IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI NO. 2015-CA-00040-COA KENNETH D. MCDUFF, JR. APPELLANT

v. TERESA B. MCDUFF APPELLEE
DATE OF JUDGMENT: 07/02/2014 TRIAL JUDGE: HON. GEORGE W ARD COURT FROM W HICH APPEALED: W I LKINSON COUNTY CHANCERY COURT ATTORNEYS FOR APPELLANT: W

. BRADY KELLEMS JOSEPH PRESTON DURR ATTORNEY FOR APPELLEE: LISA JORDAN DALE NATURE OF THE CASE: CIVIL - DOMESTIC RELATIONS TRIAL COURT DISPOSITION: DENIED MOTION TO SET ASIDE PROPERTY SETTLEMENT AGREEMENT AND DIVORCE DECREE DISPOSITION: AFFIRMED: 11/1/2016 MOTION FOR REHEARING FILED: MANDATE ISSUED: EN BANC. WILSON, J., FOR THE COURT: ¶1. This appeal arises f rom the denial of a m otion f iled by Kenneth McDuf

f pursuant to Rules 59 and 60 of t he M ississippi Rules of Civil Procedure. K enneth m oved t o set aside his property settlem ent agreem ent ( PSA) with his ex-wif e, Teresa, and the divorce decree that approved a nd incorporated the PSA. Kenneth alleges that he entered into t he PSA i n reliance

on m isrepresentations convey ed to him by a m ediator during the parties’ divorce proceeding.
He claim s that h e is e ntitled to s et aside the P SA and divorce decree because of f raud,

m isrepresentation, or m istake. In the alternative, he argues that the chancellor erred bydeny ing his mo t i o n without allowing him to conduct discovery or subpoena the m ediator.

W e f ind that the chancellor did not err by deny ing Kenneth’s m otion and theref ore af f irm

. FACTS AND PROCEDURAL HISTORY ¶2. Kenneth McDuf

f an d T e r e sa McDuf

f owned a 380-acre tract of land in W ilkinson C o u nty that has b e en ref e rred to as the “Hill property

. ” The McDuf f s also owned an undivided twenty -f

ive acres in a nearby hunting property on F oster Lake. The Foster Lake property ’s co-owner, Dan Brown, owned an undivided 285 acres. Although Kenneth and
Brown were once f

riends, they had a f

a l l i n g o u t, and Brown f

iled a petition to partite the
Foster Lake property

. Apparently , Brown al so accused K enneth of threatening him or his f am il y o r e mp l o y ees with phy sical violence and with a d eadly w eapon, and Brown’s allegations resulted in crim inal charges against Kenneth. In March 2014, Brown o f f ered to settle the partition lawsuit b y buy ing the Hill property and the McDuf f s’ interest i n t he Foster Lake tract f

or $2,000,000. However, Kenneth did not accept Brown’s of f er. ¶3. W h ile the p a rtition lawsuit was pendi n g , T e r e s a f iled a com

plaint f or d ivorce f

rom Kenneth. In June 2014, Kenneth and Teresa participated in a m ediation, which resulted in

a PSA that the chancellor approved and incorporated into a divorce decree. Under the PSA, Kenneth agreed to pay Teresa a l um p sum pr o p erty settlem ent of $ 1,000,000, and Teresa agreed to relinquish any interest in the Hill p r o p e r t y , t he Foster Lake property , another property , and the m arital dom i cile (except that Teresa retained one-half of the oil, gas, and

m ineral interest in the m arital dom icile property ). ¶4. Kenneth’s attorney testif ied t h a t , d u r i n g the m ediation, the m ediator told Kenneth,

2“[ Teresa] is on the p hone w i t h [ B r o w n ] n ow. [ Brown] has of f ered to purchase the Hill property only f

or $2,000,000.” N either Kennet h nor his attorney c laim s that the m ediator specif ically stated t hat Brown would buy the Hill property f rom Kenneth f

or $ 2 ,000,000. Rather, they i n f

erred or assum e d t h a t K e n n eth could a ccept Brown’s of f er and sell the property to Brown f

or that am ount. In addition, neither Kenneth nor his attorney sought to
contact Brown or attem

