Court Opinion

ID: 3161633
Source: CourtListenerOpinion
Date Created: 2015-12-10 20:05:43.354099+00
Date Added: 2024-06-11T12:17:18.159366
License: Public Domain

IN THE SUPREME COURT OF MISSISSIPPI

                                 NO. 2014-CA-01261-SCT

GERALD W. SCAFIDI, WHEEL-IN PARK AND
CAMPGROUNDS, INC., A MISSISSIPPI
CORPORATION, WHEEL-INN TRAILER PARK,
INC., A MISSISSIPPI CORPORATION, AND
SCAFIDI’S WHEEL-INN RESTAURANT, INC., A
MISSISSIPPI CORPORATION

v.

JO ANN S. HILLE

DATE OF JUDGMENT:                           01/17/2013
TRIAL JUDGE:                                HON. MICHAEL H. WARD
TRIAL COURT ATTORNEYS:                      NATHAN S. FARMER
                                            THOMAS WRIGHT TEEL
                                            ALFRED R. KOENENN
COURT FROM WHICH APPEALED:                  HANCOCK COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANTS:                    NATHAN S. FARMER
ATTORNEYS FOR APPELLEE:                     ALFRED R. KOENENN
                                            THOMAS WRIGHT TEEL
NATURE OF THE CASE:                         CIVIL - REAL PROPERTY -
                                            CORPORATION
DISPOSITION:                                AFFIRMED - 12/10/2015
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

       EN BANC.

       WALLER, CHIEF JUSTICE, FOR THE COURT:

¶1.    This case involves a dispute between Gerald W. Scafidi (“Gerald”) and his sister, Jo

Ann S. Hille (“Jo Ann”), about three family corporations and the land they inherited from

their parents. Unable to get along, each sibling ran one of the corporations essentially as a

sole proprietorship, while the third corporation ceased to do business. The sister, dissatisfied
with the deadlock, brought this suit to end her business dealings with her brother and divide

the assets.

¶2.    The chancellor found that the parties had failed to observe corporate formalities, so

they were not entitled to the protections of the corporate form. The chancellor made an

equitable distribution and granted each party full ownership of separate companies and then

adjusted the property lines to grant each sibling a fifty-percent interest in the land. One

corporation that could not be divided was sold by agreed order and the proceeds of the sale

were divided between the siblings. Other parts of the ruling addressed attorney’s fees, expert

fees, unpaid taxes, the BP settlement, and other matters. Gerald appeals. In short, he argues

that the chancellor erred by not following the statutory framework for dissolving and

distributing corporate assets according to stated ownership interests. Had the assets been

distributed in proportion to ownership, he would have received a larger distribution as the

majority shareholder. Finding no error, we affirm.

                       FACTS AND PROCEDURAL HISTORY

       A.     Background

¶3.    This case presents a tangled factual and procedural history between two siblings and

a chancellor’s effort to resolve their dispute. August J. Scafidi and Audrey Scafidi were

married and had three children: Gerald, Jo Ann, and August Jr. (deceased). During the 1950s,

the parents purchased all of the subject property. Later, the parents divided the property and

titled two parcels in separate family-owned companies and titled one parcel as tenants in

common. All of the property is situated along the south side of Highway 90 in Bay St. Louis,

                                              2
Mississippi. In 1994 the father died, and the mother passed away four years later. The parents

set out in their wills that Jo Ann and Gerald should share equally in their estates. A map of

the properties is attached as an exhibit.

¶4.    After the death of their parents, Jo Ann and Gerald resumed operations of the

businesses. They had two corporate meetings in 1998, but they did not reach any agreements

or record any minutes. These were the only corporate meetings the brother and sister had

over the next decade, despite Jo Ann’s requests and efforts.1 Jo Ann stayed on the eastern

parcel and ran the Wheel-Inn Trailer Park (“the Trailer Park”), while Gerald remained on the

western parcel and ran Scafidi’s Wheel-Inn Restaurant (“the Restaurant”) and the Wheel-Inn

Park & Campground (“the Campground”). Their arrangement was informal, without any

documentation. Both brother and sister expressed concerns about the way the other managed

the properties and the businesses. This was the status quo from the time their parents died

until the commencement of Jo Ann’s suit in 2006.

       B.     Properties at Issue

              1.      Wheel Inn Restaurant, Inc. (Gerald’s Business)

¶5.    When August Sr. died, he left Scafidi’s Wheel-Inn Restaurant to his wife. When

Audrey died, she left forty-five-percent of the shares to Jo Ann, forty-five-percent of the

shares to Gerald, and ten percent of the shares to her grandchildren (August Jr.’s children,

who are the nieces and nephews of Jo Ann and Gerald). The Restaurant owned the 0.92-acre

       1
         This is not to suggest that Gerald and Jo Ann had zero contact. For example,
evidently at the request of Gerald, Gerald and Jo Ann executed a note in the amount of
$250,000 on September 19, 2003. The note was reduced to $150,000 by the sale of the land
jointly owned by the siblings with the balance paid by Gerald.

                                              3
parcel of land on which it was located and was solely operated by Gerald. Gerald did not

consult Jo Ann in the decisions he made regarding the Restaurant undertaking. The

Restaurant building had not been rented out since early 2006, when its last tenant vacated.

Since then, it has been in a general state of disrepair. In the four to five years before trial, and

without Jo Ann’s consent or participation, Gerald used funds from the Campground

corporation and another rental account, both controlled by Gerald, to pay for repairs,

furnishings, and fixtures to reopen the Restaurant on a partial basis.2

¶6.    Co-located with the Restaurant, but separate from the Restaurant operation, was a

rented-out space known as the Latino Shop. Before his death, August Sr. built this tiny space

adjacent to the Restaurant for Jo Ann’s beauty salon. The parents set out in their wills that

Jo Ann could lease this space for one dollar a year. After a series of ventures, Jo Ann rented

this space for a business referred to as the Latino Shop.3

               2.      Wheel Inn Park & Campgrounds, Inc. (Gerald’s Business)

¶7.    The Campground is located on the largest parcel of land (approximately 9.3 acres),

situated behind the Restaurant property, and it also was controlled exclusively by Gerald. Jo

Ann and Gerald each received a fifty-percent ownership interest in the Campground

       2
         There was also an order entered by the chancellor in 2009 for the parties to operate
in the status quo in the normal course of business until further order of the court.
       3
         After the beauty shop, Jo Ann opened a business in the rental space, known as
Heaven, to generate income. Jo Ann supplemented the Heaven business with funds from the
Trailer Park corporation. Heaven went out of business shortly before Hurricane Katrina hit.
After Heaven closed, Jo Ann planned on using that rental space for her daughter’s business,
a 1950s Diner, but that business fell through. After Heaven closed, the Latino Shop moved
in. Jo Ann placed money from the Latino Shop into the Trailer Park corporation.

                                                 4
corporation. The Campground does not own the parcel on which it is situated. Jo Ann and

Gerald each own an undivided one-half interest in the Campground property as tenants in

common, as conveyed to them by their mother. Like the Restaurant, Gerald operated and

controlled the Campground without consulting Jo Ann. The Campground operation consisted

of a seventy-five-pad RV park, a swimming pool, five rental cabins, and several tent sites.

Out of the three family businesses, the Campground was the most profitable. Using

Campground monies, Gerald paid off his personal credit card, paid for utility and phone bills,

and bought a truck. Gerald lived on the second floor of a two-story building located on the

Campground property. The first floor included a laundry facility, a small convenience store,

restrooms and showers, and ice and propane sales.

¶8.    Gerald also used the Campground property for the rental of heavy equipment owned

by him or his friends. Gerald used this same equipment to maintain and repair the

Campground, the Restaurant, and, to some degree, the Trailer Park properties. Gerald

sometimes used income from this offsite work for the benefit of the Campground and the

Restaurant. However, Gerald did not pay rent for the equipment operation to the

Campground or to Jo Ann, as the one-half owner of the Campground land.

¶9.    Finally, Gerald rented out a small building on the property known as the “Lunch Box,”

which he used to pay for various expenses of the Campground and Restaurant operations.

Rental income from the Lunch Box was deposited into an account at People’s Bank, which

Gerald controlled and maintained to the exclusion of Jo Ann. For one year in 2000, Gerald

correctly split the rental income with Jo Ann, but then he stopped in 2001. He refused to

                                              5
divide the income from the rental account and concealed all details from Jo Ann and even

his accountant.

