guaranteed by
Lam pkin a n d Sm ith. Lim estone was in the business of selling r ock, predom inantly to
Lam pkin’s com

p a n y , L a m

p kin Construction. Following Sm ith’s death and h is estate’ssubsequent ref usal to guarantee Lim estone’s l ine o f credit, Lam pkin f orm ed Delta Stone, a

new corporation which operated on the sam e property , m ade u se of the sam e f acilities, and sold rock t o t h e s am e c lients to whom Lim estone had sold. Lam pkin sought a declaratory j u d g m ent against the Sm ith estate’s executors that he w as violating no f iduciary duties in continuing to s ell L i m estone’s inventory

. The executors counterclaim ed, seeking l ost prof its and attorney s’ f

ees. The chancellor bif

urcated the trial and determ ined, in the liability stage, that L a mp k i n had breached his f iduciary duty t o Lim e stone by u surping a corporate

o p p o r t u n i ty

. In the dam ages phase of the trial, the chancellor heard expert testim ony , assigned an award o f dam ages to the Sm ith est a t e , a n d denied the executors’ request f or attorney s’ f

ees, expert witness f

ees, a nd punitive dam ages. The executors a p pealed, and the

case was assigned to the Court of Appeals, w hich af f irm ed. Finding that the chancellor erred in his calculation of

dam ages, we now reverse and rem and.

FACTS 1
In 1 995, Lam

pkin and S m i th f

orm ed Lim estone, which they operated on l and they jointly owned in W arren C ou n t y . L am pkin and Sm ith each owned a one-half interest in the c orporation, which bought and sold r ocks. Lam pkin also owned L am

pkin Construction, which becam e one of Lim estone’s b iggest custom ers. For ten y ears, Lim estone operated on a line o f credit personally guaranteed by both Lam pkin and S m i th. The line o f c redit was set to expi r e i n S e ptem ber 2006. In August 2 006, Sm ith died, a n d h i s stock in the corporation and his interest in the r eal property transf erred to the Estate. Prior to the expiration of Lim estone’s line o f credit, Lam pkin secured an extension until Dece mb e r 8, 2006, to provide the Estate with tim e to determ ine w hether it w ould g uarantee the loan. Between Septem ber 2006 and Decem

ber 2006, the parties discussed renewing the l ine of credit. However, the Estate f ailed to provide a g uarantee

1 In p art, th e f

acts are tak e n verb a tim f

ro m th e o p in io n o f

th e C o u rt o f

A p p eals. 2bef

ore the deadline

. L am

pkin then f

orm ed a new corporation, Delta Stone, which b e g a n operating in January 2007. Delta Stone perf orm ed the sam e f unctions as Lim e stone, a nd through his new com pany , Lam

pkin com pleted Lim estone’s contracts and satisf ied its debt obligations.
Lam pkin f iled a lawsuit against the Executors in W a rren C ounty Circuit Court. Lam pkin asked the c ircuit court to f ind the f ollowing: (1) that Lam

pkin had the right to independently i nvest in and operate a rock-supply business; (2) that he w a s not in violation of his f iduciary d

uties as a director and of f icer o f Lim estone; (3) that h e p o s sessed the authority as an of f icer of Lim estone to continue t o sell the corporation’s existing i n ventory , collect accounts receivable, and apply the m onies received t o th e c o rp oration’s debt; a nd (4) that he should receive c om pensation f

or his actions and should be p aid interest on any m onetary advances m a d e on the corporation’s behalf

. The Executors f iled a counterclaim against Lam pkin f o r present and f

utur e p r o f

its the corporation lost due to Lampkin’s actions and f o r attorney s’ f

e es. Lane, one of the co-executors, also f iled a m otion to transf

er the m atter to W arren County Chancery Court. The c ircuit court judge entered an order f inding the m atter to be proper f or a declaratory judgm ent. Further fi nding that the chancery court possessed proper jurisdiction o v er the subject m atte r o f t h e declaratory -judgm ent action, the circuit court judge granted the m otion to transf e r the m atter to chancery court. In an order entered by the W arren C ounty Chancery C ourt, all the chancellors recused them s elves f

rom the case, and the Mississipp i S u prem e Court appointed a special judge to preside over the proceedings. Several of Sm ith’s ben e f iciaries f iled a m otion to intervene in the lawsuit, which the specially appointed judge granted.
Lam pkin f iled a m otion f

or separate trials on the i s s u e s o f l iability and dam ages. He also asked the chancellor to stay d iscovery on dam ages pending the outcom e on the trial as to liability

