Court Opinion

ID: 18773
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:18:22+00
Date Added: 2024-06-11T15:04:44.689253
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT

                         _____________________

                              No. 99-60023
                            Summary Calendar
                         _____________________

GLENDA CLARK; ET AL.,

                                                    Plaintiff-Appellant,

GLENDA CLARK; FRANK SMOTHERS;
JEFF CLARK; JAN CLARK; IVY
INVESTMENTS, INC.; ROBERT WILLIAMS,

                                                 Plaintiffs-Appellants,

                                    versus

D. C. PARKER; ET AL.,

                                                              Defendants,

D. C. PARKER; RICHARD B. FLOWERS;
LLOYD LINK; BETTY LINK; LINK &
ASSOCIATES,

                                            Defendants-Appellees.
_________________________________________________________________

           Appeal from the United States District Court
             for the Northern District of Mississippi
                         (1:97-CV-210-B-D)
_________________________________________________________________

                            August 30, 1999

Before JOLLY, JONES, and BENAVIDES, Circuit Judges.

PER CURIAM:*

     Glenda Clark, Robert Williams, Frank Smothers, Jeff Clark, Jan

Clark,   and   Ivy   Investments,    Incorporated   (“Ivy”)   appeal   the

district court’s granting of summary judgment for D. C. Parker,

     *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
Richard B. Flowers, Lloyd Link, Betty Link, and Link & Associates.1

The    appellants   argue    that   the     district    court   erred    when   it

concluded that as a matter of law their claims were barred by the

applicable statutes of limitations.2 Further, the appellants argue

that the district court erred in granting summary judgment for

Parker and Flowers based on the appellants’ claims of fraudulent

misrepresentation.      As we find no error on the part of the district

court, we affirm for essentially the same reasons.

       The general background facts are largely undisputed, and we

take    the   liberty   of   adopting       in   part   the   district   court’s

recitation of those facts.          Parker and Flowers are farmers and

landowners who own land at and around Mhoon Landing in Tunica

County, Mississippi. Initially, when casino gambling was legalized

in Mississippi, Mhoon Landing on the Mississippi River was the

closest point to Memphis, Tennessee, where a casino could be

legally constructed.         Parker and Flowers sold or leased various

parcels of property on Mhoon Landing and announced plans to develop

roads and other infrastructure in the area.             By September 1993, one

         1
        The attorneys representing D. C. Parker and Richard B.
Flowers filed the motion for summary judgment. Lloyd Link, Betty
Link, and Link & Associates who are representing themselves pro se
filed a letter motion asking that they be allowed to join in Parker
and Flowers’s motion for summary judgment. This letter motion was
granted by the district court.
        2
       The claims of common law fraud, breach of contract, and
breach of fiduciary duty were alleged against each of the named
defendants.    The claims of violation of federal and state
securities law were alleged against Lloyd Link, Betty Link, and
Link & Associates.

                                        2
casino was in operation at Mhoon Landing and others were in the

process of being constructed.

       In August 1993, Lloyd Link approached Glenda Clark, Jeff

Clark, Jan Clark, and Robert Williams about the potential for

development in Tunica County as a result of the casino boom.                         In

early September, Link notified them that he had located 5.0 acres

of land in Tunica County.               The property was owned by a Mr. Sugar.

On September 2, Link obtained a contract on behalf of the Clarks

and Williams for the sale of the Sugar property.                      On or about that

same date, the Clarks, Robert Williams, and various other investors

formed      Ivy    Investments,         which   was   officially      incorporated   in

Alabama on October 14, 1993.

       On September 29, the proposed sale on the Sugar property fell

through.       Link informed Ivy Investments that they could purchase

5.5 acres on Mhoon Landing for $250,000 from Parker and Flowers.

Link had already scheduled a closing and had given Parker and

Flowers a check for $50,000 as a down payment.3                        The members of

Ivy, based on Link’s representation as to the desirability of the

property,         and   based     on     Parker     and   Flowers’s    representation

concerning their intention of developing infrastructure, voted to

purchase the Mhoon Landing property.