              3.       Wheel Inn Trailer Park, Inc. (Jo Ann’s Business)

¶10.   Jo Ann operated the Trailer Park, which included the second largest parcel of land

(approximately 3.61 acres). Jo Ann did not consult Gerald in running the business. Jo Ann

and Gerald each owned a forty-percent interest in the Trailer Park, and their nieces and

nephews owned the remaining twenty-percent. The Trailer Park rented out spaces for mobile

homes, usually on a long-term basis. Jo Ann drew income from the Trailer Park and also used

funds from the Trailer Park to operate her side businesses on the Restaurant property. Jo Ann

also used funds from the Trailer Park to repair the roof on her house and to pay for her health

insurance and a car.

       C.     Summary of Events Before and During Litigation

¶11.   Despite Jo Ann’s efforts, she could never get Gerald and the other minority

shareholders to a corporate meeting after 1998. Jo Ann often tried, with no success, to talk

to Gerald about the businesses and financial accounts. This often resulted in unpleasant

exchanges. Jo Ann’s last attempt to have a corporate meeting came after Hurricane Katrina.

When Gerald stated the only way Jo Ann could get him to a meeting was by suing him, Jo

Ann retained counsel and filed suit.

¶12.   Jo Ann filed her complaint in August 2006 in the Hancock County Chancery Court.

She requested that the chancery court order an accounting, compel a shareholders’ meeting

for the purposes of dissolution, and, alternatively, partition the property. She amended her

                                              6
complaint in August 2007 to add as defendants the minority shareholders in the Trailer Park

and the Restaurant corporations, as well as a lienholder, the Peoples Bank.

¶13.   In August 2008, after attempting mediation, Gerald purchased the minority shares in

the Restaurant and the Trailer Park for $180,000. Gerald asserted this money came from the

funds of other individuals, and not monies from the Campground or Restaurant, in which Jo

Ann had an equal interest. After Gerald purchased the minority shares, Gerald and Jo Ann

held the following interests in the three corporations: the Trailer Park, Gerald sixty-percent

and Jo Ann forty-percent; the Restaurant, Gerald fifty-five-percent and Jo Ann forty-five-

percent; and the Campground, Jo Ann fifty-percent and Gerald fifty-percent.

¶14.   Gerald then called for a stockholder’s meeting to remove Jo Ann from the boards of

the Restaurant and the Trailer Park corporations, so she could no longer act on their behalf.

In response, Jo Ann sought a preliminary injunction to stop the meeting. In November 2008

after a hearing on the minority shareholders’ cross-motion to dismiss, the chancellor

dismissed the minority shareholders as defendants when it was disclosed that Gerald had

purchased their stock.

¶15.   In December 2009, the chancellor ordered the parties to maintain the status quo

regarding the corporate/business operations until he could hear and decide the matter. “[N]o

person or company should make expenditures from operations on the properties or in the

companies that are not in the interest of the companies and which are not reasonable and

necessary to that company; further there shall be no waste of the corporate assets or income.”

                                              7
The chancellor also found it was necessary to order a forensic accounting of the income and

expenditures of each party over the past decade.

       D.     The Trial and the Chancellor’s Final Amended Judgment

¶16.   The case was tried over a period of four days: on August 29 and 30, 2011, and on

February 8 and 9, 2012. Jo Ann amended her complaint a second time in October 2011 to add

a claim for a partition in kind of the properties. In response, Gerald elected to purchase Jo

Ann’s shares under the dissolution statute Section 79-4-14.34 of the Mississippi Code, which

the chancellor denied.

¶17.   The chancellor appointed Alexander, Van Loon, Sloan, and Farve (“AVL”), to

conduct the forensic accounting. Kim Marmalich testified as the expert forensic accountant.

Marmalich noted that all three corporations were closely held. She stated Jo Ann filed

personal tax returns, but that Gerald had not filed since 2004. She also testified Gerald’s

books were unclear and there was not enough information to determine Gerald’s income or

the monies he made on the Campground and the Restaurant properties. The AVL report

showed that the operation and management of the corporations under the control of Gerald

and Jo Ann revealed a commingling of revenue and expenses. The chancellor admitted the

report into evidence as a trial exhibit. Shelley Ray, an accountant with the Rigby CPA Firm,

also testified about these accounting problems. She had done accounting work for Gerald and

Jo Ann in the past for the corporations. She stated Jo Ann had provided bank statements and

verifying receipts, but that Gerald gave only receipts for cash payments.

                                             8
¶18.   After being qualified as an expert, Harry Hebert, an appraiser hired by Jo Ann, gave

testimony as to the value of the Restaurant, the Trailer Park, and the Campground properties.

Mike Cassady, a surveyor also hired by Jo Ann, also testified and put forth several versions

of a proposed division of the Scafidi properties.

¶19.   Gerald testified that the funds he used to purchase the minority shareholders’ shares

for the total cash consideration of $180,000 came from his personal funds and the funds from

five other individuals. Two of these individuals testified at trial, though they offered very

little documentation.

¶20.   On January 17, 2013, the chancellor entered a Final Judgment. In his finding, the

chancellor stated that Gerald was “less than forthcoming to the point of being secretive and

non-responsive to discovery requests regarding all financial matters, specifically including

the income and expenses of the restaurant, campgrounds, or rental account.”

¶21.   In addition to Gerald’s failure to respond to discovery, the chancellor found “that the

appointment of a forensic accountant was necessitated by the failure of Gerald to maintain

even minimally acceptable books and records . . . .”4 The chancellor noted that, although “the

forensic accounting . . . experts attempted to do their job,” he found “that the methods used

by the forensic accountants [could] not be reliably applied to the facts of this case to establish

the amount of misappropriation of money by Gerald.”

       4
       The chancellor further found “that if Gerald had truthfully responded to discovery
and maintained accurate books and records . . . then it would not have been necessary to
engage a forensic accountant . . . . [T]he work of the forensic accountant was hampered,
delayed and made more expensive by Gerald’s failure to . . . cooperate fully with the forensic
accountant.”

                                                9
¶22.   The chancellor then found that Gerald’s purchase of the minority shares in the

Restaurant and the Trailer Park corporations “was an attempt to acquire absolute control . .

. to the detriment and oppression of Jo Ann, as a minority shareholder.” The chancellor did

not find Gerald or his witnesses’ testimony credible as to the source of the $180,000. Then,

the chancellor found that “the only source of funds available to him was from the restaurant

and campgrounds corporations together with unreported income diverted from them in which

Jo Ann and Gerald had an equal interest. Effectively, the other shares were therefore

purchased with funds equitably owned by both Jo Ann and Gerald.” As a result of this

finding, the chancellor equitably resolved the interests of Jo Ann and Gerald by disregarding

the shares purchased by Gerald. The Court considered Jo Ann and Gerald to be equal

shareholders in the Restaurant and the Trailer Park.

¶23.   After finding that Jo Ann and Gerald each held an equal interest in the corporations,

the chancellor reasoned that since “the parties treated the companies . . . informally,” he

could “divide the assets and equities in a simpler manner.” He also ordered that the property

lines be modified based on the revised survey so that Jo Ann and Gerald each owned

approximately fifty percent of the real property at issue. In equalizing Gerald’s and Jo Ann’s

interest in the land and corporations, the chancellor ruled:

       5. ORDERED AND ADJUDGED, that the Court divides, partites, and
       equitably separates the parties by granting each full ownership of separate
       companies and then adjusting the property lines to accommodate the findings
       of this court; therefore,
       A.      The Court does hereby order that the remaining property shall be
               divided in accordance with [the appraiser’s] recommendations and the
               revised survey . . . .

                                             10
       B.     The Court finds that Jo Ann shall be the owner of the . . . Trailer Park
              . . . together with all personal property on that property as expanded by
              the revised . . . survey which includes part of the campground property;
       C.     The Court finds that Gerald shall be the owner of the . . . Campground
              . . . together with all personal property on that property as reduced by
              the . . . survey;
              ...
       E.     The Court hereby orders that each of the parties is to execute the
              necessary documents, including deeds, bills of sale and stock
              certificates to accomplish the directions of this court.
       6. ORDERED AND ADJUDGED, that the restaurant building, including the
       Latino shop, shall be sold together with all personal property on site . . . .

(Emphasis added.)

¶24.   According to the chancellor, “the actions of Gerald . . . were the cause of the length

and costs of this litigation,” so the chancellor equitably divided the costs, awarding Jo Ann

a percentage of her attorney’s fees, fees for forensic accounting, and fees for the appraiser

and the surveyor.