. The c h ancellor granted Lam p kin’s m otion and bif

urcated the trial. T he chancellor held a hearing on the issue of liability i n Novem

ber 2009. The m ain issue b ef o re the chancery cour t w as whether Lam

pkin breached his f

iduciary duty to Lim estone by usurping a corporate opportunity wh e n he s tarted Delta Stone. In determ ining whether Lam pkin breached his f

iduciary d uty to Lim estone, the chancellor considered the f ollowing: (1) whether the business o p p o r t unity was “reasonably r elated to the existing or prospective business a ctivities of the corporatio n ” ; a n d (2) whether the corporation h a d the f inancial ability to seize the opportunity

. See Aqua-Culture Tech., Ltd. v. Holly , 6 77 S o. 2d 171, 1 83 (Miss. 1996) (Mississippi courts apply a two-part t est t o d eterm ine whether a party h as

3established a prim a f acie c ase of conf

lict o f interest a rising f

rom a business opportunity

in question being a corporate opportunity ).
In his o r d e r , the chancellor noted L a m pkin’s concession that the business ventures and activities o f Delta Stone and Lim estone wer e t h e s am e. The chancellor f

urther note d that Delta Stone o perated on the s am e property as Lim estone, used the sam e f acilities and equipm ent as Lim estone, and sold rock to the sam e c ustom ers as Lim estone. I n determ i ning w h e ther Lim estone had the f inancial ability to seize the corporate opportun i t y , the chancellor noted that “[ t]here is no dispute am ongst the parties that the bank would not renew the line of credit without the perso n a l g uarantees of both the Estate and Lam pkin.” The chancellor continued:
From a review o f the docum entary e vidence, and f rom listening to the testim ony of the parties and their experts, the [ c]ourt is not convinced that Lim estone could f unction wit h o u t the need f or the l ine of credit. However, the [ c]ourt is also n ot convinced that the Estate was given am ple inf orm ation or t im e t o d e c i de whether [ it] wanted to renew the line of credit.
I n r eaching a d eterm ination a s to L a m pkin’s liability , the chancello r considered the events that occurred between Sm ith’s death i n August 2006 and the Decemb e r 2006 deadline f or renewing the line of credit. W ithin his discussion of these events, the chancellor provided a sum m ary of the correspondenc e exchanged by the parties. Af ter reviewing the evidence, the chancellor f

ound that L am

pkin f ailed to tim e ly p rovide f

inancial inf

orm ation to the Estate and to give the Estate am ple tim e to r eview L im estone’s corporate records. As noted i n the chancellor’s order, the Estate requested this inf orm ation to decide whether to provide a guarantee f or L im estone’s line of credit, and without the requested inf orm a t ion, the Estate was unable to m ake an inf orm ed decision prior to the line of credit’s expiration. The chancellor stated that, if the line of credit was crucial to operat ing Lime s t o n e , then Lam

pkin, who was aware of the upcom ing deadline, possessed a f

i duciary duty to Lim estone to cooperate with the Estate to m eet t he deadline. The chancellor f o und that Lam

pkin’s f ailure to tim e ly provide the necessary f

inancial i nf

orm ation to the Estate prevented him f rom prevailing in his argum ent that the Estate’s f ailure to renew the l ine of credit relieved him of any f urther f iduciary duty to L im estone. According to the chancellor, “[ t]he Estate should have been provided m ore tim e t o make the determ ination [ of whether to guarantee the line of credit], even if that m eant allowing the line to

