Court Opinion

ID: 2742806
Source: CourtListenerOpinion
Date Created: 2014-10-16 05:08:51.215138+00
Date Added: 2024-06-11T10:37:32.375388
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

                                NO. 2013-CA-00554-COA

ERNEST LANE, III, AND TRUSTMARK                                            APPELLANTS
NATIONAL BANK, CO-EXECUTORS OF THE
ESTATE OF JAMES OLDRUM SMITH, JR.

v.

RONALD D. LAMPKIN                                                              APPELLEE

DATE OF JUDGMENT:                          03/19/2013
TRIAL JUDGE:                               HON. GEORGE WARD
COURT FROM WHICH APPEALED:                 WARREN COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANTS:                  HARRIS H. BARNES III
                                           J. WILLIAMS JANOUSH
ATTORNEYS FOR APPELLEE:                    DAVID W. MOCKBEE
                                           LANDMAN TELLER JR.
                                           DAVID WESLEY MOCKBEE
                                           COLEMAN MCCANN MOCKBEE
NATURE OF THE CASE:                        CIVIL - OTHER
TRIAL COURT DISPOSITION:                   AWARDED DAMAGES FOR BREACH OF
                                           FIDUCIARY DUTY AND USURPATION OF
                                           A CORPORATE OPPORTUNITY
DISPOSITION:                               AFFIRMED - 09/16/2014
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

       BEFORE LEE, C.J., CARLTON AND MAXWELL, JJ.

       CARLTON, J., FOR THE COURT:

¶1.    This case addresses the valuation of a corporation and the related award of damages

when one of the corporation’s two shareholders dies and the remaining shareholder begins

a new corporation to operate the same rock-supply business. In the present case, Limestone

Products Incorporated had only two shareholders, Ronnie Lampkin and J.O. Smith Jr. Prior

to Smith’s death, Limestone operated for ten years with a line of credit personally guaranteed
by both shareholders.     However, upon Smith’s death, his estate (the Estate) refused

Lampkin’s request to extend a guarantee for Limestone’s credit line beyond December 2006.

Due to the Estate’s refusal to extend the credit line, Limestone lacked the ability to operate

and to meet its obligations beyond December 2006. In January 2007, Lampkin began a new

corporation, Delta Stone, which conducted the same rock-supply operations previously

provided by Limestone.

¶2.    Giving rise to the instant appeal, Lampkin filed a complaint for a declaratory

judgment against Ernest Lane III and Trustmark National Bank, as co-executors (the

Executors) of the Estate. Lampkin requested that the Warren County Circuit Court declare

the following: that he possessed the right to independently invest in and operate a rock-

supply business; that he violated no corporate fiduciary duties to Limestone; that he

possessed the right to continue to sell Limestone’s existing inventory; and that he possessed

the right to continue to collect Limestone’s accounts receivable and apply them to the

corporation’s debts.    The circuit court transferred the matter to chancery court.       The

chancellor found that Lampkin breached his fiduciary duty of loyalty by usurpation of a

corporate opportunity when he started Delta Stone in January 2007, which operated the same

rock-supply business and served the same function as Limestone.

¶3.    After determining liability based on Lampkin’s breach of his fiduciary duty of loyalty

and his usurpation of a corporate opportunity, the chancellor then addressed and awarded

damages for the offending conduct. In so doing, the chancellor determined that, even after

establishing a new corporation and borrowing $400,000, Lampkin continued to fulfill a

                                              2
contract initiated with Limestone and to ensure that the profits went to Limestone. The

chancellor also determined that Lampkin credited Limestone with rock purchased or

delivered to Limestone. After reviewing the evidence, including differing testimony from

the parties’ experts in business valuation, the chancellor awarded damages by considering

Limestone’s net value as of December 31, 2006, and December 31, 2007, less expenses, but

with the added value of the remaining corporate assets, such as an aged front-end loader and

a heating and air-conditioning unit.

¶4.    Upon appellate review, we find that the chancellor’s analysis was supported by

evidence in the record. In calculating the award of damages, the chancellor relied on expert

opinions and financial reports to assess the corporation’s net book value and its total net

income for 2008 through 2012. The chancellor determined the corporation’s total net book

value to be $125,546.32. Based on the information provided, the chancellor also found

Limestone’s average net income to be $20,914, which amounted to a total net income of

$104,570 for 2008 through 2012. However, on appeal, the Executors seek lost profits instead

of lost income.

¶5.    In the court below, the Executors also sought attorneys’ fees and expert-witness fees,

but the chancellor denied the request for fees, finding that Lampkin acted without malice or

gross negligence and did not commit fraud. The chancellor found that, even though Lampkin

usurped a corporate opportunity, Lampkin believed Limestone could not operate without the

line of credit. The chancellor also found credible Lampkin’s testimony that the Estate

refused to cooperate with guaranteeing the line of credit. The chancellor further found that

                                             3
Lampkin acted in the interest of Limestone by completing the corporation’s contracts and

accounting for its profits and debts.

¶6.       The Executors now appeal the judgment rendered by the Warren County Chancery

Court in assessing damages owed to the Estate for Lampkin’s breach of fiduciary duty and

usurpation of a corporate opportunity. The Executors appeal the award of damages by

raising the following issues: (1) whether the chancellor erred by admitting and relying on

testimony from Lampkin’s expert; (2) whether the chancellor properly assessed the amount

of damages due to the corporation; and (3) whether the chancellor erred by refusing to award

attorneys’ fees and expert-witness fees. Finding no error in the chancellor’s ruling, we

affirm.

                                            FACTS

¶7.       In 1995, Lampkin and Smith formed Limestone, which they operated on land they

jointly owned in Warren County. Lampkin and Smith each owned a one-half interest in the

corporation, which bought and sold rocks. Lampkin also owned Lampkin Construction,

which became one of Limestone’s biggest customers.