¶25.   On April 8, 2013, the chancellor entered a Corrected Judgement, nunc pro tunc to

January 17, 2013. The chancellor entered Final Judgment on April 25, 2013, nunc pro tunc

to January 17, 2013, responsive to the parties’ post-trial motions to alter/amend the judgment,

for the sole purpose of correcting and amending certain clerical errors, including the survey

line dividing the Trailer Park and the Campground properties. The chancellor ordered that

the survey line be adjusted to comport with the court’s decision to equalize the parties’

interest in the properties. That same day, the chancery court entered an agreed order that the

Restaurant building and land be sold.5

       5
        The chancery court entered an order on July 19, 2013, approving the sale of the
Restaurant property. The tract sold for $385,000, resulting in net proceeds of $313,765.59,
which were divided under the chancellor’s orders entered in these proceedings.

                                              11
¶26.   Gerald then filed a Notice of Appeal with this Court on May 24, 2013. On February

6, 2014, the chancellor entered an order on pending post-trial motions, recognizing that the

partition line referenced in the Final Judgment was in error, but that he did not have

jurisdiction to modify it because of the appeal to this Court. After the last post-trial order, the

chancellor entered his Order of Recusal on March 6, 2014, as Gerald had filed suit against

the chancellor in federal court. On March 12, 2014, by order of the Mississippi Supreme

Court, a special judge was appointed.6

¶27.   On April 7, 2014, Gerald, under Mississippi Rule of Civil Procedure 60(b), filed a

Motion Seeking Relief from Final Judgment. This Court dismissed Gerald’s appeal and

remanded the case to the Chancery Court of Hancock for further hearings on motions. Then,

Gerald filed his Supplemental Motion to Amend/Alter the Judgment, for New Trial, for

JNOV, and to Supplement the Record. The special chancellor entered an Amended Final

Judgment on May 12, 2014, to correct a calculation error. On June 4, 2014, this Court denied

Gerald’s Petition for Permission for Interlocutory Appeal and Stay of Proceedings in the

Lower Court. Gerald appealed. Because of the many issues in this case, we will discuss the

facts relevant to each issue below.

                                         DISCUSSION

¶28.   The issues raised by Gerald in this appeal fall into seven categories: (1) Whether Jo

Ann lacked standing to bring derivative claims in the name of the corporate parties; (2)

       6
         To avoid confusion, when this Opinion refers to the “chancellor” this refers to the
original chancellor, Jim Persons, and the subsequently appointed special chancellor, retired
Harrison County Judge Michael H. Ward.

                                                12
whether the chancellor committed error by granting relief beyond the scope of claims

asserted by Jo Ann; consolidated with (3) whether the chancellor committed error by granting

relief as to the divestment, division, and distribution of the assets of the corporate parties,

outside the process of the corporate dissolution statutes; (4) whether the chancellor lacked

authority to order partition in kind or partition by sale of real property held solely in the

names of the corporate parties; (5) whether the chancellor committed error by divesting

Gerald of his separate interest in the Trailer Park; consolidated with (6) whether the

chancellor committed error by granting partition in kind between Jo Ann and Gerald without:

(A) consideration of an accurate, up-to-date valuation of the remaining real properties, (B)

without a consideration of the exclusive use or occupancy of subject real properties by Jo

Ann and Gerald, (C) without granting an access easement to Gerald for ingress and egress,

and (D) without consideration of Jo Ann’s acquisition of the one-half interest of Gerald in

the Imbronone property; and (7) whether the chancellor committed error by not allowing the

parties a fair opportunity to respond to the sua sponte exclusion of the AVL Forensic

Accounting Report from evidence after the close of the record.

                                    Standard of Review

¶29.   This Court reviews a chancellor’s decision for an abuse of discretion. We will not

disturb a chancellor’s factual findings “when supported by substantial evidence unless . . .

the chancellor abused his discretion, was manifestly wrong, clearly erroneous or applied an

erroneous legal standard.” Venture Sales, LLC v. Perkins, 86 So. 3d 910, 913 (Miss. 2012).

                                              13
A chancellor’s decision will be affirmed when it is supported by substantial credible

evidence. Id. Questions of law are reviewed de novo. Id.

       I.     Whether Jo Ann lack standing to bring derivative claims in the
              name of the corporate parties.

¶30.   Gerald argues that Jo Ann’s claims are derivative in nature and that she lacked

standing to bring a derivative claim in the name of the corporate parties, because she failed

to make a written demand on the corporation as required by Section 79-4-7.42 of the

Mississippi Code. See Miss. Code Ann. § 79-4-7.42 (Rev. 2013). Gerald also argues that,

even if the trial court could treat Jo Ann’s derivative action as a direct action against Gerald,

the chancellor should have made a finding under Derouen v. Murray, 604 So. 2d 1086, 1091

n.2 (Miss. 1992), that her direct action would not: (1) unfairly expose the corporation or the

defendants to a multiplicity of actions, (2) materially prejudice the interests of creditors of

the corporation, or (3) interfere with a fair distribution of the recovery among all interested

persons.

              A.      Written Demand Requirement

¶31.   In general, “an action to redress injuries to a corporation . . . cannot be maintained by

a stockholder in his own name, but must be brought by the corporation because the action

belongs to the corporation and not the individual stockholders whose rights are merely

derivative.” Longanecker v. Diamondhead Country Club, 760 So. 2d 764, 768 (Miss. 2000).

A shareholder may not file a derivative action until “[a] written demand has been made upon

the corporation . . . .” Miss. Code Ann. § 79-4-7.42 (Rev. 2013).

                                               14
¶32.    Although Mississippi “law impresses upon derivative actions certain pre-trial

procedural requisites over and above the norm,” Derouen, 604 So. 2d at 1091, precedent

supports excusing the written-demand requirement in a closely held corporation. In Derouen,

this Court stated in a footnote that Mississippi follows the view of the Principles of

Corporate Governance § 701(d):

       (d) In the case of a closely held corporation . . . , the [chancery] court in its
       discretion may treat an action raising derivative claims as a direct action,
       exempt it from those restrictions and defenses applicable only to derivative
       actions, and order an individual recovery, if it finds that to do so will not (i)
       unfairly expose the corporation or the defendants to a multiplicity of actions,
       (ii) materially prejudice the interests of creditors of the corporation, or (iii)
       interfere with a fair distribution of the recovery among all interested persons.

Derouen, 604 So. 2d at 1091 n.2. (emphasis added).

¶33.   “The principal effect of [treating a derivative action as a direct action],” the Court

stated, “would be to exempt [the] plaintiff from these procedural hoops [such as demand].”

Derouen, 604 So. 2d at 1091 n.2; Principles of Corporate Governance § 701(d), 22 (1992).

Thus, for closely held corporations, the chancellor has the discretion to treat a derivative

action as a direct action and excuse the plaintiff from the written-demand requirement, as

long as the chancellor finds one of the Derouen requirements is met.

              B.     Characteristics of Closely Held Corporations

¶34.   “A close corporation is a business entity with few shareholders, the shares of which

are not publicly traded.” Fought v. Morris, 543 So. 2d 167, 169 (Miss. 1989). “Management

typically operates in an informal manner, more akin to a partnership than a corporation.” Id.

A close corporation functions as a small business, when “the shareholders, directors, and

                                              15
managers often are the same persons.” Id. at 170. Close corporations often are made up of

family members when the directors, officers, and shareholders are the same. Id. at 171. “Each

contributes . . . capital, skill, experience, and labor to the company. Management and

ownership are substantially identical. Each shareholder has an inside view of the company's

operations and maintains an element of trust and confidence in each other which is

commonly lacking in a large or publicly-held corporation.” Id.

¶35.   The parties here, as brother and sister, both served as officers, directors, and sole

shareholders of the corporations. We find that the Restaurant, the Trailer Park, and the

Campground companies undoubtedly are closely held corporations.

              C.      Direct Action v. Derivative Action

¶36.   Since the companies are closely held corporations, we turn to whether Jo Ann’s action

is a derivative or direct action. “There is little case law in Mississippi which addresses the

difference between derivative and direct actions, but the general rule is that derivative actions

seek recovery for injuries to the corporation.” Mathis v. ERA Franchise Sys., Inc., 25 So.
3d 298, 303 (Miss. 2009) (citing Bruno v. Sw. Servs., Inc., 385 So. 2d 620, 622-23 (Miss.