       On October 3, members of Ivy met with Lloyd and Betty Link to

make       arrangements     for        the   closing.       The   president   of     Ivy

       3
        Parker and Flowers deny ever receiving this $50,000.

                                                3
Investments, Loye Russell, expressed some concern about Link and

voiced his intention to attend the closing.       Link immediately

insisted that Russell be removed from the group. The other members

of Ivy Investments complied with Link’s request, rather than risk

jeopardizing the deal.    Link and Glenda Clark bought Russell’s

shares in Ivy Investments.     Link insisted that no member of Ivy

attend the closing. On October 4, Link and his wife, Betty,

attended the closing. Betty signed the closing statement on behalf

of Ivy.

     The purchase price as indicated on the original closing

statement was $200,000.      On the closing statement, which Link

delivered to Ivy, the purchase price had been altered to state

$250,000. The typeset of the purchase price on the altered closing

statement received by Ivy was clearly different from that in the

remainder of the document. In deposition, Glenda Clark admits that

in November 1993, she noticed the obvious difference in the typeset

of the purchase price. Although she admits that she suspected that

the document had been altered, she waited until February 1997 to

obtain a copy of the original closing statement from the closing

attorney.

     Jeff Clark admits that he likewise noticed the differences in

the typeset in the closing statement that Link delivered to Ivy.

Like Glenda Clark, he took no steps to quell his suspicions.

Further, Jeff Clark admits in deposition that he was suspicious

                                  4
about Link from the start, and that he felt he was double dipping.

He similarly failed to act on these suspicions.

      After the closing, Ivy began making preparation for the

construction of a hotel, but construction never began.                        Although

Parker and Flowers maintained that the area was being developed, it

would have been clear to any onlooker that little development was

occurring.      Not     long   after   the    sale      of    the   property,      the

legislature changed the statutory scheme regulating the permissible

locations of casinos.      As a result, Mhoon Landing was no longer the

closest point to Memphis upon which a casino could be constructed.

Following the change of law, the much ballyhooed casino industry at

Mhoon Landing vanished like a ghost into the night.                    As a result,

Parker and Flowers had no reason to develop the infrastructure, and

Ivy never built its proposed hotel.           On July 7, 1997, nearly three

years and nine months after the sale of the Mhoon Landing property,

Ivy filed this civil action alleging common law fraud, breach of

contract, breach of fiduciary duty, and violations of Rule 10(b)(5)

of   the   Securities    and   Exchange      Act   of     1934   and     Mississippi

securities law.

      Mississippi Code Annotated § 15-1-49 provides a three-year

statute of limitations for matters arising out of written contracts

or   misrepresentations.        Mississippi        Code      Annotated    §    15-1-29

similarly provides for a three-year limitation of actions on

matters arising out of unwritten contract.                Claims arising out of

securities fraud have a two-year statute of limitation under both

                                       5
Mississippi state and federal law.         Miss. Code Ann. § 75-71-725;

Felts v. National Account Systems Ass’n. Inc., 469 F. Supp. 54, 64

(N.D.Miss. 1978)(holding state statutes of limitation applicable to

federal securities claims).

     There is no question that Ivy’s claims, absent an applicable

tolling mechanism, are time barred.         Ivy points to Mississippi’s

doctrine of fraudulent concealment for relief, codified as follows:

     If a person liable to any personal action should
     fraudulently conceal the cause of action from the
     knowledge of the person entitled thereto, the cause of
     action shall be deemed to have first accrued at, and not
     before, the time which such fraud shall be, or with
     reasonable diligence might have been, first known or
     discovered.