¶8.       For ten years, Limestone operated on a line of credit personally guaranteed by both

Lampkin and Smith. The line of credit was set to expire in September 2006. In August

2006, Smith died, and his stock in the corporation and his interest in the real property

transferred to the Estate. Prior to the expiration of Limestone’s line of credit, Lampkin

secured an extension until December 8, 2006, to provide the Estate with time to determine

whether it would guarantee the loan. Between September 2006 and December 2006, the

                                               4
parties discussed renewing the line of credit. However, the Estate failed to provide a

guarantee before the deadline. Lampkin then formed a new corporation, Delta Stone, which

began operating in January 2007. Delta Stone performed the same functions as Limestone,

and through his new company, Lampkin completed Limestone’s contracts and satisfied its

debt obligations.

¶9.    Lampkin filed a lawsuit against the Executors in Warren County Circuit Court.

Lampkin asked the circuit court to find the following: (1) that Lampkin had the right to

independently invest in and operate a rock-supply business; (2) that he was not in violation

of his fiduciary duties as a director and officer of Limestone; (3) that he possessed the

authority as an officer of Limestone to continue to sell the corporation’s existing inventory,

collect accounts receivable, and apply the monies received to the corporation’s debt; and (4)

that he should receive compensation for his actions and should be paid interest on any

monetary advances made on the corporation’s behalf. The Executors filed a counterclaim

against Lampkin for present and future profits the corporation lost due to Lampkin’s actions

and for attorneys’ fees. Lane, one of the co-executors, also filed a motion to transfer the

matter to Warren County Chancery Court.

¶10.   The circuit court judge entered an order finding the matter to be proper for a

declaratory judgment. Further finding that the chancery court possessed proper jurisdiction

over the subject matter of the declaratory-judgment action, the circuit court judge granted the

motion to transfer the matter to chancery court. In an order entered by the Warren County

Chancery Court, all the chancellors recused themselves from the case, and the Mississippi

                                              5
Supreme Court appointed a special judge to preside over the proceedings. Several of Smith’s

beneficiaries filed a motion to intervene in the lawsuit, which the specially appointed judge

granted.

¶11.   Lampkin filed a motion for separate trials on the issues of liability and damages. He

also asked the chancellor to stay discovery on damages pending the outcome on the trial as

to liability.   The chancellor granted Lampkin’s motion and bifurcated the trial.         The

chancellor held a hearing on the issue of liability in November 2009. The main issue before

the chancery court was whether Lampkin breached his fiduciary duty to Limestone by

usurping a corporate opportunity when he started Delta Stone. In determining whether

Lampkin breached his fiduciary duty to Limestone, the chancellor considered the following:

(1) whether the business opportunity was “reasonably related to the existing or prospective

business activities of the corporation”; and (2) whether the corporation had the financial

ability to seize the opportunity. See Aqua-Culture Tech. Ltd. v. Holly, 677 So. 2d 171, 183

(Miss. 1996) (Mississippi courts apply a two-part test to determine whether a party has

established a prima facie case of conflict of interest arising from a business opportunity in

question being a corporate opportunity).

¶12.   In his order, the chancellor noted Lampkin’s concession that the business ventures and

activities of Delta Stone and Limestone were the same. The chancellor further noted that

Delta Stone operated on the same property as Limestone, used the same facilities and

equipment as Limestone, and sold rock to the same customers as Limestone. In determining

whether Limestone had the financial ability to seize the corporate opportunity, the chancellor

                                              6
noted that “[t]here is no dispute amongst the parties that the bank would not renew the line

of credit without the personal guarantees of both the Estate and Lampkin.” The chancellor

continued:

       From a review of the documentary evidence, and from listening to the
       testimony of the parties and their experts, the [c]ourt is not convinced that
       Limestone could function without the need for the line of credit. However, the
       [c]ourt is also not convinced that the Estate was given ample information or
       time to decide whether [it] wanted to renew the line of credit.

¶13.   In reaching a determination as to Lampkin’s liability, the chancellor considered the

events that occurred between Smith’s death in August 2006 and the December 2006 deadline

for renewing the line of credit. Within his discussion of these events, the chancellor provided

a summary of the correspondence exchanged by the parties. After reviewing the evidence,

the chancellor found that Lampkin failed to timely provide financial information to the Estate

and to give the Estate ample time to review Limestone’s corporate records. As noted in the

chancellor’s order, the Estate requested this information to decide whether to provide a

guarantee for Limestone’s line of credit, and without the requested information, the Estate

was unable to make an informed decision prior to the line of credit’s expiration.

¶14.   The chancellor stated that, if the line of credit was crucial to operating Limestone,

then Lampkin, who was aware of the upcoming deadline, possessed a fiduciary duty to

Limestone to cooperate with the Estate to meet the deadline. The chancellor found that

Lampkin’s failure to timely provide the necessary financial information to the Estate

prevented him from prevailing in his argument that the Estate’s failure to renew the line of

credit relieved him of any further fiduciary duty to Limestone. According to the chancellor,

                                              7
“[t]he Estate should have been provided more time to make the determination [of whether

to guarantee the line of credit], even if that meant allowing the line to mature and letting the

line sit for a few more weeks or months while Limestone’s documents were inspected.”

¶15.   Although Limestone’s balance sheets showed the corporation to be solvent, the

chancellor noted that the corporation apparently lacked “a substantial amount of equity with

which to continue on with the business.” The chancellor found that the line of credit had

been Limestone’s primary source of funds with which to purchase inventory for the past ten

years. He therefore agreed with Lampkin that, without the guaranteed line of credit,

Limestone could not continue to operate. The chancellor found that Lampkin was an officer

and director of Limestone and thus owed a fiduciary duty to the corporation. By forming

Delta Stone, Lampkin breached his fiduciary duty to Limestone. In addition, the chancellor

found that Lampkin’s failure to timely provide the Estate with the requested financial

information hindered Limestone’s financial ability to continue its business operations. As

a result, the chancellor granted the Executors’ motion to dismiss and denied Lampkin’s

request for declaratory relief.

