Opinion ID: 1619783
Heading Depth: 2
Heading Rank: 1

Heading: The Contract for Services.

Text: ¶ 18. Moses and the Estate of Kemp seek the enforcement of the contract between the parties because they wish to gain the financial benefits from the sale of the Florida property. The property was appraised in 2002 at roughly $798,000, and if sold at that amount Moses, the Estate of Kemp, and Brian Bailey would each receive $266,000. First we must determine if the contract is enforceable at this late date.
¶ 19. The Baileys urge that the contract entered into with Kemp and Moses is invalid for a number of reasons, among them breach of fiduciary duty, duress, fraudulent concealment, and lack of adequate consideration. The chancellor found no flaws in the contract and upheld it in its entirety. ¶ 20. Indeed, the terms of the contract are laid out clearly and at length. The Bailey family received exactly what was promised under the contract: the satisfaction of Janet Bailey Lapp's loan, plus 8% interest, the avoidance of bankruptcy, and hundreds of thousands of dollars in proceeds after all transactions were completed. The evidence demonstrated that the debt against the properties was roughly $1,405,587, and that the efforts of Moses and Kemp resulted in proceeds of $1,978,180, or a net result of $572,593. [5] ¶ 21. It is axiomatic that estoppel forbids one from both gaining a benefit under a contract and then avoiding the obligations of that same contract. A party cannot claim benefits under a transaction or instrument and at the same time repudiate its obligations. Wood Naval Stores Export Assn. v. Gulf Naval Stores Co., 220 Miss. 652, 664, 71 So.2d 425, 430 (1954). This doctrine, termed quasi-estoppel, precludes a party from asserting, to another's disadvantage, a right inconsistent with a position [it has] previously taken, and applies when it would be unconscionable to allow a person to maintain a position inconsistent with one to which he acquiesced, or from which he accepted a benefit. Bott v. J.F. Shea Co., Inc., 299 F.3d 508, 512 (5th Cir.2002). This is exactly the situation at hand; the Baileys cannot profit under this contract and also seek to have it declared invalid where their obligations under the contract are concerned. [6] ¶ 22. Estoppel also works against the sudden concerns about the amount of fees that Kemp and Moses received. The nature of the fee split was laid out explicitly in the contract and the previous MOU, and the contract expressly stated at great length and detail that [i]t is understood and it has been discussed that the fees to Andrew T. Moses, Jr. and William G. Kemp may be substantial when finally paid. However, it is further understood and agreed between the parties that, under the magnitude of the circumstances in which they have worked and are continuing to work. . . . said fee arrangements . . . are considered by all parties to be perfectly reasonable under the circumstances and exigencies of the situation. Janet Bailey Lapp even testified at trial that she did not read the contract, although Kemp had read portions of it to her. However, [u]nder Mississippi law . . . parties to a contract have an inherent duty to read the terms of a contract prior to signing; that is, a party may neither neglect to become familiar with the terms and conditions and then later complain of lack of knowledge, nor avoid a written contract merely because he or she failed to read it or have someone else read and explain it. MS Credit Center, Inc. v. Horton, 926 So.2d 167, 177 (Miss.2006). The Baileys cannot now complain of the fee arrangement which they entered into freely and benefited from. [7] ¶ 23. Further, to invalidate a contract on grounds of economic duress, the complaining party must establish: (1) that the dominant party threatened to do something which he had no legal right to do; and (2) that the wrongful threat overrode the volition of the victim and caused him to enter an agreement against his free will. Kelso v. McGowan, 604 So.2d 726, 732 (Miss.1992). The trial court found no evidence of such conduct surrounding the formation of the contract, and as noted above, all parties signed over a series of weeks in the presence of a notary public. ¶ 24. Lastly, the contract should be upheld as a matter of equity. The parties, all educated persons, knowingly entered into a highly-detailed and specific contract. To avoid the obligations it created would now mean a windfall for Bailey, despite the contract's express intention to endure until its terms were completed. [8] ¶ 25. Accordingly, the chancellor was correct in finding the contract to be valid.
¶ 26. The Baileys asserted a host of claims against the Estate of Moses and Kemp, who plead both the running of the statute of limitations and laches. The chancellor found that the general three-year statute of limitations applied and that laches barred any equitable claim. This statute of limitation, which has been applied to actions upon contracts, requires that one must commence an action within three years of its accrual. Miss.Code Ann. § 15-1-49 (Rev.2003). Laches can only apply when a claim is barred by the statute of limitations. Miss. Dept. of Human Servs. v. Molden, 644 So.2d 1230, 1232 (Miss.1994) (Laches is never applicable when a claim has not been barred by the statute of limitations). ¶ 27. The chancellor determined that the last activity under the contract occurred in 1993, and that the three-year statute had run in August of 1996. The Baileys' complaintwhich was not a counter-complaint in the declaratory judgment suit filed by the Estate of Kemp, but originally a separate actionwas filed on June 29, 2000. The trial court ruled that the action was barred by the statute. Such factfinding is well within the purview of the trial court, and there was no evidence, despite the claims of the Baileys, of any fraud or concealment on behalf of Moses and Kemp. Accordingly, the claims of the Baileys are barred by the statute of limitations. ¶ 28. The chancellor further found that laches operated to bar the purported causes of action. The defense of laches applies when one party neglects to assert a right or claim, and such neglect, when taken together with any lapses of time and other circumstances causing prejudice to the adverse party, operates as a bar in a court of equity. As with other questions of law, [t]he question of laches is addressed to the sound discretion of the chancellor and his decision will not be overturned on appeal except where there is an abuse of discretion. Molden, 644 So.2d at 1233. ¶ 29. In determining whether laches can be applied, the court looks to three considerations. The party seeking to invoke the doctrine of laches must show: (1) a delay in asserting a right or claim; (2) that the delay was not excusable; and (3) that there was undue prejudice to the party against whom the claim is asserted. Grant v. State, 686 So.2d 1078, 1089 (Miss. 1996) (internal quotations and citations omitted). The trial court found that these factors were satisfied, and that the prejudice under the third prong arose in two ways. First, Kemp could no longer testify to defend himself against the complaints of the Baileys, as he had passed away two years before their suit was filed. Second, the property had increased in estimated value by several hundreds of thousands of dollars, to the benefit of the Baileys. ¶ 30. There is nothing in the record to suggest that the chancellor abused his discretion in determining that laches applied to bar any claims against Kemp or the Estate of Moses. Additionally, the crux of the Baileys' complaint regarded actions performed by Kent and Moses that actually benefited the Baileys, and as noted above, they are estopped from now protesting the work.