Mississippi Code Ann. § 15-1-67.           To assert a valid claim of

fraudulent   concealment,   the   movant    must   demonstrate   that   the

defendant concealed the conduct complained of, and as a result of

this concealment, the movant was unable to discover the facts

forming the basis of his claim despite the exercise of reasonable

diligence.   See State of Tex. v. Allan Constr. Co., 851 F.2d 1526,

1528 (5th Cir. 1988).       Here, for the applicable statutes of

limitation to be tolled, we will have to find that through the

exercise of reasonable diligence, Ivy could not have discovered the

fraudulent concealment of their causes of action until at least

July 7, 1994.4

     4
      As to claims pursuant to federal and state securities law,
the relevant date is July 7, 1995.

                                   6
     We are in agreement with the district court that Ivy has

produced no evidence from which a reasonable person could believe

that Ivy could not have discovered its alleged causes of action

until July 7, 1994.    Any claim of fraudulent concealment arising

out of the failure to develop infrastructure at Mhoon Landing

should have been discovered by the lack of progress by Parker and

Flowers in developing the area long before July 7, 1994.       Ivy

states in its brief that following the purchase of the Mhoon

Landing property, various members of Ivy applied for a motel

franchise, rented a trailer in Tunica County, and established

business contacts in the Tunica area.      These visits to Tunica

County provided ample opportunity for members of Ivy to visit the

Mhoon Landing site and to discover the lack of development.5

     As to any claim of fraudulent concealment arising out of the

apparent alteration of the closing statement delivered by Mr. Link

to Ivy, we hold that it should have been discovered long before

July 7, 1994. In deposition, Glenda Clark stated that she realized

the document appeared to be altered and became suspicions as early

as November 1993.     The members of Ivy were in Tunica County on

numerous occasions and could easily have reviewed the original

closing statement to see if their copy had been altered.       Jeff

     5
      The members of Ivy assert that they made reasonable efforts
to discover Parker and Flowers’s misrepresentations by frequently
stopping by Parker’s office and inquiring about the status of Mhoon
Landing.   Had the members of Ivy made the short journey       from
Parker’s office to the site of the Mhoon Landing property, they
would have discovered that no development was in fact taking place.

                                 7
Clark also admits in deposition that he noticed the inconsistencies

in the typeset on the closing statement well before July 7, 1994,

but failed to investigate the cause.           Other red flags that should

have warned Ivy of potential trouble were Mr. Link’s insistence

that none of its members attend the closing, and Mr. Link’s request

that Loye Russell be removed from the group after expressing his

concerns about him.      In sum, we are in agreement with the district

court that through reasonable diligent effort, Ivy should have

discovered these causes of action long before July 7, 1994.

     As   to   Ivy’s   claim   that   Parker    and     Flowers   fraudulently

concealed their true intentions regarding the development of Mhoon

Landing, we hold that any statements made by Parker and Flowers

regarding   future     developments   were     merely    promises   of   future

conduct and can only be the basis for a claim of fraudulent

misrepresentation in a narrow situation.           The Mississippi Supreme

Court has made clear that in cases of fraud, based on a promise of

future conduct, the movant must show that the promise was made

“with [the] present intent not to perform.”           Bank of Shaw v. Posey,

573 So. 2d 1360 (Miss. 1990).      As such, to succeed on their claim of

fraudulent concealment regarding Parker and Flowers’s promise to

develop the infrastructure of Mhoon Landing, Ivy must show that

Parker and Flowers did not intend to develop Mhoon Landing at the

time the property was purchased.          We are in agreement with the

district court that Ivy has failed to produce any evidence that

Parker and Flowers did not intend to develop Mhoon Landing at the

                                      8
time the property was purchased.       It was due to the change in the

statutory scheme regulating the permissible locations of casinos,

not the fraudulent intentions of Parker and Flowers, that led to

their failure to develop infrastructure at Mhoon Landing.

     We are in full agreement with the district court that Ivy has

failed to meet its burden of proof and has failed to raise any

genuine issue of material fact for trial.         The judgment of the

district court is

                                                      A F F I R M E D.

                                   9