I N T H E SUPR EM E C O UR T O F M I SS I SS I PPI NO. 2 0 1 3 - CA- 0 1 1 5 9 - S CT ED W I NV ESTM EN TS, LLC
v. M ICH EL LE BA RN

ET T, SPE CT

RU M W I RELESS, LLC, M W

B H OLD I

NGS, LLC AN

D L4, LLC
D A T E O F JU D G M E N T : 03/ 22/ 2013 T R IA L JU D G E : H O N . W IL L IA M E . C H A P M A N , III COURT F ROM W HI CH APP EAL ED: M ADI S ON COU NTY CI RCUI T COURT A TTO RN EY S FO R A PPELL A N T: J EFFR EY D . RA W LI N G S J O N J . MI MS A T T O R N E Y S F O R A P P E L L E E S : D O R S E Y R . C A R S O N , J R . J ULI E C. SKI PP ER CH RI STOPHER D . M EYER NAT UR E OF T HE CA S E : CI VI L - T OR T S
- OT HE R T HAN P E RS ONAL I NJ UR Y & P RO P E RT Y DAMAGE D I SPO SI T I O N : A FFIRM E D - 10/ 23/ 2014 M OT I ON F OR RE HE AR I NG F I L E D: M ANDAT E I S S UE D:

B E F O R E R A N D O L P H , P . J. , L A M A R A N D K I T C H E N S, JJ. LAM AR, J UST I CE, FOR TH E COU RT: ¶1 . E D W I nv e s tment s , LLC ( “ ED W ” ) f i l e d s ui tagai ns tM i chel l e B arnet tand t hr ee c o rp o ra te d e fe n d a n ts, cla im in g tha t it s ju d g m e n t d e b to r h a d fra u d u len tly tra n sfe rre d a ss e ts t o them. T he tr i al j udge gr ant ed D ef endant s ’ m ot i on t o di s m i s s , a nd ED W a ppeal s . Fi ndi ng n o e rro r, w e a ffirm th e ju d g m e n t o f th e M a d iso n C o u n ty C irc u it C o u rt.

### ED W p revio uslyhadsuedbo th T echtro nics an d its P resident, Kev in B arn ett, in 1 

### Mad isonCo unty C ircuit Co urt. B ut Kev in filed for C hap ter 7 b ankrup tcy p rotectio n while thesuit wa s pe nding, bef ore ED W was abl e to obtain a judgm ent

agains t him pers onal ly. EDW fil ed an adve rs ar

y proc ee ding in Kevin’s bankr uptc y, and theparti es ultim ately enteredan ag reed ju dg ment inthe amo unt of $ 70 ,00 0. Kev in an d M ichelle B arnett w ill be referredto b yth eir first names to avo id 2 

### conf usi on. Acc ording to t

he Mi ss is sippi Se cret ar y of St at e website , Tec htronic s wa s 3 

### admini stratively dis solved on De ce mber 7, 2012. Mic hel leis thepurporte d owner of Spe ctrumwirel es s, MWB, and L4. 4 2

F ACT S AND P ROCE DURAL HI S TORY ¶2. E D W Investm ents , L L C , o btai ned a j ud gm ent agai nstT echtr on i cs, Inc. (Tech troni cs) i n 2007. O n M ay 16, 2011, E D W s ued M i chel l e B arnett( “M i chel l e”) , the w i f e of 1 T echtr on i cs’ presi den t , K evi n B arnett( “K evi n”) ; S pectrum w i rel ess, L L C ; M W B H oldi ng s, 2 L L C ; and L4, L L C , cl ai m i ng that : ( 1) thes e l i m i t ed l i abi l i ty compani es “ar e al t erego ent i t i es cr eat ed s ol el y t o conce al the as s et s and i ncome of T echtr oni cs , I nc. f

r om E D W ” and that 3 “M i chel l e B arnettknow i ngl y part i ci pat ed i n thes e ef f or t s ”; ( 2) “[ t ] he as s et s and i ncome of