1980)). Section 7.01 of the Principles of Corporate Governance states:

       (a) A derivative action may be brought in the name or right of a corporation by
       a holder . . . to redress an injury sustained by, or enforce a duty owed to, a
       corporation. An action in which the holder can prevail only by showing an
       injury or breach of duty to the corporation should be treated as a derivative
       action.

       (b) A direct action may be brought in the name and right of a holder to redress
       an injury sustained by, or enforce a duty owed to, the holder. An action in
       which the holder can prevail without showing an injury or breach of duty to the

                                               16
       corporation should be treated as a direct action that may be maintained by the
       holder in an individual capacity.

Mathis, 25 So. 2d at 303 (quoting Principles of Corporate Governance § 7.01 at 17).

¶37.   “The action is derivative if the gravamen of the complaint is injury to the corporation,

or to the whole body of its stock or property without any severance or distribution among

individual shareholders, or if it seeks to recover assets for the corporation or to prevent the

dissipation of its assets.” Mathis, 25 So. 3d at 303 (quoting 12B William Meade Fletcher,

Cyclopedia of the Law of Corporations § 5911 (Rev. Ed. 2009)). “Thus, in determining

whether the action belongs to the corporation or the individual, the focus of the inquiry is

whether the corporation or the individual suffered injury.” Mathis, 25 So. 3d at 303.

¶38.   In the present case, Jo Ann sought an accounting, asking the chancellor to compel

Gerald to produce all financial records and to appoint a special master to examine the records

and issue a report. Jo Ann also requested that the chancellor judicially dissolve the

corporations and compel a stockholders’ meeting to dissolve the corporations. She further

asked that the chancellor partition and distribute real property owned by the corporations.

“An action to inspect corporate books and records is a direct action.” Principles of Corporate

Governance § 7.01 at 18 cmt. (c). “Actions to require the holding of a shareholders’ meeting

and actions to compel dissolution, appoint a receiver, or obtain similar equitable relief are

direct actions.” Id. Thus, we find no standing issue as to Jo Ann’s accounting and corporate-

dissolution claims, as they are direct actions.

¶39.   Jo Ann also maintained in her complaint that, as a fifty-percent owner of the

Campground corporation, Gerald owed a fiduciary duty to her to account for all profits and

                                              17
expenses and to divide the proceeds, and that he failed and refused to do so. She stated she

was entitled to fifty-percent of the profits of the Campground corporation and that the

chancellor should enter a money judgment.

¶40.   This proposition that a shareholder exercising control over a closely held business

owes a fiduciary duty to the other shareholders comes from the seminal case Fought v.

Morris, 543 So. 2d 167 (Miss. 1989). Fought also involved dissension among shareholders

in a close corporation. Id. at 169. Fought, the vice-president; Morris, the president; and

Strong and Peyton each had equal shares. Id. at 168. Morris bypassed the stock-redemption

agreement when he purchased Peyton’s stock, and Fought filed suit. Id. at 169.

¶41.   This Court held that “in a close corporation where a majority stockholder stands to

benefit as a controlling stockholder, the majority’s action must be ‘intrinsically fair’ to the

minority interest. Thus, stockholders in close corporations must bear toward each other the

same relationship of trust and confidence which prevails in partnerships . . . .” Id. at 171. The

Court found that the controlling shareholder had breached his fiduciary duty to the

corporation and other shareholders by purchasing stock in violation of the terms of the stock-

redemption agreement. Id. at 172-73. Fought, however, does not provide any analysis on

whether the claim for a breach of fiduciary duty is a direct action or a derivative action.

¶42.   Gerald chiefly relies on two cases, Derouen v. Murray and Mathis v. ERA Franchise

Systems, Inc., to argue that Jo Ann’s claims were derivative in nature. Derouen, 604 So. 2d

at 1088; Mathis, 25 So. 3d at 301. A derivative claim, Gerald argues, would be for the

$180,000 Jo Ann claims Gerald improperly utilized out of the proceeds of the corporations

                                               18
to purchase the stock of the minority shareholders. The present case, however, is

distinguishable from Derouen and Mathis.

¶43.   Derouen v. Murray involved shareholders each with a fifty-percent ownership of a

closely held corporation. Derouen, 604 So. 2d at 1088. One shareholder, Derouen,

challenged the propriety of the other shareholder/president’s actions after sale of the

corporation’s operations. The other shareholder/president later had formed a new corporation

which acquired the first corporation’s assets. Id. Derouen, named the president, Murray, as

the sole defendant in his complaint. Id. at 1089. From the outset the chancellor saw

Derouen’s action as an individual action against Murray. Id. at 1090.

¶44.   Upon review, this Court stated “Derouen has never called his action a ‘shareholder's

derivative action,’ but looking to its nature, the proof he made and the relief he sought, that

is exactly what it is.” Id. “When, as here, Derouen charges Murray’s breach of his fiduciary

duty of fair dealing to the corporation, he charges a violation of Murray’s duties to the

corporation and only derivatively owed him.” Id. at 1091.

¶45.    Although the Court found the action in Derouen was derivative in nature, “the

opinion stated in a footnote that it could have been brought as a direct action.” Mathis, 25
So. 3d at 301 (citing Derouen, 604 So. 2d at 1091). According to the Derouen doctrine:

       (d) In the case of a closely held corporation . . . , the [chancery] court in its
       discretion may treat an action raising derivative claims as a direct action,
       exempt it from those restrictions and defenses applicable only to derivative
       actions, and order an individual recovery, if it finds that to do so will not (i)
       unfairly expose the corporation or the defendants to a multiplicity of actions,
       (ii) materially prejudice the interests of creditors of the corporation, or (iii)
       interfere with a fair distribution of the recovery among all interested persons.

                                              19
Derouen, 604 So. 2d at 1091 n.2. (emphasis added).

¶46.    However, because the chancellor did not consider the issue of whether or not the

plaintiff’s claim was a direct or derivative action, this Court did not address it. Derouen, 604
So. 2d at 1091 n.2.

¶47.    Gerald also cites Mathis v. ERA Franchise Systems to support his argument that Jo

Ann could not bring the derivative action as a direct action. Mathis, 25 So. 3d at 301.

Mathis is distinguishable as well. In Mathis, the shareholder of a closely held corporation

known as Real Estate Professionals, LLC (“REP”), attempted to bring a derivative claim as

a direct action, but the chancellor dismissed for lack of standing. Id. at 299. This Court

affirmed the chancellor. Id. at 299. The Court did not extend the Derouen doctrine7 in

Mathis.

¶48.    “Keeping in mind that [applying the Derouen doctrine] is a question left to the

discretion of the trial judge,” this Court found “that the complexity of this case militates

against application of the doctrine. A review of cases from other jurisdictions reveals that the

doctrine is almost always employed in purely intracorporate disputes.” Mathis, 25 So. 3d at

302. This Court continued to explain why the Derouen doctrine could not be applied in that

case:

        Although Mathis has filed suit against his current and former business
        partners, there are four defendants who are not and have never been owners or
        members of REP. Given the number of parties involved and the existence of
        several counterclaims and cross-claims, it is likely that a direct recovery would
        interfere with a fair distribution of the recovery or expose the corporation to

        7
       We also have referred to the Derouen doctrine as the “Murray exceptions.” Phillips
Brothers v. Winstead, 129 So. 3d 906, 921-22 (Miss. 2014).

                                               20
       a multiplicity of actions. Moreover, ERA has asserted that it is owed $300,000
       from REP, making it a potential creditor that would be prejudiced if Mathis
       were to receive an individual recovery.

Id.

¶49.   We acknowledge that the chancellor, rather than this Court, was required to make a

Derouen finding. The chancellor apparently based his decision to treat the closely held

corporations as partnerships under the authority of Fought, but he made no on-the-record

finding as required by Derouen. We find, however, that this error was harmless. If the

chancellor had made an on-the-record Derouen finding, the result would have been the same.

¶50.   Unlike in Mathis, neither Jo Ann nor Gerald presented any evidence that there were

any potential creditors that could be prejudiced.8 Further, there is no danger of a multiplicity

of suits, since Jo Ann and Gerald were the only two shareholders. There also is no indication

that a direct action would interfere with a fair distribution of the recovery among all

interested persons, because the only persons interested are Gerald and Jo Ann.

¶51.   Jo Ann’s claims for an accounting and to compel a shareholders meeting to dissolve

the corporations are direct actions, and thus not subject to the written-demand requirement

for derivative actions. Jo Ann’s claim for a breach of fiduciary duty, while held to be

derivative in other cases, can be treated as a direct action for the reasons discussed. Thus, we

find that Jo Ann had standing to bring this action and was excused from the written-demand

requirement.