4m ature a nd letting the line sit f or a f e w mo r e weeks or m onths while Lim estone’s docum ents were inspected.”
A l t h o u gh Lim estone’s balance sheets showed the corporation to be solve n t , t h e chancellor noted that the corporation apparently lacked “a substantial am ount of equity with which to continue on with the b usiness.” The chancellor f ound that the line of credit had been Li mestone’s prim ary source of f unds with which to purchase inventory f o r the past ten y ears. He theref ore ag r e e d w ith Lam pkin that, without the guarantee d l i n e of c r edit, Lim estone c ould not continue to operate. The chancellor f ound that Lam

p kin w a s a n of

f icer and director of Lim e stone a nd thus ow e d a f i d u c iary duty to the corporation. By f orm ing D elta Ston e , L a m pkin breached his f

iduciary duty to Lim estone. In addition, the chancellor f ound that L am

pkin’s f a ilure to tim ely p r o vide the E state with the requested f i nancial inf

o rm a t ion hindered Lim estone’s fi n a n c i a l ability to continue i ts business operations. A s a result, the chancellor granted the Executors’ m o tion to d i sm iss and denied Lam pkin’s requ e s t for declaratory relief

. Following the chancellor’s ruling that Lam pkin breached his f

iduciary d uty to Lim estone by starting Delta Stone and usurping a corporate o p p o r t unity , the parties presented evidence as to the dam age that resulted f r om Lam p kin’s breach of duty

. Both parties hired an expert to t estif y as to the valuation of Lim estone

. L a mpkin hired Brent Saunders, and the Executors hired Jam es Koerber. The chancellor accepted both experts as certif ied public accountants and experts in the f

ield of business valuation.
Lane v. Lam

pkin , 2014 W L 4548870, **2-4 (Miss. Ct. App. Sept. 16, 2014) ¶2. Koerber, expert f

or S m i th’s estate, testif

ied at the hearing on dam a g es that Lam pkin’s construction com

pany , Lam

pkin Construction, purchased rock f rom Lim estone and that
Lam pkin’s f ailure tim ely to pay his bills to Lim estone resulte d i n a g r owing line of credit. This growing line of c r e d i t prevented Lim e stone’s f ulf ilm e nt of its own o bligations and,

t h e reby rem aining a viable com pany . Koerber’s e xpert report indicated that betwee n 2 0 0 0 and 2007, Lim estone’s average net incom e was $20,914.00. Koerber opined that , in total, 649,203 tons o f rock w ere d iverted f rom Lim estone between 2 003 and 2011. This unreported

5rock was, beginning in 2 007, diverted to Delta Stone: “ y o u’ve got a l l of this unreported rock

that went through say Delta [ S]tone and then som e that should have been attribut a b l e to Lim estone.” Based on the unreported rock, Koerber testif ied that Lim estone h ad incurred lost-prof i t dam a ges of $ 1 , 0 9 5 , 281. Additionally , Koerber calculated that the lost-prof it dam ages f

rom 2011 through 2012 had been $270,804.00, which he b ased on “the a verage of 2007, 2008, 2009, and 2010’s lost prof its.” Koerber e stim ated that lost prof its am ounted to $1,366,085, which he rounded down to $1,366,000. He then added $169,129 to that f igure

to account f

or loss of assets, bringing the total loss to $1,535,129. The c h ancellor indicated in h is valuation order that “the Sm ith estate’s portion, based on K o erber’s f i gures, would be $767,564.50.” ¶3. Saunders, Lam

pkin’s expert, testif

i ed that the rock was not “unreported,” as Koerber had stated, but that Lam pkin had “m oved the tons f r om Lim estone to Delta Stone.” According t o Saunders, the tons of rock “m ay

be unreported in Lim estone but we’ve g ot a accounting and analy sis” which shows that “ they j ust m oved o ver to D elta Stone because [ Lam pkin] k ept on r

unning the thing just like he was doing bef ore.” Instead of

conducting

a l ost-prof

its analy sis, S aunders conducted a valuation of the “net book value” of L im estone. As o f 2006, the y ear Sm ith died, Saunders opined that the net book value w as $165,000. The
2007 valuation, according t o Saunders, w as $156,000. According t o the c h ancellor, “[ a]f ter deductions, Saunders added the value of the c orporation’s rem a ining assets” a n d “arrived at

a total n et book value of $125,546.32.” Saunders s tated that $62,773.16 was o w e d t o t h e Sm ith estate.