4 T e c h tro n ics , In c . w e re fra u d u len tly c o n v e y e d to M ich e lle B a rn e tt an d th e sh e ll en tit ies to
a v o id p a y in g E D W ” ; an d (3 ) “ [t] h e a c tio n s o f th e [D e fe n d a n ts] w e re g ro ss ly n e g lig e n t,
w i l l f ul and/ ori nt ent i onal and cons t i tut e vi ol at i on of comm on l aw dut i es underM i s s i s s i ppi la w .” ¶3. D ef

endant s f i l ed a m ot i on t o di s m i s s , ar gui ng, among other thi ngs , that the s t atut e of l i m i t at i ons had run on al l of E D W ’ s c l ai m s unde rthe U ni f orm Fr audul entT r ans f

erA ct , and t hatE D W di d n ots uf

f i c i e nt l y p l e a d i t s c omm on - l a w - f r a ud c l a i m as r e qu i r e d b y Rul e 9( b)

### Burch v. Il li noisCent . R. R. Co. , 13 6 S o. 3 d 1 06 3, 1 06 4-6 5 (M iss. 21 04 ). 5 

### Lo tt v. Sa ulters , 133 So. 3d 794, 798 (Mi ss . 2014) (quoting Scag gsv . GP CH - GP , 6 

### Inc . , 931 So. 2d 1274, 1275 ( Mis s. 2006)) . 3 o f th e M iss iss ip p i R u les o f C iv il P ro c e d u re . T h e trial c o u rt g ra n ted D e fe n d a n ts’ m o tio n to dis m i ss, and E D W t i m el y ap peals , rai si ng three i ssues: I . T he ci r cui tcourterr oneous l y f ou nd thatthi s act i on i s barr ed by app l i cable l i m i t at i on peri od s; I I . E D W has pl ed f act s suff i ci entt o ent i t l e ED W t o r ecove ry under al t ernat i ve theor i es of

r ecove ry; and I I I . E D W has pl ed i t s cl ai m s bas ed on f r aud w i th s uf

f i ci entpart i cul ar i ty. W e a ffirm th e ju d g m e n t o f th e M a d iso n C o u n ty C irc u it C o u rt. S TANDA RD O F REVI EW ¶4. T hi s C our templ oys a de novo stan d ard o f re v iew w h e n c o n sid e ri n g a tri al co u rt ’s gr antof a mot i on t o di s m i s s . “I n de ci di ng w hethert o gr anta mot i on t o di s m i s s , a l l of the 5 al l egat i ons i n the pl ai nt i f f’ s compl ai ntm us tbe t aken a s true, and the mot i on s houl d be gr ant ed onl y w her e i tappea r s beyond doubtthatthe pl ai nt i f f w i l l be unabl e t o pr ove any s et
o f f a c ts in s u p p o rto f h is c la im .” 6 L A W A N D A N A L Y S IS I . The s t at ut e of

l i m i t at i ons has r un on ED W ’ s s t at ut or y f r audul e nt - t rans f

er cl aim s. ¶ 5 . A lth o u g h E D W d id n o t sp e c ifica lly p lea d th e U n ifo rm F ra u d u len t T ra n sfe r A c t in its
co m p lai n t, it s p ri m ary co n tention is th at “[t ] h e a ssets an d inco m e o f T ec h tr o n ics, Inc . w ere

### Weno t ethat De f e nd ant s argu eth at

EDW ’ s so l ere m e dyari s e s und e r th eAc t , but

we 7 

### ar e n o t p ersuad ed. T he lan gu age o f the A ct itself states that: “ U nle s s d is plac e d by the p ro v isio n s o

f th is a rtic le , the pr i nci pl es o f l aw an d equi ty, i ncl udi ng the l aw m er chantand the law rel at i ng to p ri n ci pal and ag ent, est op pel, l aches, fr aud , m i sr epresent at i on , du res s, c o e rc io n , m ista k e , ins o lv e n c y o r o th e r v a lid a tin g o r in v a lid a tin g c a u se , su p p lem e n t it s pr ovi s i ons . ” 

### Mis s. Code Ann. § 15-3- 117 (Re v. 2012) (e mpha si s a dded) . M iss. C o d e A n n . § 1 5 -3-1 0 7 (1) (R ev . 2 0 1 2 ). 8 