       8
        The People’s Bank had been dismissed. No other creditors were joined as parties,
nor were any outstanding debts identified during the trial.

                                              21
       II.    Whether the chancellor erred by granting relief beyond the scope
              of the pleadings asserted by Jo Ann.

       and

       III.   Whether the chancellor committed error by granting relief as to
              the divestment, division, and distribution of the assets of the
              corporate parties, outside the process of the corporate dissolution
              statutes.

¶52.   Gerald argues that the chancellor erred in granting relief beyond the scope of the

claims asserted by Jo Ann. He claims that, under Mississippi Rule of Civil Procedure 8(a),

Jo Ann was required to set forth direct or inferential factual allegations respecting each

material element necessary to entitle her to recovery under an actionable legal theory. Gerald

argues the claims on which the chancellor premised a substantial portion of the Amended

Final Judgment were not pleaded or asserted by Jo Ann. Such claims are: (1) seeking to treat

the corporations as a “family partnership”; (2) the divestiture of Gerald’s stock interest in the

Trailer Park; (3) damages as a derivative claim brought by Jo Ann; (4) the assessment of

attorney’s fees and/or court costs on a basis other than what was set out in Mississippi Code

Section 11-21-31; (5) the direct dissolution of the Trailer Park and the Restaurant; (6) the

partition of property solely held in the name of the corporations; (7) piercing the corporate

veil and setting aside the corporations; and/or (8) breach of a fiduciary duty by Gerald toward

Jo Ann outside of an accounting. Gerald further contends that none of these claims was tried

by implied consent.

                                               22
              A.     Jo Ann’s Corporate-Dissolution Claim

¶53.   Mississippi is a “notice pleadings” state. Upchurch Plumbing Inc. v. Greenwood

Utils. Comm’n, 964 So. 2d 1100, 1117 (Miss. 2007). A claim for relief shall contain “a short

and plain statement of the claim showing that the pleader is entitled to relief, and, a demand

for judgment for the relief to which he deems himself entitled. Relief in the alternative . . .

may be demanded.” M.R.C.P. 8(a). “Each averment of a pleading shall be simple, concise,

and direct. No technical forms of pleadings or motions are required.” M.R.C.P. 8(e)(1). “All

pleadings shall be so construed as to do substantial justice.” M.R.C.P. 8(f). “Every final

judgment shall grant the relief to which the party in whose favor it is rendered is entitled by

the proof and which is within the jurisdiction of the court to grant, even if the party has not

demanded such relief in his pleadings.” M.R.C.P. 54(c) (emphasis added).

¶54.   In her complaint, Jo Ann asked the chancellor to dissolve the Restaurant corporation

under Mississippi Code Section 79-4-14.30(2)(i-iv), to judicially dissolve the Trailer Park

corporation, and to compel a shareholders’ meeting to authorize the dissolution of the

corporations. Toward the end of trial, Jo Ann expressed that she was not going forward with

her dissolution claim, though it is unclear from the record whether the parties were referring

to statutory dissolution, judicial dissolution, or both. The chancellor acknowledged this and

stated he would re-open the record to allow Gerald to address the claims for dissolution if

Jo Ann later decided to pursue that claim. The issue was never again addressed during trial.

¶55.   Gerald argues that, although there was never a formal dismissal of Jo Ann’s claim, the

chancellor was without authority under Sections 79-4-14.30, 14.33, and 14.34 of the

                                              23
Mississippi Code to dissolve, divest, divide, and/or distribute the assets contained in the

corporations. So, Gerald argues, the particular relief granted by the chancellor was not

available. Gerald further argues the pleadings should not be considered amended under Rule

15(b) of the Mississippi Rules of Civil Procedure, because Gerald would suffer prejudice

from such amendment. Par Indus., Inc. v. Target Container Co., 708 So. 2d 44 (Miss.

1998).

¶56.     We find that the rules governing amendments under Rule 15(b) are not applicable

here. Amending the pleadings to conform with the evidence concerns “issues not raised by

the pleadings [that] are tried by expressed or implied consent.” M.R.C.P. 15(b). Jo Ann

initially sought to dissolve the corporations. Nothing was formally adjudicated after she

expressed her desire not to pursue dissolution. The chancellor stated, “[I]t was my

understanding that . . . the issue of dissolution would remain in the complaint, with the

understanding it would not be urged but could be brought up if tax issues were somehow

resolved or worked into the total issue of this lawsuit.” The chancellor left the dissolution

claim in the complaint “to accommodate either a resolution or some agreement if in the event

they elected to proceed.” Notwithstanding whether the issue of dissolution was still before

the chancellor, we find the relief granted was adequately pleaded and the chancellor was

cloaked with sufficient authority to grant the relief ordered in this case.9

         9
         Although it is not binding authority, we note a case from Illinois that held that a
court’s oral statement that a counterclaim might be withdrawn did not affect the withdrawal,
because no order permitting withdrawal was entered on the record. Galter v. Galter, 323 Ill.
App. 297, 55 N.E.2d 405 (1944).

                                              24
              B.     Whether the chancellor erred in denying Gerald’s election to
                     purchase shares.

¶57.   Section 79-4-14.30(a)(2)(i-iv) of the Mississippi Code provides the grounds for

dissolution in a proceeding by a shareholder and also states that “shareholders may elect to

purchase all shares owned by the petitioning shareholder at the fair value of the shares.”

Miss. Code Ann. § 79-4-14.34 (a)(Rev. 2013). This election is “irrevocable unless the court

determines that it is equitable to set aside or modify the election.” Id. (emphasis added).

Gerald elected to purchase all the shares owned by Jo Ann at fair value, but the chancellor

determined it was equitable to set Gerald’s election aside.

¶58.   Gerald argues that, since the chancellor set aside the election to purchase Jo Ann’s

shares of the Trailer Park and the Restaurant, the chancellor was no longer clothed with

broad authority under Sections 79-4-14.30, 14.33, and 14.34 of the Mississippi Code to

dissolve, divest, divide, and/or distribute assets contained in the corporations. Outside the

scope of a dissolution action, Gerald argues, the chancellor is not authorized to utilize these

equitable powers because such powers are to be relied upon when an election to purchase has

been asserted. Gerald cites In the Matter of Will and Testament of Hardin, 158 So. 3d 341

(Miss. Ct. App. 2014), to support this argument.

¶59.   We find In re Hardin does not support Gerald’s assertion that a chancellor is cloaked

with broad equitable relief only if he grants the election to purchase the petitioning

shareholder’s shares. In In re Hardin, a shareholder filed an action under the Mississippi

Business Corporation Act to judicially dissolve an incorporated family farm, which was

owned by four shareholder siblings. In re Hardin, 158 So. 3d at 343. The corporation moved

                                              25
to elect to purchase the petitioning shareholder’s shares, which the chancellor granted. Id.

at 344. The chancellor ordered the corporation to convey to the shareholder a portion of real

property instead of a cash buyout. Id. The Court of Appeals held that “the chancellor was still

within his right to reserve an in-kind division of land in lieu of a cash payment. Section

79–4–14.34(i) specifically allows for the ‘inherent equity powers of the court to fashion

alternative remedies to judicial dissolution.’” Id. at 346. We find that nothing in this case or

the dissolution statutes suggests that a chancellor must grant the election to purchase the

petitioners’ shares before continuing to exercise his broad equity powers in granting relief

under Section 79-4-14.34 (i) of the Mississippi Code.

              C.      Alternative Remedies to Dissolution

¶60.   We now turn to the relief granted by the chancellor. In an action to judicially dissolve

a corporation, a chancellor does not have to order a dissolution, even if grounds such as

oppression or deadlock are met. This is because the general view in Mississippi is that

“[d]issolution is an extraordinary remedy to be sparingly administered in exceptional cases

only.” Capitol Toyota, Inc. v. Gervin, 381 So. 2d 1038, 1039 (Miss. 1980). However, “if the

strife among the participants has been so long and bitter that the former relationships of

congeniality and trust cannot be re-established [like Jo Ann and Gerald’s case], there is little

left that an unhappy shareholder can do except . . . bring about the dissolution of the

business.” F.H. O’Neal & R. Thompson, O’Neal’s Close Corporations § 9.04 (3d ed. 1971).