6¶4. The chancellor then conducted an independent assessm ent of the dam ages, which he

chronicled in a Judgm ent on Valuation of Busin e s s . H e a c k n o w l e d g e d Saunders’s calculation of net book value, including d e d u c t ions, a t $125,546.32. H e opined that “in m aking an
assessment of lost prof

its f rom January 1, 2008[ ,] f orward the m ore f

air assessm ent of dam ages would be that of historical lost prof its.” He then took into consideration Koerber’s calculation of average y e arly net incom e o f $20,914, m ultiplied t h at f

igure by f

ive, representing the y ears 2008 through 2012, and con c l u d e d t h a t the “historical lost prof its”

am ounted to $104,570. Theref ore, “[ u]tilizing the net book value provided by S aunders, in

a d d i t i o n to the historical costs, the Court f inds that the total sum of dam ages due t o Lim estone Products totals $230,116.32.” T he c hancellor ordered La mp k i n to pay $230,116. 3 2 “ as a result o f his usurpation of corporate o pportunity , ” o r o therwise $115,058.16, in the event the p arties reached an agreem ent to dissolve the corporation. The chanc e l l o r d e nied the executors’ request f or attorney s’ f

ees, expert-witness f

e e s, and punitive dam ages. ¶5. Aggrieved, the executors appealed th e c h a n c e l l o r ’ s j u d gm ent, and the case was assigned to the Court of Appeals. The Court of A ppeals af f irm ed, f inding that the chancellor had not abused his discretion in the m ethods he em ploy ed to assess t h e d a ma ges owed to Sm ith’s estate, in determ i ning that Lam pkin’s expert h ad accounted f or the unreported rock, in f ailing to award dam ages based on unpaid rent due t o Lim estone, and in f ailing to award

costs t o Sm ith’s estate. Af ter f iling the requisite m otion f or rehearing in the Court of Appeal s, the executors tim ely f iled the present petition f or a writ o f certiorari , which this

7Court granted on April 22, 2015. T he executors of Sm ith’s estate assert that the chancellor

em ploy e d the wrong analy sis in a ssessing dam ag e s , t h a t the chancellor f ailed to take into

account the unreported rock in a ssessing dam ages, that the chancellor f ailed to award dam ages based on unpaid r e nt due to Lim estone, and that the chancellor f ailed to award attorney s’ f

ees, e xpert-witness f

ees, and punitive d am ages to the Sm ith Estate. W e granted
certioriari to consider the f o llowing issues:
I. W hether the chancellor erred in the accounting m ethods he em ploy ed to calculate dam ages. II. Wh ether the chancellor f ailed to take into a c count Lim estone’ s unreported rock inventory in his calculation of

loss of f uture prof

its.
III. W hether the chancellor f ailed t o award dam ages b ased o n unpaid rent due to Lim estone.

STANDARD OF REVIEW ¶6. “W e ‘alway s review a c hancellor’s f indings of f

act, but

. . . will not disturb the f actual
f indings of a c h a n cellor when supported by substantial evidence unless [ we] can say with reasonable certainty that the chancellor abused his discretion, was m anif estly wrong, clearly

erroneous, or applied an erroneo u s l egal standard.’” Biglane v. Under the Hill Corp. , 949
So. 2d 9, 13-14 (Miss. 2007) (quoting Cum m ings v . Benderm an , 681 So. 2 d 97, 100 (Miss. 1996)). This Court em

ploy s “a de novo standard when analyz ing questions of law.” Id. ¶7. In the context o f a dam ages assessm ent, which is a f inding of f

act, “the appellate court

m ust r e v i e w t h e d am ages award by looking to the ‘f acts of each case.’” Greater Canton
Ford M e r c u r y , Inc. v. Lane , 997 So. 2d 198, 206 (Miss. 2008) (quoting T exaco, Inc. v. Addison , 6 1 3 S o . 2 d 1193, 1202 (Miss. 1993)). W e have held “that ‘[ d]am a g e awards are