¶16.   Following the chancellor’s ruling that Lampkin breached his fiduciary duty to

Limestone by starting Delta Stone and usurping a corporate opportunity, the parties presented

evidence as to the damage that resulted from Lampkin’s breach of duty. Both parties hired

an expert to testify as to the valuation of Limestone. Lampkin hired Brent Saunders, and the

Executors hired James Koerber. The chancellor accepted both experts as certified public

accountants and experts in the field of business valuation.

                                               8
¶17.     After considering both experts’ testimony, as well as the testimony provided by Lane

and Lampkin, the chancellor entered his findings of fact. The chancellor stated that any

damages owed by Lampkin should be paid to Limestone rather than to individual

shareholders. As part of his analysis, the chancellor considered the profits Lampkin made

because of the usurpation; Limestone’s assets; both Limestone’s and Delta Stone’s income

and profit; and the debts and other expenses associated with the operation of both Limestone

and Delta Stone. The experts’ testimony varied greatly as to the proper valuation for

Limestone, and the chancellor found that the experts were “just splitting hairs” and getting

“bogged down” in an argument over the proper terminology to describe Limestone’s

valuation. The chancellor stated, “Whether you call it asset based or net book value or lost

profits, this [c]ourt is merely concerned with how and when to value this business.”

¶18.     With regard to damages, the Executors claimed that the Estate was entitled to one-half

of the lease payments owed to Limestone since 2007. While the chancellor found that the

lease was still in effect, he also noted Lampkin’s testimony that no lease payments had been

made in five years. In addition, the chancellor found that, as the only two shareholders of

Limestone, Lampkin and Smith were equally responsible for any lease payments and equally

entitled to one-half of any lease proceeds. He therefore found that the issue “create[d] a

wash.”

¶19.     The chancellor next considered testimony by Koerber, the Executors’ expert, that

649,203 tons of rock purchased by Limestone was diverted from the corporation’s accounting

system and remained unreported. The chancellor found that Lampkin and his expert,

                                               9
Saunders, accounted for this allegedly unreported rock in their testimony. As to this issue,

the chancellor stated the following:

       The [c]ourt does not find merit in the argument of the Estate and its expert as
       it relates to “unreported rock.” The business was a closely held business
       where rock was delivered to different locations and was billed on occasion to
       Lampkin himself. Saunders and Lampkin were able to readily account for the
       alleged unreported rock. Therefore, the [c]ourt will not take into consideration
       any purported “unreported product.” The [c]ourt does not find that this
       constitutes “lost profits” of the businesses.

¶20.   The chancellor next looked at the actual profit of Limestone and Delta Stone as

reported in the companies’ financial records. He found the following:

       There is no question, from the testimony of the parties, of the inability of the
       parties to get along, and therefore, the Estate and Lampkin would not have
       continued to do business together for a prolonged period of time [after Smith’s
       death]. If the [c]ourt were to carry its business assessment forward to the year
       2012, based on the financial records of both companies, the [c]ourt would
       merely be placing a net loss in the hands of the corporation. A corporation is
       responsible for not only the profits of a business, but also the liabilities. . . .
       [T]here is no doubt from the financial records of the business that Limestone
       . . . relied heavily on an operating line of credit and was never all that
       profitable. It is the opinion of the [c]ourt that an award of damages after 2007
       would be more equitable were the [c]ourt to look to past performance of
       Limestone . . . . Taking into consideration the value of the business as of
       December 31, 2007, the [c]ourt agrees with the findings made by Saunders in
       “Exhibit L” to his expert report. In this exhibit[,] Saunders takes the value of
       the year[-]end net book values for 2006 and 2007 and backs out all expenses,
       all erroneously placed personal expenses of Lampkin[,] as well as accounts
       receivable from the partners. After deductions, Saunders added the value of
       the corporation’s remaining assets . . . . He arrived at a total net book value of
       $125,546.32.

¶21.   In determining Limestone’s lost profits since January 1, 2008, the chancellor found

                                               10
“historical lost net profits” to be an appropriate method for assessing damages.1 The

chancellor began his analysis with Koerber’s average-net-income figure of $20,914 for the

years 2000 through 2007. The chancellor then multiplied this amount by five, which

accounted for each year in the disputed period from 2008 through 2012. This calculation

amounted to a total net income of $104,570 for 2008 through 2012. Adding the sum of these

historical costs to the net book value of $125,546.32 provided by Saunders, the chancellor

concluded that the total damages owed to Limestone amounted to $230,116.32. The

chancellor also ordered that the Estate, as one of Limestone’s two shareholders, would

receive $115,058.16, which amounted to half of the total damages awarded to Limestone.

¶22.   After determining the damages owed to Limestone, the chancellor next considered the

Executors’ claim for attorneys’ fees and expert-witness fees. Although Lampkin usurped a

corporate opportunity, the chancellor found that the parties and their attorneys had repeatedly

corresponded in the several months after Smith’s death and prior to the expiration of the line

of credit. Therefore, the chancellor found that the Estate was well aware of Limestone’s

situation. The chancellor also noted Lampkin’s belief that Limestone could not continue to

operate without the line of credit, as well as Lampkin’s efforts in completing Limestone’s

contracts and keeping the profits from Limestone separate from Delta Stone’s profits. Based

on the evidence presented, the chancellor found that Lampkin’s actions failed to show malice

       1
        The chancellor cited to Lovett v. E.L. Garner Inc., 511 So. 2d 1346, 1353 (Miss.
1987), for his finding that this method is acceptable in Mississippi cases involving breach
of contract.