“But the more common relief in modern cases . . . is to provide relief alternative to

dissolution.” Id. at § 9.25. Mississippi’s corporate dissolution statute states that “[n]othing

                                              26
contained in this section shall diminish the inherent equity powers of the court to fashion

alternative remedies to judicial dissolution.” Miss. Code Ann. § 79-4-14.34 (i) (emphasis

added).

¶61.   Contrary to Gerald’s assertion, the chancellor did not dissolve the corporations.

Instead, he fashioned an alternative remedy to this problem. The chancellor found that the

source of funds for the $180,000 Gerald used to purchase the minority shareholders’ interest

in the Trailer Park and the Restaurant corporations came from the corporations themselves.

Those shares were purchased with funds equitably owned by both Jo Ann and Gerald. So

Gerald’s purchase was for the benefit of both parties. The chancellor then disregarded the

shares purchased by Gerald and considered Jo Ann and Gerald to be equal shareholders in

the Restaurant and the Trailer Park. After equalizing their interests in the corporations, the

chancellor ordered that the property lines be modified by survey to reflect that Jo Ann and

Gerald owned fifty-percent of the land upon which the Trailer Park and the Campground

were situated.

¶62.   The Amended Final Judgment from which Gerald appeals states “that the Court

divides, partites, and equitably separates the parties by granting each full ownership of

separate companies . . . .” He then granted Jo Ann full ownership of the Trailer Park, and

Gerald full ownership of the Campground. The chancellor ordered “that each of the parties

is to execute the necessary documents, including deeds, bills of sale and stock certificates to

accomplish the directions of the court.” Nowhere in the Amended Final Judgment does the

chancellor mention “dissolution.” The chancellor did quite the opposite when he fashioned

                                              27
an alternative remedy to dissolution, which he had full authority to do under Section 79-4-

14.34 (i) of the Mississippi Code.

¶63.   Since the chancellor did not order a direct dissolution of the corporations, Gerald’s

argument that this “equitable distribution” method violates the method provided by the

Mississippi Legislature in Section 79-4-14.05 to dissolve a corporation and distribute its

assets among its shareholders according to their interests is without merit.

¶64.   We cannot locate any precedent in which a chancellor has granted this exact, or even

similar, relief. However, we note that “[i]t is not necessary that some exact precedent be

found for extending relief in a given situation.” Griffith’s Mississippi Chancery Practice

§ 35 (2000 ed.) (citing Miller v. Doxey, 1 Miss. 329, 333 (1829)). If a certain form of “relief

is clearly requisite and a practical remedy may be applied, such remedy is not to be denied

because that remedy has never been applied in just that manner to that exact state of case.”

Id. The question for this Court to decide, then, is whether the relief granted here is an

appropriate remedy under Mississippi Code Section 79-4-14.34(i), which states “[n]othing

contained in this section shall diminish the inherent equity powers of the court to fashion

alternative remedies to judicial dissolution.” Although little caselaw addresses Mississippi’s

alternative-remedy provision, substantial precedent supports the chancellor’s broad powers

to provide an equitable solution in cases such as this. See, e.g., In re Hardin, 158 So. 3d at

346.

¶65.   Other jurisdictions offer guidance as to appropriate remedies to resolve disputes

among dissenting shareholders in a close corporation. Some courts have resorted to remedies

                                              28
listed by statute, while others have fashioned remedies not specifically mentioned in a statute.

O’Neal’s Close Corporations at § 9.35. The corporate statutes in California and North

Dakota, for example, authorize a court to “grant any equitable relief.” Id. at § 9.35; see Cal.

Corp. Code § 1804, and ND Cent. Code § 10-19.1-115.

¶66.   “In many states the statute authorizes courts to provide relief other than dissolution,

and then sets out a nonexclusive list of what that relief may be.” O’Neal’s Close

Corporations § 9.35; see e.g., Me. Rev. Stat. Ann. tit. 13A, § 1123; SC Code Ann. § 33-14-

310. “In the absence of statute, courts [show] a willingness to fashion a remedy that is best

suited in the particular factual circumstances to resolve the problem presented to the court.”

O’Neal’s Close Corporations at § 9.35. In Baker v. Commercial Body Builders, Inc., the

Supreme Court of Oregon listed several remedies available for oppressive conduct as an

alternative to dissolution. Baker v. Commercial Body Builders, Inc., 507 P.2d 387, 395-96

(1973). Subsequently, courts across the country have applied one or more of the remedies

listed in Baker, and other courts have fashioned remedies in addition to those in Baker. A

sample of such remedies includes:

       (1)    Ordering issued stock to be cancelled or redeemed [to] achieve a 50/50
              balance or some other ownership structure fair to the shareholders.
       (2)    Permitting the minority to purchase additional shares . . . .
       (3)    Treating a group of related corporations as a single entity for the
              purpose of determining appropriate relief.
       (4)    Awarding damages to the minority shareholder as compensation for
              injuries suffered by oppressive conduct, sometimes including the
              awarding of punitive damages.

O’Neal’s Close Corporations at § 9.35.

                                              29
¶67.   After reviewing these alternative remedies, and in light of all the particular factual

circumstances of this case, we find that granting full ownership in the respective separate

corporations operated individually by Gerald and Jo Ann was a practical, fair, and just

remedy to resolve the dispute. A chancellor’s remedial powers have long been “marked by

plasticity.” Griffith’s Mississippi Chancery Practice § 35 (citing Hall v. Wood, 443 So. 2d
834, 843 (Miss. 1983)). “Equity jurisdiction permits innovation that justice may be done.”

Id. If ever a case needed the innovation allowed by equity jurisdiction, it is this one.

Considering that nothing “shall diminish the inherent equity powers of the court to fashion

alternative remedies to judicial dissolution,” Miss. Code Ann. § 79-4-14.34 (i), we find that

the chancellor did not abuse his discretion in fashioning this alternative remedy.

              D.      Jo Ann’s Breach-of-Fiduciary-Duty Claim

¶68.   Gerald also argues that Jo Ann did not plead a breach-of-fiduciary-duty claim in her

complaint, and that the equitable-division method the chancellor used contradicts this Court’s

precedent that a breach of a fiduciary duty in a closely held corporation is an intentional tort

that allows only a judgment for damages.

¶69.   We find that Jo Ann adequately stated a claim for breach of fiduciary duty. Jo Ann

argued in her complaint that, as a fifty-percent owner of the Campground corporation, Gerald

owed a fiduciary duty to her to account for all profits and expenses and to divide the

proceeds, and that he failed and refused to do so. She stated she was entitled to fifty percent

of the profits of the Campground corporation and that a money judgment should be entered.

As Gerald correctly argues, this fiduciary duty Jo Ann refers to in her complaint is not in

                                              30
reference to Gerald’s purchase of the minority shareholders’ shares to gain control of the

corporations. Jo Ann never moved to amend her complaint to adjust this claim.

¶70.   Although the claim for a breach of fiduciary duty regarding Gerald’s purchase of the

minority shareholders’ interest was not in the complaint, we find the claim was sufficiently

before the chancellor and the parties. Gerald purchased the shares of the minority

shareholders in the Restaurant and the Trailer Park for $180,000 during litigation and then

tried to vote Jo Ann off the board. In response, Jo Ann sought a preliminary injunction to

keep Gerald’s meeting from taking place, and she pleaded and argued at trial that Gerald

owed a fiduciary duty to her as a minority shareholder in a closely held corporation. On direct

and cross-examination, both attorneys questioned Gerald and his witnesses as to the source

of the $180,000 and his reason for buying out the minority shareholders. Thus, we find Jo

Ann’s breach-of-a-fiduciary-duty claim against Gerald for using corporate funds, in which

she held an equal interest, to purchase the minority shares to her detriment and oppression

was before the chancery court.

¶71.   If this is true, Gerald argues, according to Phillips Brothers v. Winstead, a breach of

a fiduciary duty in a closely held corporation is an intentional tort that allows only a judgment

for damages. Phillips Brothers v. Winstead, 129 So. 2d 906, 924 (Miss. 2014). This

equitable-division method the chancellor employed, Gerald argues, is wrong. We disagree.

Dividing the parties’ interests in the properties and granting each full ownership in their

respective corporations was an alternative remedy to the dissolution action–not a remedy for

a breach of fiduciary duty. In fact, no damages for a breach of fiduciary duty were awarded

                                               31
in the Amended Final Judgment. Because this remedy of equitable relief to resolve the

dispute between the Gerald and Jo Ann was appropriate under the alternative-remedy

provision under Section 79-4-14.34(i) of the Mississippi Code, we find this argument is

without merit.