8only overturned when the trial judge has abused his discretion or ‘in exceptional cases where

such awards are so gross as to be contrary to right reason.’” Id.
DISCUSSION
I. Whether the chancell or erred in the accounting m ethods he em ploy ed to calculate dam ages. ¶8. The executors c laim that the chanc e l l o r “ a b u s e d h i s d i s c r e t i on in conducting a business valuation, as o pposed t o a lost prof its analy sis” a n d that his “purported lost prof its analy sis is f

lawed.” ¶9. The c hancellor, rely ing on this Court’s decision in Lovett v. E . L . Garner , 511 So. 2d 1346, 1353 (Miss. 1987), held that “in m aking an assessm ent o f lost prof i ts f rom January 1, 2008, f orward[ ,] the m ore f

air assessm ent of dam ages would be that of historical lost net prof its.” The chancellor rec o g n i z e d t hat this Court has a cknowledged the propriety of this dam age assessm ent m ethod “ in cases of breach o f c o n t ract.” The chancellor m ultiplied Koerber’s estim ate of Lim e stone’s average net i ncom e o f $20,914 by f ive, representing the
f ive y ears between 2008 an d t h e d a t e o f trial i n 2012, to arrive at his c alculation of Lim estone’s “historical lost net prof its” of $104,570. ¶10. This Court has stated that “[ t]here a re no guidelines set in stone s pecif y i ng the degree of certainty that we require of parties in proving loss o f f uture prof its” and that “the degree of proof required usually depends on the particular f acts of the case.” Lovett , 511 So. 2d at 1353. “One guideline f

requently r e c o g n i z e d by this Court is a party ’s proof of its past prof its.” Id. But i n that case, Lovett owned a convenience store and G arner sold petroleum products to Lovett. I

d. a t 1347. The two m en h ad entered i nto a contract under which “Garner

9would pay to Lovett one-half of the n et pro f its on all gasoline Lovett sold to the public, provided that Lovett would be guaranteed a m inim um prof it o f f o ur cents per gallon sold.”
Id. a t 1347-48. Because “Garner was not necessarily entitled t o one-half of the net prof its per

m onth” but “ Garner was entitled to what was lef t over af ter Lovett received h is f

our cent per
ga l l o n guarantee, regardless of whether that c onstituted o ne-half of the net prof its or not,” this Court observed that Garner’s p r o j e c tions of f

uture prof

i ts on p ast prof

its “were

m isleading and resulted in inaccurate am ounts f or f uture prof

its.” Id. at 1353. ¶11. According to the executors of Sm ith’s e state, the lost-prof i ts analy sis c o n d u cted by the chancellor was f

lawed: “[ p]ast prof

its would, in n o wa y , be indicative of f uture lost prof its , a s t h e y f

ail to consider any post-breach action by Lam pkin, such as the f

act that
Lam pkin g reatly i ncreased the price of rock

. . . .” Koerber testif ied that rock prices in 2003 were substantially

dif f erent f rom those in 2009: [ T]he p rices in 2003 – well, we will j us t p i c k o n e. Product num b er 200 it shows the cost was $4.00 a ton and it sold f or $11.24. If y ou take t h a t on across y ou w ill s ee af

ter Mr. L a mp k i n started [ Delta Stone] he greatly increased the prices to as h igh as $ 36.21 in 2009 and $34.52 in 2010. And the price did not increase that m uch, the cost to buy i t. It w as $4.00 a ton in 2003. It was $6.50 in 2010. This Court has held that: Although recovery o f p r o f i t s m ay be awarded where one who breaches a f iduciary obligation m akes prof its in excess of the loss cause[ d] by the breach,

. . . one who breaches a f

iduciary obligation is responsible f o r the entire loss suf f ered by the corporation as a result of the breach. This liability is not lim i ted to the recovery

of prof i ts or to “out-of

-pocket” loss. Aqua-Culture T

echs., Ltd. v. H

olly , 677 So. 2 d 171, 183-84 (Miss. 1 996) (quoting Norte & Co. v. Huffines , 288 F. Supp. 855, 864 (S.D.N.Y. 1968)).