                                              11
or gross negligence or that he committed fraud. The chancellor therefore denied the request

for attorneys’ fees. Aggrieved by the chancellor’s judgment, the Executors now appeal to

this Court.

                               STANDARD OF REVIEW

¶23.   When supported by substantial evidence, a chancellor’s findings of fact will not be

disturbed on appeal unless the chancellor abused his discretion, was manifestly wrong, was

clearly erroneous, or applied an erroneous legal standard. Biglane v. Under the Hill Corp.,

949 So. 2d 9, 13-14 (¶17) (Miss. 2007). As the reviewing court, we examine the entire

record and accept as true all “evidence which supports or reasonably tends to support the

findings of fact made below, together with all reasonable inferences which may be drawn

therefrom and which favor the lower court’s findings of fact. That there may be other

evidence to the contrary is irrelevant.” Par Indus. Inc. v. Target Container Co., 708 So. 2d

44, 47 (¶4) (Miss. 1998) (citation and internal quotation marks omitted). As to questions of

law, however, we apply a de novo standard of review. Id. at (¶5).

                                      DISCUSSION

       I.     Whether the chancellor erred by admitting and relying on
              testimony from Lampkin’s expert.

¶24.   The Executors contend that the chancellor erred by relying on testimony from

Lampkin’s expert, Saunders. In addressing this assignment of error, we recognize that “the

admission of expert testimony is within the sound discretion of the trial judge.” Miss.

Transp. Comm’n v. McLemore, 863 So. 2d 31, 34 (¶4) (Miss. 2003) (citation omitted).

                                            12
“Therefore, the decision of a trial judge will stand unless we conclude that the discretion was

arbitrary and clearly erroneous, amounting to an abuse of discretion.” Id. (citation and

quotation marks omitted). In support of their argument, the Executors assert that Saunders’s

testimony was unreliable because his damage calculation was based on unreliable accounting

methods and he possessed a conflict of interest.

¶25.   The Executors first contend that Saunders erroneously used a business-valuation

analysis to calculate damages owed to Limestone when he should have used a lost-profits

analysis.   The Executors further “contend that the inappropriate analysis utilized by

[Saunders] should, at the very least, necessitate deference to the damages determined by

[their] expert[, Koerber,] and, at most, render the testimony of [Saunders] unreliable

according to Rule 702 of the Mississippi Rules of Evidence.” The Executors also argue,

without providing any supporting caselaw, that Saunders’s testimony was unreliable due to

a conflict of interest that compromised his objectivity. As reflected in the record, Saunders’s

firm performed tax work for Lampkin personally and for Lampkin’s businesses, including

Limestone and Delta Stone.

¶26.   “Conflicting expert testimony—often called a ‘battle of the experts’—requires the

fact-finder to assign credibility. The trial judge, as the fact-finder in this case, was free to

accept or reject any of the expert opinions.” Estate of Sykes ex rel. Campbell v. Calhoun

Health Servs., 66 So. 3d 129, 135 (¶27) (Miss. 2011) (citations omitted). Our law clearly

provides that expert testimony should only be admitted if it meets the requirements of Rule

702. Bailey Lumber & Supply Co. v. Robinson, 98 So. 3d 986, 991 (¶13) (Miss. 2012).

                                              13
¶27.   Rule 702 provides:

       If scientific, technical, or other specialized knowledge will assist the trier of
       fact to understand the evidence or to determine a fact in issue, a witness
       qualified as an expert by knowledge, skill, experience, training, or education,
       may testify thereto in the form of an opinion or otherwise, if (1) the testimony
       is based upon sufficient facts or data, (2) the testimony is the product of
       reliable principles and methods, and (3) the witness has applied the principles
       and methods reliably to the facts of the case.

¶28.   Thus, pursuant to Rule 702, expert testimony must satisfy a two-pronged inquiry: (1)

“the witness must be qualified by virtue of his . . . knowledge, skill, experience[,] or

education”; and (2) “the witness’s scientific, technical[,] or other specialized knowledge must

assist the trier of fact in understanding or deciding a fact in issue.” McLemore, 863 So. 2d

at 35 (¶7) (internal citations omitted). “In other words, the expert witness must be qualified

to render the opinion, and the testimony must be relevant and reliable.” Bailey Lumber, 98

So. 3d at 992 (¶13) (citation omitted).

¶29.   Saunders testified that he obtained his certified-public-accountant license in 1977. He

further testified that he began his own accounting firm in 1981 and that his practice had

included performing business valuations since the mid-1980s. Saunders also testified that

he was a member of several professional associations and was certified in financial forensics

by the American Institute of Certified Public Accountants. In addition, Saunders stated that

he had previously testified and been accepted as an expert in all types of accounting-related

areas, including business valuations, lost-profits calculations, corporate accounting practices

and procedures, and damage studies.

¶30.   During both Saunders’s voir dire and cross-examination, the Executors questioned

                                              14
him about his objectivity and his firm’s work on behalf of Lampkin and Lampkin’s

businesses. The Executors specifically asked Saunders during voir dire whether he could

have Lampkin as a client and still retain his independence as an expert witness in the

proceeding. In response, Saunders stated:

       There’s the standard . . . which forensic accountants fall under which is in the
       consulting practice. And as a general rule, independence is not a requirement
       to practice in that area. And specifically[,] I can do tax work and accounting
       work for a client and still be independent under those rules as an expert
       witness.

When asked during voir dire whether he worried that, if he testified adversely to Lampkin,

he might lose Lampkin’s business, Saunders replied, “Absolutely not.”