       III.     Whether the chancellor erred in ordering partition by sale or in
                kind of real property solely held in the names of the corporate
                parties.

¶72.   In order for the chancery court to acquire jurisdiction under Section 11-21-3 of the

Mississippi Code over a parcel of real property for purposes of partition in kind or partition

by sale, the property must be held by joint tenants, tenants in common, or coparceners. Yeats

v. Box, 198 Miss. 602, 22 So. 2d 411, 415-16 (1945); Coers v. Williams, 74 So. 2d 836, 839-

840 (Miss. 1954). If the title to the subject property is not held as tenants in common or

jointly, then the chancery court has no jurisdiction to entertain a partition by sale or in kind,

and the party bringing the action has no standing to sue. Cooper v. Fox, 7 So. 342, 343-44

(Miss. 1890).

¶73.   At all times, the Restaurant and the Trailer Park held title to their respective tracts of

real property solely in their corporate names. Gerald argues that Jo Ann did not have standing

to bring any independent action under Mississippi Code Section 11-21-3, so the chancellor

committed reversible error by ordering partition of the Restaurant and the Trailer Park real

property. We address these two parcels separately.

                                               32
              A.      Partition of the Trailer Park

¶74.   The Trailer Park held title in its corporate name to the parcel of land on which it

operated. Gerald argues that, because this parcel of land was not held by joint tenants or

tenants in common, the chancellor was without authority to partition the land under Section

11-21-3 of the Mississippi Code. However, no partition of the land owned by the Trailer Park

was ordered. The chancellor partitioned the adjacent Campground property, which was held

by Gerald and Jo Ann as tenants in common. The Campground’s eastern boundary line and

the Trailer Park’s western boundary line run adjacent to each other. The adjusted boundary

line affected the western portion of the Campground property, which was jointly owned

property. So the chancellor partited the Campground, not the Trailer Park real property.

¶75.   Because the chancellor partited the Campground property, and since Jo Ann and

Gerald held interest in the Campground as tenants in common, Gerald’s argument that the

chancellor erred in ordering a partition of the Trailer Park is without merit.

              B.      Partition of the Restaurant

¶76.   Gerald asserts that the chancellor erred in ordering the Restaurant and its property

sold. Under Section 11-21-11 of the Mississippi Code, the parties must be cotenants for the

chancellor to order a sale of the land. Here, title was held solely in the name of the Restaurant

and not by Gerald and Jo Ann as tenants in common. It does not appear, nor was there any

argument advanced, that the Restaurant could be partited in kind. So partition by sale was the

only available method. The chancellor signed an order authorizing the sale of the Restaurant.

More importantly, Gerald joined in the sale of the Restaurant property. All parties approved

                                               33
the order, and the proceeds of the sale were distributed to Gerald and Jo Ann. Because Gerald

joined in the sale, we find this issue is without merit.

       IV.    Whether the chancellor committed error by divesting Gerald of his
              separate interest in the Trailer Park.

       and

       V.     Whether the chancellor erred in granting partition in kind between
              Jo Ann and Gerald without: (A) consideration of an accurate, up-
              to-date valuation of the remaining real properties, (B)
              consideration of the exclusive use or occupancy of subject real
              properties by Jo Ann and Gerald, (C) granting an access easement
              for ingress and egress to Gerald, and (D) consideration of Jo Ann’s
              acquisition of the one-half interest of Gerald in the Imbronone
              property.

¶77.   Gerald argues that, even if the chancellor had the power to order a partition in kind

of the Campground and the Trailer Park real property, then such partition must be in

accordance with the statutory requirements of the partition statutes under Section 11-21-1 of

the Mississippi Code. We already have found that the chancellor did not order a partition of

the Trailer Park under Section 11-21-1. So Gerald’s argument that the chancellor did not

follow the requirements for a partition of land are without merit. Since the chancellor did

order a partition in kind of the Campground, this is the only issue we will address.

              A.      Consideration of an Accurate, Up-to-date Valuation of the
                      Remaining Properties

¶78.   Gerald argues the chancellor erred by not considering an accurate valuation of the

Trailer Park and the Campground properties. The chancellor divided these two properties in

accordance with the appraiser’s and surveyor’s recommendations. According to the appraiser,

the Trailer Park property and its use could have been valued separately from the Campground

                                              34
property, and he had enough information to perform an independent appraisal of the Trailer

Park, as he had done for the Restaurant. The appraiser testified that the reason he gave an

appraisal for the Trailer Park property on an acreage basis was for divisional purposes.

Gerald argues that, under Murphree v. Cook, 822 So. 2d 1092 (Miss. Ct. App. 2002), this

is the type of ad hoc and arbitrary method of division of land in kind that is condemned by

the Court of Appeals and constitutes reversible error. He argues that, once the chancellor set

aside the interests of Gerald and Jo Ann, then he should have adjusted the equities between

them as required by Section 11-21-9 of the Mississippi Code.

¶79.   In Murphree v. Cook, the Court of Appeals considered a chancellor’s deviation from

the partition statutes in a partition action. Murphree v. Cook, 822 So. 2d 1092 (Miss. Ct.

App. 2002). Helen Cook, co-tenant, was in complete control of the property from shortly

after the date of purchasing the property until when Murphree, the other co-tenant, filed a

partition action to sever their tenancy in common. Id. at 1096. The chancellor did not

partition the property under Section 11-21-3 of the Mississippi Code as Murphree requested.

Id. at 1098. The chancellor used a complex calculation to determine what he felt to be the

fair value of Murphree’s half interest in the property. Id. at 1098. He ordered Murphree to

convey his interest in the property to Cook upon receipt of payment of that sum.

¶80.   The Court of Appeals said “in every case that the chancellor proposes to subvert the

detailed statutory procedures for a partition in favor of some ad hoc means of sale, especially

when it is undertaken over the strenuous objection of one of the cotenants, that decision

                                              35
would be subject to being set aside on appeal on an abuse of discretion standard.” Id. at

1098-99.

¶81.   The chancellor in Murphree used the original purchase price when he divested

Murphree of his interest in the property, even though the parties had purchased the property

more than three years before the partition action. Id. at 1099. There was no evidence that the

figure accurately reflected the market value of the property at the time of the partition. Id.

at 1099. The Court of Appeals concluded that the means the chancellor used to value the co-

tenants’ interests in the property was arbitrary and was an abuse of discretion. Id. Because

“Murphree’s right to have his interest in the property set apart to him by a partition conducted

according to the applicable statutes would seem to be preferred over some alternate plan

devised by the chancellor,” the Court of Appeals reversed and remanded for the chancellor

to sever the tenancy in accordance with the statutes. Id.

¶82.   In Cheeks v. Herrington, a co-owner brought suit to partition property in which he

had acquired an interest by intestate succession. Cheeks v. Herrington, 523 So. 2d 1033,

1034 (Miss. 1988). Cheeks alleged that the chancellor erred because he did not allow an

accounting for improvements made to the property. Id. at 1036. Generally, “when a tenant

in common is in possession of the entire property, and so long as he is not called on to pay

for its use and occupation, he is under a duty to preserve the property and to make all

ordinary repairs which will go to its preservation . . . .” Id. at 1037.

¶83.   This Court held “that making repairs which are necessary for the preservation and

maintenance of property is the sole responsibility of the person in actual or legal possession.”

                                               36
Id. at 1037. Because the chancellor in Cheeks did not allow an accounting, this Court

remanded the case for the chancellor to adjust the equities between the co-tenants under

Section 11-21-9 and to present evidence as to what improvements had been made. Id. at

1037.

¶84.    We find that the chancellor did not abuse his discretion here, and his actions are

supported under Cheeks and Murphree. Gerald and Jo Ann held ownership in the

Campground as tenants in common. And, like the co-tenant in Cheeks, Gerald was in actual

possession of the Campground. But, unlike the chancellor in Cheeks, here the chancellor

ordered a forensic accounting. He heard evidence from AVL’s forensic accountant, the

corporations’ accountant, Jo Ann, and Gerald about improvements, repairs, and maintenance

that Gerald had conducted on all the properties.

¶85.    In 2006, the appraiser determined that the improvements on the property at that time

were not utilizing the property to its highest potential value. He came to this conclusion based

on a market-value approach. He was unable to use an income approach, because while Jo

Ann provided rental-income information from the Trailer Park, he never received any rental-

income information from Gerald for the Campground.