1 0¶12. The chancellor’s a ssessm ent of “historical lost net prof its” in his d am ages calculation d i d not take into account Lam pkin’s post-breach rock-price increase. And while the chancellor considered “ historical lost net p rof its” o n the b asis of L o v ett , which u ltim ately concluded that u se o f past p r of its t o determ ine f

u ture prof its was m i sleading, the chancellor of f ered no explanation f

or why h is assessm ent of lost prof its took into account only the y ears 2008 through 2012, especially in light o f the f act that D elta Stone began operating in January 2007. ¶13. To the “historical lost net p rof its,” the chancellor added “the net book value provided by Saunders” ($125,546.32) and arri v e d at a “total sum of dam ages due to Lim estone,” which he concluded was $230,116.32. Judge Grif f is observed in his dissent in the Court of Appeals that “‘[ n]et book value’ is sim ply an accounting term that is not directly related to the actual value o f the corporation’s a ssets. I t should n ot be consider e d a s p a r t of the calculation of dam ages f

or a recovery based on the claim s o f br e a c h o f f iduciary duty or usurpation of c o rp o r a t e opportunity .” Lane , 2014 W L 4548870, at *15 (Grif f is, J., dissenting). Judge Grif

f is f urther observed that “[ t]here is sim p ly no legal authority f

or the chancellor to consider a

business-valuation analy sis f o r a claim of b reach o f f

iduciary duty or usurpation of

corporate opportunity .” I d. W e agree. ¶14. In the case of Aqua-Culture Tec h n o l o g i e s v . H o l l y , t h i s C o u r t c o n s idered a shareholder’s derivative suit in which c orporate of f i cers and directors were alleged to have diverted “expertise, w ork product and good w ill” of the corporation into a new corporation,

a “ duplicate enterprise.” H olly , 677 So. 2d at 1 82. T his Court af f irm e d the chancellor’ s

1 1award of dam a ges against the of f ending of f i cers and directors, citing the rule that “one who breaches a f

iduciary obligation i s responsible f or the entire loss suffered by the corporation as a result of

the breach.” I

d. at 184 (em

phasis added). ¶15. Business valuation analy ses, on the other hand, h ave been utilized f or the purp o s e s of determ ining a p arty ’s interest in a b usiness f or purposes of divorce and em inent dom ain.
See G utierrez v. Gutierrez , 1 53 So. 3d 703 (Miss. 2014) (divorce); Singley v . Singley , 846
So. 2d 1004 (Miss. 2002) ( divorce); Dedeaux Utility Co., I n c. v. Gulfport , 63 So. 3d 514 (Miss. 2 011) (em inent dom ain). Likewise, valuations have been used in cases of shareholder dissension to c orporate m erger. See Richton Bank & Trust v. Bowen , 798 S o . 2d 1268 (Miss. 2001); C

al-Maine Foods, Inc. v

. D u v ic , 264 S o. 2d 383 (Miss. 1972); M iss. Code Ann. § 79-4-13.02 (Rev. 2013). ¶16. In the present case, the chancellor observed that: [ T]he experts are just splitting hairs with getting bogged down in an a r gum ent over the term inology used to describe the valuation o f Lim estone Pr o d u c ts. W h ether y ou call it asset based or net book value or lost prof its, the C ourt is m erely concerned with how and when to value this business.
But Judge G rif

f is c orrectly opined that, “[ t]he e xperts were n ot ‘ j u s t s p l i tting hairs’ or ‘getting bogged down’; rather, they were testif y ing about detailed and im portant accounting

term inology .” Lane , 2014 W L 4548870, at * 15 (Grif f is, J., dissenting). A d ditionally , the chancellor’s attem

pt “to v alue the business” is not the appropriate standard. I n c ases in which

a f inding o f breach of f

iduciary duty and usurpation of corporate opportunity has been m ade,

we h ave held that the of f ending party is obligated “f or the entire loss suf

f ered by the corporation as a result of

the breach.” Holly , 677 So. 2d at 184.