¶ 31. The contract detailed how the Bailey family would retain and pay for the professional services of Kemp and Moses in their quest to sell property. Because Moses and Kemp wish to now gain the benefit of the remainder contract, the Baileys urge that we apply Section 15-1-49 of the Mississippi Code, which applies to contracts for professional services, and requires that actions based upon them commence within three years after the accrual of the cause of action. Miss.Code Ann. § 15-1-49 (Rev.2003); In re Estate of Stewart, 732 So.2d 255, 258 (Miss.1999). ¶ 32. In short, the Baileys contend that by filing for declaratory judgment in 1998, Moses and the Estate of Kemp simply waited too long to assert their rights to the Florida property under the contract. The family offers that the last service rendered under the contract by Kemp and Moses was in 1987, and so any lawsuit would have had to be filed by 1990. The chancellor rejected this argument without elaboration. [9] ¶ 33. The very first sentence of the contract makes clear it is for professional services which were not solely legal services, but also a myriad of other services and counsel in other areas. However, the argument of the Baileys assumes that the contract has been wholly performed, and that Moses and the Estate of Kemp are only now seeking payment for their services. This is not quite the case. Instead, those parties are looking for the contract to be enforced as written; they seek to hold the Baileys to the letter of the contract, which would provide them with a one-third share in the proceeds of the sale of the Florida property. In exchange for services, which were numbered as thirteen separate items in the contract, Moses and Kemp were to receive proceeds from the sale of the property. As specifically outlined in the MOU: [10] The broad outline of the arrangement which we have discussed is that we would take the total gross sales price of all properties, deduct the cash expenses, in terms of debts owed to the banks or any other parties, deduct the mortgages, deduct the amount guaranteed to Janet [Bailey Lapp], deduct out of pocket expenses and split the remaining equities one-third to Brian and Lynn [Bailey], one-third to Andy [Moses] and one-third to myself. All of these conditions occurred save one: the Florida property was never sold. Because a component of the contract remains to be fulfilled, the statute of limitations has not begun to run. In contracts, [t]he general rule is that the statute of limitations begins to run as soon as there is a cause of action. Old Ladies Home Ass'n v. Hall, 212 Miss. 67, 80, 52 So.2d 650, 655 (1951). Had Bailey sold the property years ago and refused Moses and Kemp their one-third shares, we would have a different issue. Because Bailey has not yet sold the property, the statute of limitations has not run. See Old Ladies Home, supra (limitations period does not begin to run upon nonperformance of contractual duty until the cause of action accrues).
¶ 34. Of the multiple properties contemplated by the contract, only the Florida property was not sold. The chancellor originally ordered its sale, mandating distribution of the net proceeds to the three parties. Later, the judgment was modified to provide two alternate solutions: first, that Bailey could first purchase the one-third shares of Moses and Kemp after an appraisal of the property to ascertain their value; alternatively, Bailey could judicially partition the property. [11] ¶ 35. The contract and MOU repeatedly use the term contingent to describe the interest Moses and Kemp have in the proceeds from the sale of the property. Indeed, in their briefs the attorney and real estate expert defended themselves against allegations of overcharging for services by noting their payment was bargained-for and contingent. The contract states that each of the said parties has agreed to accept his compensation for such services on a partially deferred basis, as set forth in said memorandum contingent upon the financial result of these services heretofore and hereafter to be performed by each of them. The contract also states that when all properties have been in fact liquidated and all proceeds of sale received, adjustments would be made as between the parties . . . to assure that all parties receive their appropriate distributions. (Emphasis added). ¶ 36. The use of the term contingent, and the express and plain language of the contract requiring the sale of all the properties, indicate that two events are conditions precedent to Kemp and Moses receiving further fees. First, the Florida property must be sold. Second, the sale must be effected by Moses and Kemp for them to receive their portion of the fees. From the findings of the trial court it is clear that neither of these conditions have been satisfied. ¶ 37. We cannot guess at the intent of the parties, but the facts tell a compelling story. The Baileys were in a dire financial situation. Kemp and Moses helped them out of the situation by selling the beleaguered Indiana properties, for which they received a healthy fee. Once the Baileys were out of financial danger, the pressing need to exert great time and effort (without hourly fees) to sell the remaining property in Florida simply disappeared, and the parties apparently retreated to their respective spheres. The contract was born of need and was useful only when the Baileys were in financial danger. Once the danger had passed, none of the parties pressed to fulfill the remainder of the contract to sell the Florida property. ¶ 38. The trial court committed an abuse of discretion in ordering the sale or partition of the Florida property. Even ignoring the sticky jurisdictional issues involved with a Mississippi court demanding the sale of a Florida homestead, such a result was never contemplated by the contract. If and when two conditions precedent are satisfied, Kemp and Moses may receive their one-third fee. [12]