pted to v erif

y the of f e r or its details bef

ore Kenneth signed the PSA and the chancellor entered the divorce decree. Nonetheless, Kenneth alleges that he agreed
to pay Teresa $1,000,000 and entered into the PSA in reliance on the m ediator’s statem ent regarding Brown’s of

f er—and his belief

that he could accept the of f er. ¶5. Af ter the divorce decree was entered, Kenneth attem pted to accept Brown’s of f er, but
Brown responded that no such of f er existed, a nd he declined to pay Kenneth $2,000,000 f or the Hill property . Kenneth then f iled a m otion to set aside the PSA and the divorce decree pursuant t o R

ules 59 and 60 of the Mississippi Rules of C ivil P rocedure. K enneth’s m otion alleged “m isrepresentation and m isconduct by Teresa” during the m ediation. ¶6. Brown subsequently testif i ed 1 that h e told Teresa that he would c onsider buy ing the Hill property f

rom her but n ot f

rom Kenneth; that he probably would pay her $2,000,000; and that he would buy the property o nly if he could arrange a section 1031 exchange. 2 Kenneth

1 Brown testif

ied at a hearing in the partition lawsuit.

2 “ Under 2 6 United S tates Code Service Section 1031, when property hel d f o r productive use in a trade or b usiness or f or investm ent is exchanged f or p roperty of like kind that is also to be held either f o r productive use in a trade or business or f or investm ent, the taxes or credits norm a lly associated with any gain or loss are def

erred.” Callicutt v. Prof’l Servs. of Potts Camp Inc. , 974 So. 2d 216, 217 (¶3) (Miss. 2007). 3and his a ttorney testif ied that the m ediator f

ailed t o d isclose to them

(a) t hat Brown would buy the Hill property f

or that price only f

rom Teresa and (b) that Brown’s of f er was contingent on his ability to arrang e a s e c t i o n 1031 exchange. Kenneth alleges that these

om issions caused him to believe—due to either m isrepresentation or m istake—that Brown would buy

the property

f rom him f or $2,000,000. ¶7. In connection with his m otion under Rules 5 9 a n d 6 0 , Kenneth served subpoenas duces t ecum on Brown and Teresa and requested the court’s perm ission t o depose Brown and
Teresa. Kenneth a l s o served a witness subpoena and a subpoena duces tecum on the

m ediator. Brown, Teresa, and the m ediator all f iled m otions to q

uash the subpoenas, which the chancellor granted. The chancellor also denied Kenneth’s requests to conduct d iscovery , although he noted that h e m ight revisit the i ssue af ter the hearing on Kenneth’s m otion under Rules 59 and 60. ¶8. At the h earing on Kenneth’s m otion to set aside the PSA a nd divorce decree, Kenneth and h i s a t torney both testif i ed regarding t he m e diator’s statem ents during the m ediation. Af ter the hearing, the chancellor denied the m otion. I n his a ccom pany i n g opinion, the chancellor f

ound, am ong other things, that Kenneth’s testim ony that h e relied on an of f er f rom Brown was “incredible.” The chancellor also f ound t hat K enneth could have verif ied the term s of

Brown’s of

f er during the m ediation but f ailed to do so. DISCUSSION ¶9. On appeal, Kenneth argues that the chancellor e rred b y d eny ing his m otion to set aside the PSA and divorce decree. I n the alternative, he argues that the ch a n c e l lor erred by

4deny ing the m o tion without allowing him to c o nduct discovery or subpoena the m ediator to

t e stif y . W e review a chancellor’s denial of a m otion u nder Rule 59 or Rule 60 u n d e r a n abuse-of

- discretion standard. Hanshaw v. Hanshaw , 5 5 So. 3d 143, 146 (¶8) (Miss. 2011); Stringfellow v. Stringfellow , 4 5 1 So. 2d 219, 2 21 (Miss. 1 984). The sam e standard of review applies to the chancellor’s rulings on m a tters r elating to discovery