¶31.   As the record reflects, Lampkin laid a foundation and presented Saunders as an expert

witness in business valuation, and the Executors then had an opportunity to conduct voir dire.

As the fact-finder in the court below, the chancellor was in the best position to assign

credibility to the conflicting expert testimony presented during the “battle of the experts,”

and he was free to accept or reject any of the expert opinions. See Campbell, 66 So. 3d at

135 (¶27). Based on the record before him, the chancellor accepted Saunders as an expert

in the field of business valuation and allowed him to testify. The chancellor clearly found

that Saunders was qualified to render an expert opinion and that his testimony was relevant

and reliable. See Bailey Lumber, 98 So. 3d at 992 (¶13). After reviewing the record and

applicable caselaw, we find no abuse of discretion by the chancellor’s decision to admit and

rely on Saunders’s expert testimony. This issue therefore lacks merit.

       II.    Whether the chancellor properly assessed the amount of damages

                                             15
              due to the corporation.

¶32.   Throughout their brief, the Executors argue that the chancellor failed to properly

assess the damages owed to not only Limestone but also the Estate. The Executors seek lost

profits instead of lost income as damages. In reviewing this assignment of error, we

acknowledge the following:

       The assessment of damages is a finding of fact, and the appellate court reviews
       an award of damages under the clearly erroneous standard. This Court has
       stated that damage awards are only overturned when the trial judge has abused
       his discretion or in exceptional cases where such awards are so gross as to be
       contrary to right reason. The appellate court must review the damages award
       by looking to the facts of each case.

Greater Canton Ford Mercury Inc. v. Lane, 997 So. 2d 198, 206 (¶30) (Miss. 2008) (internal

citations and quotation marks omitted). In support of their argument that the chancellor

awarded Limestone inadequate damages, the Executors raise the following sub-arguments:

(1) the chancellor based his calculation of damages on unreliable accounting methods; (2)

the chancellor failed to take into account the unreported rock that Lampkin allegedly diverted

from Limestone; and (3) the chancellor failed to award damages with respect to a valid lease

agreement.

              a.     The Chancellor’s Accounting Methods

¶33.   In response to the Executors’ claim that the chancellor based his damages assessment

on unreliable accounting methods, Lampkin asserts that the chancellor relied on portions of

both experts’ calculations that fell within accepted methodologies to arrive at a reasonable

calculation based on the parties’ evidence. Lampkin further asserts that the chancellor was

                                             16
within his discretion to “make his own calculation using an approved methodology, in this

case[,] using past profits to calculate lost profits.”

¶34.   In calculating the amount of damages owed to Limestone, the chancellor cited Lovett

v. E.L. Garner Inc., 511 So. 2d 1346, 1353 (Miss. 1987), for his finding that “historical lost

net profits” is an acceptable method to use in cases involving breach of contract. With

regard to loss of future profits, Lovett states the following:

               In Mississippi, one may recover for loss of future profits in a breach of
       contract action as long as such profits are proved with reasonable certainty, not
       based on speculation or conjecture. In calculating loss of future profits, such
       loss is that of net profits as opposed to gross profits. To ascertain net profits,
       a party must deduct such items as overhead, depreciation, taxes and inflation.
       Further, future profits should always be discounted at an appropriate rate to
       arrive at present value. And, finally, the plaintiff must mitigate damages if he
       is able to do so.

              There are no guidelines set in stone specifying the degree of certainty
       that we require of parties in proving loss of future profits. Indeed, the degree
       of proof required usually depends on the particular facts of the case. One
       guideline frequently recognized by this Court is a party’s proof of its past
       profits.

Id. (emphasis added and internal citations omitted).

¶35.   Thus, as recognized by Mississippi caselaw, “one way to show damages (the loss of

future profits) is to introduce evidence of past profits.” Sanders v. Dantzler, 375 So. 2d 774,

777 (Miss. 1979). This Court has further clarified, however, that “[i]t is lost profits and not

lost income which is the proper measure of damages, i.e., it is a net and not a gross figure on

which damages should be calculated.” Lynn v. Soterra Inc., 802 So. 2d 162, 171 (¶33) (Miss.

Ct. App. 2001) (citing City of New Albany v. Barkley, 510 So. 2d 805, 807 (Miss. 1987)).

                                               17
¶36.     As reflected by the record in this case, the chancellor looked at Limestone’s past

performance for the years 2000 through 2007 to assess damages in the form of lost future

profits for the years 2008 through 2012. In determining lost future profits, the chancellor

used the average net income provided by Koerber, the Executors’ expert. For 2000 through

2007, Koerber determined that the average net income, or past profits, for Limestone

amounted to $20,914. Multiplying this amount by five, the number of years for 2008 through

2012, the chancellor determined that Limestone’s loss of future profits totaled $104,570. The

chancellor also used the net book value of $125,546.32 provided by Saunders’s testimony

and added this amount to the calculation of Limestone’s lost future profits. As a result of this

method, the chancellor determined that Limestone suffered damages of $230,116.32.2

¶37.     Based on applicable caselaw and the facts of this case, we find no abuse of discretion

in the methods the chancellor used to assess Limestone’s damages. In reviewing the

particular facts of this case, we find that the record fails to demonstrate that this is one of

those “exceptional cases where [the award was] so gross as to be contrary to right reason.”

Greater Canton Ford Mercury, 997 So. 2d at 206 (¶30). Accordingly, this argument lacks

merit.

                b.     The Unreported Rock

         2
         To calculate damages, the chancellor used the net book value of $125,546.32, plus
the lost profits calculated for 2008 through 2012, as follows:

         $125,546.32
+        $104,570.00
         $230,116.32

                                               18
¶38.   The Executors also contend that the damages calculated with respect to lost profits

are greatly understated because the chancellor failed to take into account unreported rock that

Lampkin allegedly diverted from Limestone. Without providing any caselaw to support their

argument, the Executors claim that the chancellor abused his discretion by eliminating the

unreported rock from the calculation of Limestone’s lost profits.

