Court Opinion

ID: 9835577
Source: CourtListenerOpinion
Date Created: 2023-09-02 02:31:13.352821+00
Date Added: 2024-06-11T12:17:08.444336
License: Public Domain

DICKINSON, PRESIDING JUSTICE,
FOR THE COURT:
¶1. Occasionally, the question of whether the statute of limitations has run turns on the resolution of a fact question. In such cases, a statute-of-limitations defense cannot be resolved on a defendant’s motion to dismiss based on Mississippi Rule of Civil Procedure 12(b)(6). In this case, the defendant filed a Rule 12(b)(6) motion to dismiss, claiming the statute of limitations has expired. The chancellor — finding it inappropriate to dismiss the case at the Rule 12(b)(6) stage due to an existing fact question — denied the motion. We affirm and remand.
FACTS AND PROCEDURAL HISTORY
¶2. Scott Buras and Carlos Rodriguez founded Lagniappe Logistics in 2004. Since then, Buras and Rodriguez’s business relationship has deteriorated to the point that Buras left the company in June 2013. So, on February 19,2014, Buras filed this complaint in the Hinds County Chancery Court, claiming that Rodriguez had been unjustly enriched through Lagniappe’s operation. Buras’s complaint requested that the chancellor declare Buras a fifty-percent owner of Lagniappe, order an accounting, judicially dissolve the company, and appoint a receiver or custodian to wind up its affairs. 1
¶3. Rodriguez and Lagniappe moved to dismiss Buras’s complaint based on Missis^ sippi’s catch-all, three-year statute of limitations. According to the defendants, Bu-ras’s claims — which depended on Buras’s status as an owner — were time-barred because Buras failed to file a legal action to rescind or cancel a 2006 agreement transferring his ownership interest to Rodriguez within three years of the agreement’s execution.
¶4. Buras responded that his complaint pleaded that he and Rodriguez had bargained for no consideration in exchange for his ownership interest. And because the failure to bargain for consideration precludes contract formation in the first instance, no contract ever existed to rescind or cancel, and no cause of action existed upon which the statute of limitations could have run. The chancellor — accepting Bu-*677ras’s well-pleaded allegations. as true for purposes of the Rule 12(b)(6) motion— agreed and denied the defendants’ motion. This Court then granted the defendants’ petition for interlocutory appeal.
ANALYSIS
¶5. A motion to dismiss under Mississippi Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the complaint.1 Rule 12(b)(6) motions should not be granted unless “ ‘it appears beyond doubt that the plaintiff will be unable to prove any set of fads in support of his claim.’ ”2 When reviewing a Rule 12(b)(6) motion on appeal, we conduct a de novo review and must accept the allegations contained in the complaint as true.3
¶6. In this case, the plaintiff filed suit seeking, among other things, to establish his ownership in a business. The defendants claim the plaintiff entered into a contract that transferred away his interest in the business, and that the plaintiffs claims — based on his status as an owner— are time-barred because he failed to cancel or rescind the contract within three years. The plaintiff responds that the contract was void because the parties never bargained for consideration and that the statute of limitations does not run on void contracts because they do not exist. Stated another way, the plaintiff argues that when parties fail to bargain for consideration, they create no contract, so a party has no need to file a legal action to rescind it as nothing exists to cancel or rescind. We agree.
¶7. According to Buras’s complaint, the 2006 agreement purporting to transfer his interest in Lagniappe never involved a bargained-for exchange of consideration. “It is, of course, a basic principle of the law of contracts that a contract is not formed between the parties absent the essential elements of offer, acceptance, and consideration,”4 So, accepting Buras’s allegations as true, the 2006 agreement lacked a basic prerequisite to contract formation.
¶8. It is here that the defendants’ statute-of-limitations argument fails. For purposes of a Rule 12(b)(6) review, the Court must accept that no contract had been formed in 2006. And, absent a contract, Buras had nothing to rescind or cancel. In other words, the defendants argue that Buras needed to have a court invalidate a 2006 contract within three years of its formation. But, accepting as true the allegations of Buras’s complaint, no 2006 contract existed to invalidate.
¶9. This Court has adopted a similar view with regard to deeds. In Estate of Hardy, Martha Hardy died, and her will named her son James executor of her estate.5 More than three years after the probate of Hardy’s will, James’s three sisters filed a petition to remove him as executor and for an accounting.6 The sisters then filed a motion to declare void four warranty deeds.7 The deeds had been found in *678Martha Hardy’s purse on the day of her death, and had purported to transfer interests in two pieces of real property to James and his sisters.8 The chancellor concluded that Mississippi’s catch-all three-year statute of limitations barred the sisters’ motion because they had known of the deeds more than three years earlier.9
¶10. The sisters appealed, and this Court reversed, concluding that the record revealed no evidence that the deeds had ever been delivered or accepted.10 Because “[djelivery and acceptance are essential to a deed’s validity,” the Court concluded “that the Highway 30 deeds are merely instruments without effect or meaning.”11 The Court explained that:
[O]ur inquiry is not whether the instrument was void or voidable, but whether, in legal contemplation, it was a deed. The statement of the principle by which such conveyances are held void presupposes a deed, and such instrument is not a deed until delivery.”12
The Court found “the attempted conveyances of the sisters’ interest in certain real property were not valid, and were, in fact, void ab initio. An action to set aside the conveyances was therefore unnecessary, and no statutory limitation of action applies hereto.”13
¶11. As with the deeds in Estate of Hardy, Buras’s factual allegations, if true — and we must accept them as true— establish that the 2006 agreement lacked a legal requirement for the formation of a legal instrument: in this case, a contract. Because no contract ever was formed, “[a]n action to set aside the [contract] was therefore unnecessary, and no statutory limitation of action applies hereto.”
¶12. Other courts have reached similar conclusions. In Thompson v. Ebbert, the Supreme Court of Idaho rejected the argument that an action to set aside a lease agreement was barred by the statute of limitations.14 That court concluded that “[b]ecause the lease agreement was void ab initio, it could be challenged at any time.”15 Likewise, the United States District Court for the District of Puerto Rico has recognized that an agreement lacking consent is void ab initio, and that a claim to that effect “may not be subject to a limitations period.”16 And, in Edwards v. Allen, the Supreme Court of Tennessee recognized that “[b]ecause [a county] ordinance is void ab initio, a statute of limitations is no defense.”17
¶13. So we affirm the chancellor’s decision to reject the defendants’ argument that the statute of limitations bars Buras’s claims because he did not file an action to rescind or cancel the 2006 agreement within three years of its execution. Stated another way, there is no duty to file an action *679to rescind or cancel a contract that does not exist.
¶14. The dissent errs by relying on the rebuttable presumption that a valid contract existed. At the Rule 12(b)(6) stage, we must accept Buras’s allegations as true. Buras alleges that while the contract does say consideration was bargained for and exchanged, that was not true. So, while the contract’s language is sufficient to raise the rebuttable presumption that a valid contract existed, Buras has pleaded sufficient facts that, if accepted as true, rebut the presumption. And, if the presumption is rebutted, no contract ever existed, and Buras had nothing to invalidate within the three-year statute of limitations.
¶15. In the end, the plaintiff may fail to prove that consideration had not been bargained for, and that no contract existed to transfer his ownership interest that needed to be cancelled or rescinded within three years of its execution. But, we cannot — from the complaint — know “beyond doubt that the plaintiff will be unable to prove any set of facts”18 that his claims are not time barred.
CONCLUSION
¶16. Because Buras’s well-pleaded allegations precluded Rule 12(b)(6) dismissal based on the statute of limitations, we affirm the chancellor’s decision to deny the defendants’ motion, and we remand this case to the chancery court for further proceedings consistent with this opinion.
¶17. AFFIRMED AND REMANDED.
LAMAR, KITCHENS, KING AND COLEMAN, JJ., CONCUR. MAXWELL, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY WALLER, C.J., RANDOLPH, P.J., AND BEAM, J.
WALLER, C.J., RANDOLPH, P.J., AND BEAM, J., JOIN THIS OPINION.