. Blossom v. Blossom , 66 So. 3d 124, 126 (¶9) (Miss. 2011). ¶10. W e f

ind no abuse of discretion and a f f i rm the chancellor’s ruling because no am ount of d iscovery or additional testim ony would produce evidence t h a t w o u l d w a

r r a n t s etting aside the PSA and divorce decree. A p a rty seeking to set aside a divorce decree based on f raud or

m istake m

ust prove f

o ur things: (1) that the f

acts constituting the f

raud

. . . [ or] m i stake

. . . m ust h ave been the controlling f

actors in the ef

f ectuation of the o riginal decree, without which the decree would not have been m ade as it was m ade; (2) the f acts justif y ing the relief m u st be clearly a n d positively alleged as f a cts and m

ust be clearly and convincingly p r oved; (3) the f acts m ust not have been known t o the injured par t y at the tim e of the o riginal decree; and (4) the ignorance thereof at the tim e m ust not have been the resu l t o f t h e want of r easonable care and diligence. Rogers v. Rogers , 94 So. 3d 1 2 5 8 , 1264 (¶19) (Miss. C t

. App. 2 012) (quoting Manning v. Tanner , 594 So. 2d 1164, 1167 (Miss. 1992)); accord Jenkins v. Jenkins , 757 So. 2 d 339, 343 (¶8) (Miss. Ct. App. 2000) (quoting Guthrie v. Guthrie , 226 Miss. 190, 84 So. 2d 158, 161 (1955)); s ee also W

hitehead v. Johnson , 797 So. 2d 317, 325 (¶27) (Miss. Ct. App. 2 001) (“It is

. . . a basic tenet of the law of f raud that any reliance on an alleged f raudulent statem ent

m ust be reasonable or justif iable. The law as to reliance is the sam e f or a claim based on a negligent m isrepresentation.” (citations om itted)).

5¶11. Kenneth c a n n o t m eet this standard e ven if we accept as f act his testim ony that he entered into the PSA in relia n c e o n t h e m istaken belief that Brown would b uy the Hill property f rom him f

or $ 2,000,000. For even i f that is true, K enneth could have discovered that Brown’s of

f er was not open to him had he e x e r c i s e d “ r easonable care and diligence.” Rogers , 94 S o. 3d at 1264 (¶19). K enneth and Brown were engaged in litigation concerning

a separ a t e property , and their relationship was contentious, t o put it m ildly

. K enneth also knew that less than three m onths earlier Brown was willing to pay $2,000,000 f or t h e H i l l property only if Kenneth also gave u p h is interest i n the Foster Lake property

. Moreover, even setting aside the history between Brown and Kenneth, a real estate transaction of this signif icance alm ost alway s involves negotia t i o n over term s other than price. See
T r ansnational Ventures Inc. v. Derr Plantation Inc. , 1 87 So. 3d 185, 191-92 (¶¶25-27) (Miss

. Ct. App. 2016). ¶12. Under these circum stances, “reasonable care and diligence” would have included—at the very le a s t

— c o n f

irm ing with Brown that his reported of f er was open to K enneth and whether t he of

f er involved any other term s o r conditions. On appeal, Kenneth p rotests that it is u nreaso n a b l e t o s u g gest that he “should have suspended the m ediation” to “verif y the
accuracy ” of the m ediator’s report of Brown’s of f er. However, B r own was already talking

to Teresa on t

he p hone during t

he mediation

. I f B r o w n ’ s of f er was truly essential to Kenneth’s decis i o n t o e n t e r i nto the PSA, Kenneth s hould have at least asked to speak to Brown directly

. Having f a iled to do so, his ignorance of the lim i tations o f Brown’s of f er is not a basis f

or setting aside the PSA or divorce decree.

6¶13. In all likelihood, there was no m isrepresentation. The m ediator r eportedly s tated that

Brown had “of

f ered to purchase the Hill property o nly f or $2,000,000,” and the e v i d e nce indicates that Brown d i d m ake such an of f er to Teresa. Kenneth’s claim that he relied on a belief that Brown’s of

f e r w a s e qually open t o him is a lso dubious g iven that the m ediator

never stated that. It would a ppear tha t Kenneth relied on his own assum ptions about the of f er, not any

thing that the m e diator actuall y s aid. But even setting t hese issues aside, the chancellor correctly d e nied Kenneth’s m otion t o s et aside t he P SA a n d d i v o r c e decree because K enneth easily could have learned o f the nature and term s of Brown’s of f er had he exercised reasonable care and diligence. Theref ore, we af f irm