¶39.   In his findings of fact, the chancellor discussed the parties’ conflicting testimony

regarding the allegations of unreported rock. The chancellor then dismissed the Executors’

allegations, stating that “Lampkin and Saunders both provided testimony which accounted

for the whereabouts of the alleged unreported rock.”           As our caselaw recognizes,

“[c]onflicting testimony in the record is to be resolved by the trier of fact.” Scott Addison

Constr. Inc. v. Lauderdale Cnty. Sch. Sys., 789 So. 2d 771, 773 (¶8) (Miss. 2001). The

chancellor, as the fact-finder in the court below, possessed the authority and discretion to

weigh the credibility of the parties’ testimony. Univ. Med. Ctr. v. Martin, 994 So. 2d 740,

746-47 (¶25) (Miss. 2008).

¶40.   As reflected in his judgment, the chancellor clearly resolved this factual dispute

regarding the allegations of unreported rock in Lampkin’s favor.               As previously

acknowledged, on appeal this Court examines the entire record and accepts as true all

“evidence which supports or reasonably tends to support the findings of fact made below,

together with all reasonable inferences which may be drawn therefrom and which favor the

lower court’s findings of fact.” Par Indus. Inc., 708 So. 2d at 47 (¶4) (citation and internal

quotation marks omitted). Based on the applicable standard of review, we find no abuse of

                                              19
discretion in the chancellor’s resolution of this factual dispute in Lampkin’s favor. This

argument also lacks merit.

              c.     The Lease-Agreement Payments

¶41.   The Executors further assert that the chancellor failed to award damages based on a

valid lease agreement. According to the Executors’ argument, the chancellor erroneously

found that lease monies were owed to Limestone by Lampkin and Smith, the shareholders.

They instead contend the following:

       Limestone is the lessee, or tenant; therefore, Limestone is responsible for
       paying monies to Lampkin and . . . Smith under the lease. These lease
       payments are the obligation of Limestone, not [the obligation of] the individual
       shareholders.

       ....

       By not finding damages for the [Estate] due to Lampkin’s failure to pay the
       rent owed from Limestone to himself and Smith, the [chancellor] essentially
       pierced the corporate veil. Oddly enough, the [chancellor] pierced the
       corporate veil to the detriment of the non-breaching party, which is contrary
       to the applicable caselaw.

The Executors therefore argue that the chancellor ignored the corporate form of Limestone,

the entity responsible for the lease payments, and instead pierced the corporate veil against

the non-breaching party without any reason.

¶42.   In response, Lampkin first asserts that the chancellor properly declined to award

damages for lease payments that the Executors claim Lampkin owed. If this Court decides

to consider the claim for lease payments, however, Lampkin argues that the Executors failed

to raise the claim in their pleadings. According to Lampkin’s brief, the claim was not raised

                                             20
until trial in July 2012. Thus, Lampkin argues that any claim as to lease payments before

2009 is time-barred by the three-year statute of limitations.

¶43.   Lampkin also asserts that the Estate lost any ownership interest in the property leased

by Limestone once the November 2011 judgment was entered to partition the property. He

therefore argues that, at most, only lease payments allegedly owed from 2009 through 2011

could be considered. Overall, however, Lampkin asks this Court to affirm the chancellor’s

determination that the Estate suffered no damages from the failure to pay rent and that the

facts make this issue “a wash.”

¶44.   Applying the appropriate standard of review to the facts of this case, we find no abuse

of discretion by the chancellor’s decision to not include any alleged lease payments in his

calculation of the damages owed to Limestone. We therefore find that this argument lacks

merit. As a result, we find no merit to the Executors’ overall argument that the chancellor

failed to properly assess damages owed to Limestone and the Estate.

       III.   Whether the chancellor erred by refusing to award attorneys’ fees
              and expert-witness fees.

¶45.   In their final assignment of error, the Executors contend that the chancellor erred by

denying their request for attorneys’ fees and expert-witness fees. This Court reviews the

grant or denial of attorneys’ fees and expert-witness fees for abuse of discretion. See Smith

v. Dorsey, 599 So. 2d 529, 550 (Miss. 1992) (finding no abuse of discretion in the

chancellor’s award of expert’s fee and attorneys’ fees).

¶46.   Rule 54(d) of the Mississippi Rules of Civil Procedure discusses judgments and costs.

                                             21
The comment for Rule 54 states the following:

               Three related concepts should be distinguished in considering Rule
       54(d): These are costs, fees, and expenses. Costs refers to those charges that
       one party has incurred and is permitted to have reimbursed by his opponent as
       part of the judgment in the action. Although costs has an everyday meaning
       synonymous with expenses, taxable costs under Rule 54(d) is more limited and
       represents those official expenses, such as court fees, that a court will assess
       against a litigant. Costs almost always amount to less than a successful
       litigant’s total expenses in connection with a law suit and their recovery is
       nearly always awarded to the successful party. . . .

              Fees are those amounts paid to the court or one of its officers for
       particular charges that generally are delineated by statute. Most commonly
       these include such items as filing fees, clerk’s and sheriff’s charges, and
       witnesses’ fees. In most instances an award of costs will include
       reimbursement for the fees paid by the party in whose favor the cost award is
       made.

              Expenses include all the expenditures actually made by a litigant in
       connection with the action. Both fees and costs are expenses but by no means
       constitute all of them. Absent a special statute or rule, or an exceptional
       exercise of judicial discretion, such items as attorney’s fees, travel
       expenditures, and investigatory expenses will not qualify either as statutory
       fees or reimbursable costs. These expenses must be borne by the litigants.