### EDWargues that it “first disco veredthe fraud andtransfer whenK ev inB arn ett 9 

### te stif ie d on May 28, 2008 . . . . ” EDW di d not f il e its com

plaint unti l May 16, 2011. 4 f r audul ent l

y conv eye d

t o M i chel l e B arnettand the s hel l ent i t i es t o avoi d payi ng E D W . ” T he 7 A ctpr ovi des thatany “tr ans f erm ade . . . by a debt ori s f r audul entas t o a cr edi t or. . . i f the d e b to r m a d e th e tra n s fe r . . . w ith a c tu a l in te n t to h in d e r, d e la y o r d e f r a u d a n y c r e d it o r.” 8 F u rt h e r, t h e A c t p ro v id e s t h a t “ [a ] c a u s e o f a c tio n w ith re s p e c t to a fr a u d u le n t tr a n s fe r . . . u n d er this arti cle i s ex ti n g u ishe d un less ac ti o n is bro u g h t: (a) [u] n d er S ec ti o n 1 5 -3-1 0 7 (1),
w i thi n t hr ee ( 3) year s af t ert he tr ans f

erw as m ade . . . or, i f

l at er , w i thi n one ( 1) yearaf t erthe tr ans f er. . . w as orcoul d r eas onabl y have be en di s cover ed by the cl ai m ant ” ¶ 6 . B o th th e th re e -y e a r a n d th e o n e -y e a r tim e p e rio d s e la p s e d b e fo re E D W filed its compl ai nt . I n i t s compl ai nt , E D W suggest s thatthe al l eged f r audul enttr ans f

er s occurr ed sim u lt an eo u sly w ith the fo rm ati o n o f th e thre e c o rpo rate D efe n d an ts, m o re tha n three y ea rs bef or e i tfi l ed i t s com pl ai nt , and t hati tknew of the al l eged f

r audul enttr ans f

er s on M ay 28, 2 0 0 8 , m o re tha n o n e y ea r be fore itfi led its co m p lai n t. T h e re fo re, E D W ’s st atuto ry 9 fr a u d u le n t- tr a n s fe r c la im s a re tim e -b a rr e d .

### Mis s. Code Ann. § 15-3- 117 (e mpha si s a dded) . 10 In i t s com plai nt, E D W all eges n um erous fact s that supp orta con t i nu i ty-of ent erpr i se 11 cl ai m buti nexpl i cabl y fai l ed t o pl ead i t , pl eadi ng i ns t ead: 

### (1) alter e go; ( 2) f ra udulent conve yanc e, and ( 3) gross , wi ll fuland/or intention al negl igenceand vi olati on of c omm on law duties. Gray v. Edgewat

er Landing, Inc

. , 541 So. 2d 1044, 1047 ( Mis s. 1989). 12 5 ¶ 7 . EDW r e l i e s o n S e c t i o n 1 5 - 3
- 1 1 7 o f th e Ac tt o a r g u e th a ti t s f r a u d u l e n t - tr a n s f

e r c l a i ms ar e s ubj ectt o M i s s i s s i ppi ’ s gener al thr ee- years t atut e of l i m i t at i on and i t s acc om panyi ng dis cov ery rule. B ut Sect i on 15 -3- 11 7 st at es: U n les s d isp la c e d

b y th e p ro v is io n s o

f th is a rtic le , the pr i nci pl es of l aw and e q u ity , inc lu d in g th e la w m e rc h a n t an d th e law re latin g to p rin c ip a l an d a g e n t, es t oppel , l ache s , f

r aud, m i s r epres ent at i on, dur es s , coer ci on, m i s t ake, in so lv e n c y o r o th e r v a lid a tin g o r in v a lid a tin g c a u se , su p p lem e n t it s provis i on s. 10 A s di s cus s ed above , the A cthas i t s ow n st atut e- of
- l i m i t at i on pr ovi s i on, Sect i on 15- 3- 115. S o th e A c t cle a rly d isp lac e s M iss iss ip p i’s g e n e ra l sta tu te o f lim itatio n w ith re g a rd to fr aud ulent -transf