. ¶14. THE JUDGMENT O F THE WILKINSON COUNTY CHANCERY COURT IS A F FIRMED. ALL COSTS OF THIS A P PEAL ARE ASSESSED TO TH E APPELLANT. GRIFFIS, P.J., BARNES, CARLTON AND GRE E N L E E , J J., CONCUR. JAMES, J., CONCURS IN PART AND DISSENTS IN PART WITHOUT SEPARATE WRITTEN O P I N I O N. ISHEE, J., DISSENTS WITH SEPARATE WRITTEN OPINION, JOINED BY LEE, C.J., IRVING, P.J., FAIR AND JAMES, JJ. ISHEE, J., DISSENTING: ¶15. W i th rega r d t o t h e ma jority opinion, I r espectf

ully d issent. In 2014, Kenneth and
T e r e sa e ntered i nto m ediation regarding their divorce. An a greem ent was reached t ha t included a $1,000,000 p a y m ent f r om Kenneth to T eresa. Kenneth agreed to pay T eresa the

m oney based on the purchase of certain m a r i tal property b y a third-party buy er f or $2,000,000. The buy er’s of f e r w as convey ed by the m e d iator. The c h ancery court later entered an order r ef

lecting the parties’ agreem ent, including the $1,000,000 pay m ent f rom Kenneth to Teresa. Late r , t h e b u y er’s of f e r was rescinded. Kenneth then contested the

7chancery court’s order, arguing that his pay m ent to Teresa was contingent on the sale of the

m arital property that never occurred. Kenneth f urther asserted that the buy er’s of f er was not legitim ate and that the m ediator a nd Teresa com m i tted f raud and m isrepresentation. As such, Kenneth attem

pted to subpoena the m ediator t o testif y at a hearing bef

ore the chancery court regarding the alleged of

f er to purchase the m arital p roperty

. The chancery c ourt quashed the subpoena and eventually denied Kenneth’s requests to revisit the divorce o rder. Kenneth

now appeals. Finding error, I would reverse and rem and this case to the c hancery court f or f urther action consistent with the f indings of

this opinion. S TATEMENT OF FACTS ¶16. On June 17, 2014, Kenneth and Teresa entered into a m ediation regarding the division of their m arital property pursuant to their divorce p roceedings. W i lliam J. L utz served as the parties’ m ediator. Kenneth, Teresa, and their respective attorney s w e r e also present at the

m ediation. ¶17. Kenneth and Teresa owned several pieces of p rop e r t y , i n c l uding certain property known as “ the Hill property .” D uring the m ediation, Teresa represented that she had an of f er f rom a thir d

- p a r t y b u y er to p urchase t he Hill property f or $2,000,000. K e n neth’s attorney
t e s tif ied that Lutz inf

orm e d them that “[ Teresa] is on the phone with [ the buy er] now. H e has of f ered to purcha s e t h e H i l l property only f or $ 2,000,000.” Neither Kenneth nor his attorney verif ied the buy er’s of

f er. ¶18. Nonetheless, based on the buy er’s of f er, Kenneth agreed to sell the Hill property and
pay Teresa $1,000,000. Howeve r , t h e d a y af ter t he divorce was f

inalized, the buy er

8rescinded his o f f er. In t urn, Kenneth contested the judgm ent of divorce, arguing that he only agreed to pay

Teresa the $1,000,000 based on the sale of the Hill property even though the contingent sale was n o t included in the language o f the divorce order. Ken n e t h f u r t h er averred that Teresa, the buy er, and Lutz had induced him into agreeing to the pay m ent based on f raud and m i srepresentation. ¶19. In preparation f

or the hearing on the m atter bef ore the c h a n c e r y c o u r t , K e nneth requested the chancery court’s leave to conduct a d d i t ional lim ited discovery regarding the
statem ents of T eresa, the buy e r, and Lutz. The ch a n c e r y c o u r t denied Kenneth’s m otion. Kenneth t hen attem

pted to s ubpoena Teresa, th e b u y e r, and L u tz to t estif y regarding the alleged term s of the sale. The chancellor quashed all three subpoenas w ith l ittle explanation.
W h en the hearing concluded, the chancellor denied Kenneth’s m otion to alter o r am end the judgm ent of

divorce. Aggrieved, Kenneth now appeals. DISCUSSION ¶20. It is w ell settled t hat appellate court s a r e b ound by a lim i ted standard of review in dom estic-relations m atters. S ee, e.g., Fergu s o n v. Ferguson , 639 So. 2d 921, 929 (Miss. 1994). The Missi s s i ppi Suprem e Court has held that a chancellor’s f indings of f