¶47.   “As a general rule, fees for expert witnesses, beyond the ordinary fees authorized for

witnesses, are not taxable as costs unless there is a statute specifically allowing such an

expense.” Hubbard v. Delta Sanitation of Miss., 64 So. 3d 547, 564 (¶70) (Miss. Ct. App.

2011) (citation and internal quotation marks omitted). While certain Mississippi statutes3

provide for expert-witness fees to be taxed as costs in particular cases, we can find no such

       3
        For example, see Mississippi Code Annotated section 95-5-10(3) (Rev. 2013), which
provides that “[a]ll reasonable expert[-]witness fees and attorney’s fees shall be assessed as
court costs in the discretion of the court” in trespass-to-timber cases.

                                             22
statute that applies to the present case.

¶48.   As to the issue of an award of attorneys’ fees, Mississippi caselaw provides the

following:

       [T]his Court has analogized an allowance of attorneys’ fees to the grant of
       punitive damages. Absent statutory authority or contractual provisions,
       attorneys’ fees cannot be awarded unless punitive damages are also proper.
       Within these guidelines, the allowance and the amount of a fee is a matter
       committed to the sound discretion of the trial judge.

Smith, 599 So. 2d at 550 (internal citations omitted).

¶49.   The supreme court has previously held:

       [P]unitive damages are recoverable in breach[-]of[-]contract cases where the
       breach results from an intentional wrong and when there has been a showing
       of malice or gross/reckless disregard for the rights of others. Punitive damages
       are only appropriate in the most egregious cases so as to discourage similar
       conduct and should only be awarded in cases where the actions are extreme.

Warren v. Derivaux, 996 So. 2d 729, 738 (¶28) (Miss. 2008) (internal citations omitted).

¶50.   Based on the evidence presented by the parties, the chancellor found that Lampkin’s

conduct failed to show malice, gross negligence, or that Lampkin committed fraud. The

chancellor further found that Lampkin usurped a corporate opportunity from Limestone but

that the Estate was well aware of Limestone’s developing situation. In his order, the

chancellor noted Lampkin’s testimony that Limestone could not continue operating without

the line of credit, as well as Lampkin’s efforts to complete Limestone’s contracts and to

separate Delta Stone’s profits from Limestone’s profits. As a result of his findings, the

chancellor concluded that Lampkin’s actions “could be said to be somewhat negligent, but

not grossly negligent. The [c]ourt does not believe [Lampkin’s] behavior was egregious or

                                             23
committed with malice, and the Estate has not alleged any fraud.”

¶51.   A review of the record shows that the chancellor’s findings of fact were supported by

substantial evidence. Therefore, applying our appropriate standard of review and accepting

as true all “evidence which supports or reasonably tends to support the findings of fact made

below, together with all reasonable inferences which may drawn therefrom and which favor

the lower court’s findings of fact[,]” we find no abuse of discretion by the chancellor’s

refusal to award attorneys’ fees and expert-witness fees. Par Indus. Inc., 708 So. 2d at 47

(¶4) (citation and internal quotation marks omitted). This assignment of error lacks merit.

¶52. THE JUDGMENT OF THE WARREN COUNTY CHANCERY COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANTS.

     LEE, C.J., IRVING, P.J., ROBERTS AND MAXWELL, JJ., CONCUR.
GRIFFIS, P.J., DISSENTS IN PART WITH SEPARATE WRITTEN OPINION,
JOINED BY BARNES, ISHEE AND FAIR, JJ. JAMES, J., NOT PARTICIPATING.

       GRIFFIS, P.J., DISSENTING IN PART:

¶53.   I respectfully dissent.

¶54.   The chancellor called the judgment appealed a “Judgment on Valuation of Business.”

The chancellor recognized that Lampkin and Smith incorporated Limestone Products, Inc.

The chancellor ruled:

       The liability portion of the case was heard first and the Court determined
       Lampkin breached his fiduciary duty to the Smith estate by usurping a
       corporate opportunity through the starting of Delta Stone. In addition to the
       business itself, Limestone Products, the parties jointly owned certain real
       property on which the business was being operated. The real property has
       been partitioned by this Court. All that remains is an assessment of damages
       as a result of the above referenced usurpation.

                                             24
The chancellor then concluded, without citation to authority, that “[t]he damages portion of

the trial took place on the above referenced days. This portion of the trial consisted primarily

of establishing a valuation for Limestone Products.” (Emphasis added). The chancellor then

discussed the opinions offered by the expert witnesses. The chancellor then stated the

“Court’s Findings”:

       A director or officer who is found to have usurped a corporate opportunity
       “may be held accountable for the fruits of the wrongdoing.” 19 C.J.S.
       Corporations § 513.

              A director or officer who usurps a corporate opportunity holds
              the usurped opportunity, and all the profits and benefits received
              therefrom, as constructive trustee for the corporation, or is liable
              in damages measured by the profits which the corporation lost
              by not getting the opportunity. It is immaterial that the
              corporation suffered no out-of-pocket loss or that the fiduciary
              was not unjustly enriched by the transaction.

       Id. The Court in Aqua-Culture Technologies, Ltd. v. Holly, 677 So. 2d 171,
       183-184 (Miss. 1996), stated similarly that "recovery of profits may be
       awarded where one who breaches a fiduciary obligation makes profits in
       excess of the loss caused by the breach." (citing Norte & Co. v. Huffines, 288
       F. Supp. 855, 864 (S.D.N.Y. 1968).