1 2¶17. The chancellor’s calculation of “historical net book value” was m isleading because

it did not account f

or a rock price increase af ter Lam pkin’s b reach, and also b ecause it was, without explanation, based only o n the y ears 2008 through 2012. The chancellor’s business valuation ignored our precedent which instructed him to calculate the “entire loss suf f ered by the corporation” a s a result of Lam pkin’s breach of f

i duciary d u t y and u surpation of corporate opportunity

. ¶18. Because the chancellor’s erroneous dam ages assessm e nt in the present case am ounted to an abuse of

discretion, we reverse and rem and.
II. Wheth e r t he chancellor failed t o take into account L im estone’s unreported rock inventory in his calculation of lo s s of future profits. ¶19. The Sm ith estate’s executors argue that the chancellor’s f ailure to take into account Lim estone’s unreported rock inventory am o unted to an abuse of discretion. ¶20. At the hearing on dam ages, Koerber opined that “unreported rock” was, b eginning in 2007, diverted to D elta Stone: “y ou’ve got all of this unreported r ock that went through say Delta [ S]tone and then som e that should have been attributable to L im es t o n e . ” S a unders reported that 154,000 tons of rock “ m ay b e unreported in Li m e s t o n e but we’ve got a accounting and analy sis” which shows that “ they j ust m oved o ver to D elta Stone because [ Lam pkin] kept on running the thing just like he was doing b ef o re.” The chancellor agreed with Saunders and f

ound that “Saunders and Lam pkin were able to readily

account f or the

a l l e g e d l y u

nr e p o r t e d r o c k.” Yet, d e spite Saunders’s agreem ent w ith K oe r b e r t h a t L i m e s t o n e ’ s

1 3inventory had b e en diverted by Lam pkin to Delta Stone, the c hancellor declined to “take into consideration any

purported ‘unreported product.’” ¶21. A c cording to Holly , the party guilty of a breach o f f i duciary duty o r us u rp a t i o n o f corporate opportunity is r esponsible f or “the entire loss suffered by the corporation as a result of the breach.” Holly , 677 So. 2d at 184 (em phasis added). W e hold that such “entire loss” includes corporate inventory diverted f rom L im estone to Delta Stone. It is clear that the rock was not accounted f

or, as the chancellor held, but a lso that it had been m o ved by Lam pkin
f rom Lim estone to Delta S tone. This transf er of corporate a ssets constituted a breach of
Lam pkin’s f iduciary obligation to Lim estone f or which he should be held accountable. ¶22. Finding that the chancellor abused h i s d i s c r e t i o n in f ailing to take into a ccount the unreported rock in his calculation of lost f uture prof

its, we reverse and rem and.
III. Whether t he chancellor failed to aw ard dam a ges based o n unpaid rent due to Lim estone. ¶23. In 1999, Lam

pkin and Sm i th entered into a lease agreem ent with Lim estone wherein they , as l essors, l eased property t o Lim estone upon which to conduct its corporate operations. The l ease obligated Lim e stone to pay to Lam p kin and Sm ith $4,000 per m onth, and the term of the lease autom atically

was “extended f

or t erm s of

one y ear each unless at least 90 day s prior to the expiration o f the then-current lease t erm w ritten notice is g iven by either party
term inating the l ease.” If rent “shall rem ain unpaid f o r 30 day s af

ter sam e shall have becom e due and pay able and without dem and theref or,” Lam pkin and Sm ith possessed the right “to
repossess itself of said prem ises” a nd the lease “shall c ease, determ ine and be utterly void.”
E r n e s t Lane, one of the executors of the Sm ith estate, testif ied that “in April 2007[ ,] M r .
1 4Lam

pkin as President of Lim estone Products arbitrarily cancelled the lease and stopped
pay m ent.” ¶24. The chancellor f