act,
esp e c i a l l y i n dom estic-relations cases such as the instant case, “will generally not be overturned b y [ the appellate court] unless they a re m anif estly wrong.” F

ancher v
. Pell , 831 So. 2d 1 137, 1140 (¶15) (Miss. 2 0 02) (citing Nichols v
. T edder , 547 S o. 2d 766, 781 (Miss. 1989)). The ch a n c e l l o r m ust h ave been “m a nif

estly wrong, c learly e r

roneous, or an

erroneous legal standard [ m ust have b een] applied,” f or t h e f indings to be o verturned.

9Montgomery v. Montgomery , 759 So. 2d 1238, 1240 (¶5) (Miss. 2000).

¶21. In quashing the subpoenas, the chancellor provided l ittle explanation f o r the quashing of Teresa and the buy er’s subp o e n a s a n d determ ined that the conf identiality agreem ent contained in the m ediation agre e me n t , i n conjunction with applicable m ediation rules, prevented Lutz f

rom being subpoenaed. H owever, there was no hearing regarding the subpoenas, nor were t he parties given an opportunity to present evidence to the chancellor regarding their positions on why the subpoenas should or should not be quashed. Kenneth
asserts that be c ause h e i s arguing that the judgm e nt of d ivorce was procured by f raud or

m isrepresentation, the chancellor had a duty to hear and consider the argum ents o f the parties with r espect to t he s ubpoenas and the testim onies of Teresa, the buy er, and L utz in order to properly rule on the m atter. ¶22. W e recognize our lim ited standard of r e v i e w i n t h i s ma t t e r . However, we also acknowledge a chancellor’s obligation to make an inf orm e d d ecision p rior to excluding evidence that m ay be p e rtinent in determ ining w hether f raud o r m istake oc c u r red in the
procurem e nt of a judgm ent. Mississippi Rule of Evidence 1101(b)(1) notes that the Rules of E vidence do not apply to circum stances involving prelim i n a r y q u e s tions of f act. Specif ically , Rule 1101(b)(1) s t a t e s that evidentiary rules do n ot a pply to “the court’s determ ination, under R ule 104(a), on a prelim i nary question of f act governing adm issibility [ .]” Id

. In turn, Mississippi Rule of Evidence 1 04(a) provides: “ The court m ust decide any

prelim inary

question about whether a w itness i s qualif ied, a privilege exists, or evidence is adm issible.” The c om m ents to Rule 104(a) fu rther note: “ Of

tentim es prelim inary

10m atters w ill involve a d eterm ination of f acts.” As such, “[ w]hen the judge hears evidence

on these pr e l i m i n a ry q

uestions, he is not bound under R ule 104 to apply the [ R ]ules of [ E]vidence.” Lastly , Mississippi Rule of Mediation f or Civil Litigation VII.D. perm its the chancellor “to determ ine, i n c am era, whether the f acts and c i rcum stances and context of the

com m unications or m aterials sought to be disclosed warrant a protective order of the court or whether the com m

unications or m aterials are subject to disclosure.” ¶23. The r ecord indicates that Kenneth o nly requested subpoenas f or Teresa, the buy er, and
Lutz af ter the c hancery court denie d h i s mo t ion to conduct l im ited discovery into the
statem ents m a de by the potential witnesses during the m ediation. By deny ing Kennet h ’ s request to allow discovery on this narrow issue and f urther quashing the subpoenas without

a hearing o r other i nf

orm ative outlet, the chancery court was without enough inf orm ation on the m atter to m ake a proper ruling. I f ind, at a m inim

um , the c hancellor should have allowed f or a h earing on the issue of the subpoenas and perm itted an in cam era review of the witnesses’ testim onies. In doing so, the chancellor w ould have been af f orded the opportunity
to h ear a ll relative inf

orm ation and thereaf

ter m ake a com

p rehensive ruling on w hether or not the witnesses should have b een subpoenaed. As such, I would reverse and r em and the chancery court’s judgm ent f

or f urther action consistent with the f indings of

this opinion. LEE, C.J., IRVING, P.J., FAIR AND JAMES, JJ., JOIN THIS OPINION.

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