       In making a determination as to the time expiration of any damage award, the
       Court turns to the case of Knox Glass Bottle Co. v. Underwood, 89 So. 2d 799,
       (Miss. 1956), where the Court was faced with somewhat similar facts. In Knox
       Glass, Roy Underwood, the president of a corporation, died. After his death,
       his brother took over as president and the corporation entered into trucking
       leases for the transportation of products. The leases were entered into
       between the corporation and some of the Underwood family, who were
       shareholders. associates, and friends. Through the leases, these persons
       yielded large personal profits. Knox Glass, 89 So. 2d at 803-813. The
       corporation sued arguing unjust enrichment and violation of fiduciary duties.
       The Court ultimately held that the directors and officers of Knox Glass
       personally leased trucks and received substantial profits from the leases. Since
       the corporation had the funds to purchase trucks, which would have been much

                                              25
       less costly than the leasing of the trucks, the directors and officers were liable
       for profits realized by the leases for a reasonable time after the death of the
       president. Id. at 818 (Emphasis added). The Court has thereby set forth a
       subjective standard when making a determination of damages where a
       fiduciary has breached his or her duty to a corporation.

       Whatever damages, if any, due and owing are to be paid to . . . Limestone
       Products, not the individual shareholders. In making a damages determination
       the Court must consider what, if any, profits were made by Lampkin as a result
       of the usurpation. This assessment or valuation requires the Court to look at
       the assets of Limestone Products, the income or profit of both Limestone
       Products and Delta Stone, and the debts and other expenses associated with
       the operation of both Limestone Products and Delta Stone.

¶55.   I include this lengthy quote of the chancellor’s opinion because I believe he has

accurately stated the law that is applicable here. However, starting in the last sentence of this

quote, the chancellor has committed error.

¶56.   Further, in the next paragraph, the chancellor makes erroneous statements of law. The

judgment states:

       All of the discussion regarding the line of credit and Lampkin Construction's
       payment for purchase of rock really aren't of any importance to the Court since
       the line of credit was paid off in April 2007 and Lampkin Construction has
       paid all debts owing to Limestone Products. These payments will be reflected
       in the financial records of the businesses. Also, the Court is of the opinion that
       the experts are just splitting hairs with getting bogged down in an argument
       over the terminology used to describe the valuation of Limestone Products.
       Whether you call it asset based or net book value or lost profits, the Court is
       merely concerned with how and when to value this business. Both experts
       were accepted as experts in the field of business valuation and the Court will
       consider the reports and testimony of both Koerber and Saunders in making its
       finding.

¶57.   The chancellor has the duty to weigh the evidence, assess the credibility of witnesses,

and chose what evidence to rely upon. Notably, the chancellor states that “the Court is of the

                                               26
opinion that the experts are just splitting hairs with getting bogged down in an argument over

the terminology used to describe the valuation of Limestone Products.” I disagree and find

this to be reversible error. The experts were not “just splitting hairs” or “getting bogged

down”; rather, they were testifying about detailed and important accounting terminology.

¶58.   The chancellor “determined Lampkin breached his fiduciary duty to the Smith estate

by usurping a corporate opportunity through the starting of Delta Stone.” A lost-profits

analysis should be used to calculate damages based on a claim of breach of fiduciary duty.

Griffith v. Griffith, 997 So. 2d 218, 223 (¶19) (Miss. Ct. App. 2008). Likewise, a lost-profits

analysis should be used to calculate damages based on a claim of usurpation of a corporate

opportunity. Aqua-Culture Technologies, Ltd. v. Holly, 677 So. 2d 171, 184 (Miss. 1996).

¶59.   There is simply no legal authority for the chancellor to consider a business-valuation

analysis for a claim of breach of fiduciary duty or usurpation of corporate opportunity.

¶60.   Further, it is illogical to include a calculation of “net book value” in a calculation for

damages when the court found a breach of fiduciary duty or a usurpation of corporate

opportunity. Upon dissolution, the shareholder of a corporation is entitled to receive a

distribution of the corporation’s assets that remain.        “Net book value” is simply an

accounting term that is not directly related to the actual value of the corporation’s assets. It

should not be considered as part of the calculation of damages for a recovery based on the

claims of breach of fiduciary duty or a usurpation of corporate opportunity. There is simply

no case to support this conclusion.

¶61.   Also, I disagree with the chancellor’s disregard of the unreported rock. Each side’s

                                              27
expert witness agreed that tons of rock were diverted by Lampkin from Limestone Products

to either Delta Stone or Lampkin Construction. Saunders testified to the following in his

direct testimony about Koerber’s testimony of “unreported rock”:

       Well in truth if unreported means they weren’t reported in Limestone then
       yeah, that’s right. But they were reported in Delta Stone. 154,000. He moved
       the tons from Limestone to Delta Stone. And I’ve already told you that he did
       that. There’s no question that he did that.

Thus, Saunders’s testimony supported Koerber’s analysis, when Koerber testified:

       Limestone Products was also damaged by Mr. Lampkin purchasing rock
       delivered to the Limestone Products facility and circumventing the accounting
       system of Limestone Products. From 2003 through 2006, while Limestone
       Products was still operating, numerous invoices from Luhr Brothers and Tower
       Rock were not entered into the Quickbooks accounting system of Limestone
       Products, Inc. Limestone Products experienced lost profits due to the
       circumvention of the accounting system.

I am of the opinion that the chancellor was in error to not consider the unreported rock in the

calculation of damages.

¶62.   Accordingly, I would reverse and remand this case to the chancellor for a new trial

on damages. As part of the remand, I would also remand the claim of attorney’s fees. I note

that in Aqua-Culture, the Mississippi Supreme Court upheld an award of attorney’s fees

against the “improperly-acting shareholder.” Covington v. Covington, 780 So. 2d 665, 671

(¶14) (Miss. Ct. App. 2001) (citing Aqua-Culture, 677 So. 2d at 184).

       BARNES, ISHEE AND FAIR, JJ., JOIN THIS OPINION.

                                              28