er cl ai m s. I I . E D W cannot prevai l on i t s al t ernat e t heori es of rec overy. ¶ 8 . E D W a lso a v e rs th a t D e fe n d a n ts a re a “ c o n tin u a tio n ” o f T e c h tro n ics . E D W p re se n ts i t s cont i nuat i on ar gum entas tw o “al t ernat i ve theor i es of r ecove ry”: al t erego and c ont i nui tyo f-e n terp rise . B u t E D W fa iled to p lea d a c o n tin u ity -o f-e n terp rise c laim in it s c o m p lain t, 11
a n d “ a lter e g o ” is n o t a s u b sta n tiv e c laim b u t m e re ly a p ro c e d u ra l ar g u m e n t th a t, i f
su cc essfu l, all o w s a p lai n ti ff t o p ierce th e c o rpo rate v eil an d re c o v e r f rom a c o rpo rati o n ’s
s har ehol der s . A l t er - ego l i abi l i ty can be ext ended onl y t o a corpor at i on’ s s har ehol der s , and

12

### Id. 13 

### Mis s. R. Civ. P. 9(b) . 14 

### Brabham v

. Brabham , 483 So. 2d 341, 342 ( Mis s. 1986). 15 

### See Brabham , 483 So. 2d at 342. 16 6 i ti s u n d i s p u t e d th a tno n e of t h e De f e n d a n t s wa s a s h a r e h o l d e ro f Te c h tr o n i c s . I n s u m,

13 E D W s i m pl y cannotpur s ue a j udgm entagai ns tt hese D efenda nt s vi a an a l t er - ego theory. T h is c la im is w ith o u t m e ri t. I I I . E D W di d not pl ead i t s com m on- l aw - f raud cl ai m w i t h suf

f i ci ent part i cul ari t y. ¶9. Fi nal l y, E D W ar gues thati tpl eaded a co m m on - l aw - f r aud cl ai m . R ul e 9( b) of the M i s s i s s i ppi R ul es of

C i vi l Pr ocedur e r equi r es that : “I n al l averm ent s of f r aud orm i s t ake, the
c irc u m sta n c e s c o n stitu tin g fra u d o r m ista k e sh a ll b e sta ted w ith p a rticu lar ity .” “ F ra u d w ill 14 notbe i nf

err ed orpr es um ed and may notbe char ged i n ge ner al t erm s . T he ci r cumst ance s of the al l eged f

r aud suc h as the t i m e, pl ace and cont ent s of any f al s e r epr es ent at i ons orconduct
m u s t b e s ta te d .” 15 ¶1 0. E D W fa i l s t o provi de an y s pe c i f i c i nf ormat i on r e ga r di ng the al l eged f r audul ent tra n sfe rs a n d ins tea d as k s th is C o u rt t o rem a n d the ca se “s o tha t [i t] c a n c o n tin u e its e ffo rts t o col l ecton i t s J udgm entby c onduct i ng di s covery t o de t erm i ne the dat es and f ul l natur e and ext entof the tr ans f

er s . ” I n f act , E D W admi t t ed bef

or e the tr i al courtthati t“does notknow
w hatw as tr ans f

err ed, w hen i tw as tr ans f err ed orhow i tw as tr ans f err ed. O nl y thats om ethi ng
m ay have been tr an sferred . ” A s su ch , E D W ’s fraud claim s d o n o t c o m p ly w ith R u le 9’s pleadi ng requi rem ents . 167 CO NC L US I ON ¶11. A l though E D W m ay cont i nue i t s eff or t s t o col l ect i t s j udgm ent agai ns tT echtr oni cs via any o th er a vail able avenu e, w e fi nd that this eff ortt o o btai n judgm ents againstthese D ef endant s cannotbe mai nt ai ned f orthe r eas ons s t at ed above . W e af f i rm the j udgm entof th e M a d iso n C o u n ty C irc u it C o u rt. ¶ 1 2 . AF F I RM ED . W A LL ER , C . J. , D I C K I N SO N A N D R A N D O LP H , P. JJ . , K I TC H EN S, CHANDL ER , P I ER CE , KI NG AND COL EM AN, J J . , CONCUR.