ound that the lease had not been term inated a n d that “ it r e mains in
f orce and ef

f ect between the parties.” Further, the chancellor ruled that, because “Lam pkin and Sm ith are equal s hareholders in L i me s t one Products,” both “would be equally responsible f

or lease p ay

m ents” a nd, theref

ore “equally responsible f o r any lease pay

m ents.” Ultim a tely , the c hancellor f o und that “this creates a wash.” The Court o f Appeals af f irm ed solely on the b asis of the abuse-of -discretion standard of review. Lane , 2014 W L 4548870, at *21. ¶25. On writ o f certioriari , the executors of Sm ith’s estate argue that the chancellor abused h i s d i s c r e tion in f

ailing to award dam ages b ased on the unpaid rent d ue to Lim eston e pursuant to the lease. T h ey posit that the chancellor’s f ailure to take into consideration unpaid r ent in h i s dam ages a ward ultim ately r esulted in piercing the corpor a t e v e i l of Lim estone: “absent any c onduct b y the Estate that would warrant piercing the corporate veil

to its detrim ent[ ,] the Chancellor abused his discretion

. . . not to award dam ages based on a valid lease that rem ained in ef f ect . . . .” ¶26. It i s true, as the executors claim , that “[ i ] t i s w e l l s e t t l e d M i s sissippi l aw that a corporation is a separate, distinct entity f rom its stockholders,” D urham v. Univ. of Miss. , 966 So. 2 d 832, 8 3 5 (Miss. Ct. App. 2007) (citing Ill. Cent. R. Co. v. Miss. Cotton Seed
Prods. Co. , 166 Miss. 579, 589, 148 So. 371 (1933)). Further, “a s hareholder o f a corporation is n ot personally l iable f

or the acts or debts of the c o rp o r a t ion except that he m ay becom e

1 5personally liable by reason of his own acts or conduct.” Miss. C ode Ann

. § 79-4-6.22 (b)

(Rev. 2013)

. “Mississippi c ase l aw generally f avors m aintaining corporate entities and avoiding attem

pts to pierce the corporate veil.” Canadian Nat’l Ry. Co. v. Waltm a n , 94 So. 3d 1111, 1115 (Miss. 2012) (quoting Buchanan v. Am eristar C asino V icksburg, Inc. , 957 So. 2d 969, 977 (Miss. 2007)). ¶27. C o n t r a r y t o t h e e x e c u t o r s ’ a rgum ent, however, Lam pkin’s conduct m a y h a v e warranted piercing the corporate veil. The chancellor was correct in f inding tha t Lam

pkin and Sm i th, as equal shareholders in Lim estone, were equally responsible f o r lease pay

m ents and, as l e s s o r s to L im estone, e qually and individually e ntitled to one-half of the lease proceeds p ursuant t o the lease agreem ent. However, the chancellor f a i led t o take into account that Lam pkin’s new com

pany , Delta Stone, had been operating on the property sub ject to Lim estone’s lease without h aving paid any rent. It cannot be said, theref ore, that the situation is “a wash.” ¶28. On rem and, the chancellor should reconsider whether the Sm ith e state is entitled to lease proceeds f

rom 2007, the tim e of

Lam p kin’s breach, onward.
CONCLUSION ¶29. The chancellor’s dam ages assessm ent i n the present case was arbitrary and f ailed to

account f o r rock which Lam

pkin had diverted f

rom L im estone to Delta S tone. W e theref ore

reverse the j udgm e nt of the C ourt of Appeals. Finding that the dam ages a w ard am ounted to

an abuse of discretion, we reverse the judgm ent of the Chancery Court of W arren County and

rem and the case f

or proceedings consistent with this opinion.

1 6¶30. REVERSED AND REMANDED.

WALLER, C.J., D ICKINSON, P.J . , L A MAR, C HANDLER, KING AND COLEMAN, J J., CONCUR. RANDOLPH, P.J., CONCUR S I N P A RT AND IN RESULT WITHOUT SEPARATE WRITTEN OPINION. PIERCE, J ., NOT PARTICPATING.

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