. Rose v. Tullos, 994 So.2d 734, 737 (Miss.2008) (citing Cook v. Brown, 909 So.2d 1075, 1077-78 (Miss.2005)).

. Covington Cty. Bank v. Magee, 177 So.3d 826, 828 (Miss.2015) (quoting City of Belmont v. Miss. State Tax Comm’n, 860 So.2d 289, 295 (Miss.2003)) (emphasis added).

. Magee, 177 So.3d at 828 (citing City of Belmont, 860 So.2d at 295).

. Whiting v. Univ. of S. Miss., 62 So.3d 907, 915 (Miss.2011) (citing Gatlin v. Methodist Med. Ctr., Inc., 772 So.2d 1023, 1029 n. 3 (Miss.2000)).

. In re Estate of Hardy, 910 So.2d 1052, 1054 (Miss.2005).

. Id.

. Id.

. Id.

. Id.

. Id. at 1053-55.

. Id. at 1054-55 (citing Martin v. Adams, 216 Miss. 270, 62 So.2d 328, 329 (1953)).

. In re Estate of Hardy, 910 So.2d at 1055 (quoting Ladner v. Moran, 190 Miss. 826, 1 So.2d 781, 783 (1941)).

. In re Estate of Hardy, 910 So.2d at 1053-54.

. Thompson v. Ebbert, 144 Idaho 315, 160 P.3d 754, 757 (2007).

. Id. (citing S. Idaho Realty of Twin Falls, Inc. Century 21 v. Larry J. Hellhake & Assocs., 102 Idaho 613, 636 P.2d 168, 173 (1981)).

. Ocaso, S.A., Compania De Seguros Y Reaseguros v. Puerto Rico Mar. Shipping Auth., 915 F.Supp. 1244, 1257 (D.P.R.1996).

. Edwards v. Allen, 216 S.W.3d 278, 293 (Tenn.2007).

. The dissent incorrectly emphasizes what we do not know: “Buras makes no allegation in his complaint that in the eight years between signing the agreement and leaving Lagniappe he asked to be issued shares, distributions, or dividends, to have access to Lagniappe’s books or records, or otherwise to be treated as the co-owner he now claims to be.” This statement exposes the dissent’s failure to recognize the basic standard for Rule 12(b)(6) motions. The motion may not be granted based on what the court does not know. Rather, it may be granted only when " ‘it appears beyond doubt that the plaintiff will be unable to prove any set of facts in support of his claim.' ” Magee, 177 So.3d at 828 (quoting City of Belmont, 860 So.2d at 295) (emphasis added).