¶86.    Again in 2012, the appraiser made another evaluation. He concluded that the

Restaurant property had to be treated differently from the Trailer Park and the Campground

properties, which he determined had the same value per acre. He noted again that he could

not use an income approach to value the property because of the inaccuracy and unreliability

of Gerald’s records.

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¶87.   Even if, as Gerald suggests, the properties should have been valued separately, the

appraiser could not have made a more accurate valuation. Gerald himself caused this problem

by refusing to comply fully with requests from the chancery court, appraisers, accountants,

and Jo Ann for documents and financial records.

              B.     Consideration of the Exclusive Use of the Separate Properties
                     by Jo Ann and Gerald

¶88.   Gerald argues the chancellor erred in not considering the exclusive use by Gerald of

the entire Campground property. Gerald and Jo Ann held title to the Campground property

as tenants in common, and the parties did not dispute that Gerald had exclusive use of the

Campground. Gerald obtained his income from the Campground without consulting Jo Ann,

which had been the status quo over the previous decade. Gerald resided and also ran side

businesses on the Campground. The chancellor reduced the original Campground acreage

when he adjusted the property lines in accordance with the survey.

¶89.   Gerald argues he is entitled to have the whole Campground property allocated to him

since he has been in exclusive possession of it and has made improvements on the property.

“[A] tenant in common who has improved the land is entitled to have such land allotted to

him or her if there is a partition in kind.” Bennett v. Bennett, 36 So. 452, 453 (Miss. 1904).

“As a general rule, where a cotenant places improvements on the common property, equity

will take this fact into consideration on partition and will in some way compensate him or

her for such improvements . . . provided they are made in good faith and are of a necessary

and substantial nature, materially enhancing the value of the common property.” 68 C.J.S.

Partition § 130 (2009).

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¶90.   As for Gerald’s claim that the whole of the Campground property should have been

allocated to him because he made improvements to the Campground, there is no evidence

that Gerald improved the land. The appraiser determined in 2006 that the improvements on

the property were not utilizing the property then to its highest potential value and, in fact, he

opined the property would be worth more without the improvements. As to Gerald’s

argument the chancellor should have considered his exclusive possession of the Campground

and awarded him the entire property, we find the chancellor did consider the exclusive use

by Gerald when he granted Gerald full ownership of the Campground and all personal

property located on it. Thus, we find the chancellor did not abuse his discretion in the

allocation of the Campground property.

               C.      Access Easement for Ingress and Egress to Gerald

¶91.   Gerald argues that the partition of the property by the chancellor did not allow for an

easement for ingress and egress, that it land-locks Gerald, and that it deprives him of access

to and from Highway 90. Access to Highway 90 was first raised in a post-trial motion after

the chancellor adjusted the property line. At the post-trial hearing before the chancellor in

May 2014, Gerald admitted he had actual access on both the east and west sides of the

Restaurant, which his daughters now own. The chancellor stated at the post-trial hearing,

“[Gerald] can get an easement. Anything else on this part? Let’s go to something else.

Unless they’re going to get in up here and testify that they refuse to talk to their father and

give him an easement. That’s ridiculous. All right. Let’s go on.” We decline to address this

issue, as it is not ripe for review.

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               D.     The Imbornone Property (a.k.a. Necaise Claim)

¶92.    Gerald and Jo Ann owned an additional tract of real property in equal shares as tenants

in common on the south end of the properties, known as the Imbornone property. Originally,

the chancellor considered this land in the division of real property, but it was lost at a tax sale

during litigation. So the chancellor did not include it in the final judgment. By the time post-

trial motions began and because the parties could not reach an agreement, Jo Ann personally

bought the Imbornone strip from Mr. Imbornone, who previously had purchased it at the tax

sale.

¶93.    The parties informed the chancellor at the post-trial hearing that the Imbornone

property was lost at a tax sale and recently had been purchased by Jo Ann. Since Jo Ann was

a cotenant with Gerald, Gerald argues Jo Ann’s purchase redeemed the acreage for both Jo

Ann and Gerald. Wall v. Wall, 71 So. 2d 308, 311 (Miss. 1954); Brown v. Brothers, 97 So.
2d 642, 644-45 (Miss. 1957). Gerald asserts that he should be given credit for one-half of the

Imbornone property, and the court should then order a partition in kind. Since the chancellor

did not address the Imbornone property in the Amended Final Judgement, we decline to

address this issue, as it was not before the trial court.

        VI.    Did the chancellor commit error by not allowing the parties a fair
               opportunity to respond to the sua sponte exclusion of the AVL
               Forensic Accounting Report from evidence after the close of the
               record?

¶94.    Gerald argues that the chancellor erred in not allowing the parties a fair opportunity

to respond to the chancellor’s own motion striking various portions of the AVL report as

inadmissible, when the report was fully admitted into evidence without any objection.

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¶95.   “Mississippi law requires the trial court to ensure that proposed testimony satisfies

Rule 702 of the Mississippi Rules of Evidence.” Univ. of Miss. Med. Ctr. v. Pounders, 970
So. 2d 141, 146 (Miss. 2007). Mississippi Rule of Evidence 702 provides:

       If . . . 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 . . . (3) the witness has applied the
       principles and methods reliably to the facts of the case.

M.R.E. 702(3).

¶96.   This Rule “recognizes the gate keeping responsibility of the trial court to determine

whether the expert testimony is relevant and reliable.” M.R.E. 702 cmt. This Court

“require[s] that, when an expert’s opinion is challenged, the party sponsoring the expert’s

challenged opinion be given a fair opportunity to respond to the challenge. The provision of

a fair opportunity to respond is part of the trial court’s gate keeping responsibility.” Kilhullen

v. Kansas City Southern Ry., 8 So. 3d 168, 174 (Miss. 2009) (quoting Smith v. Clement, 983
So. 2d 285, 290 (Miss. 2008)). “[W]e will reverse only where the trial court abused its

discretion by clearly failing to provide a fair opportunity to respond.” Id.

¶97.   During trial, the chancellor admitted into evidence a report prepared by AVL, the

forensic accounting firm appointed by the Court. Neither party objected to this admission.

The AVL reports revealed the operations and management of the corporations under the

control of both Gerald and Jo Ann showed a commingling of revenue and expenses. The

AVL reports also showed that the completeness of revenues for both the Campground and

the Trailer Park could not be proven. According to the report, Jo Ann had paid attorneys’ fees

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and the costs of litigation through revenue from the Trailer Park, and AVL did not consider

this to be a normal expense. The AVL report also found that the Campground and the Trailer

Park had understated revenues, caused by mismanagement, below-market rental rates, under-

reported revenues and/or misappropriation of funds. The chancellor struck portions of the

AVL report under Rule of Evidence 702(3):

       Though the Court ordered the forensic accounting and those experts attempted
       to do their job, the Court also finds that the methods used by the forensic
       accountants may not be reliably applied to the facts of this case to establish
       the amount of misappropriation of moneys by Gerald. The Court finds from
       the totality of the evidence that Gerald’s Campground books, records and tax
       returns are false and incomplete as to both gross receipts and expenditures.

¶98.   The chancellor made this ruling after the close of the record. The chancellor also did

not make any indication during trial that the AVL report was inadmissible or that the

conclusions were not based upon the application of generally accepted principles of

accounting and methods to the facts of this case as required by Rule 702(3).

¶99.   Gerald argues that the chancellor’s striking of the report without giving a fair

opportunity to respond is an abuse of discretion and constitutes reversible error, since the

chancellor based his findings on his perception that Gerald alone had misappropriated

$180,000 to purchase the minority stockholders’ interest.

¶100. The chancellor, though, did not find Gerald had misappropriated the $180,000 to

purchase the minority shareholder’s interest based solely on the AVL report. He reached this

conclusion because he did not find the evidence presented by Gerald and his witnesses to be

credible as to the source of those funds. Gerald presented no credible evidence of a bank loan

or other “above board” loan from a third party. The chancellor found that Gerald had been

                                             42
“less than forthcoming to the point of being secretive and non-responsive to discovery

requests.” The chancellor concluded that in “absence of credible proof from Gerald, the only

source of funds available to him were from the Restaurant and Campground funds plus

unreported income diverted from them in which Jo Ann had an equal interest.”

¶101. We find the chancellor did not abuse his discretion in excluding portions of the AVL

report. Even if the chancellor did abuse his discretion by not allowing the parties to object

to the chancellor’s own motion to exclude portions of the AVL report, this error was

harmless. The chancellor did not exclude the entire report, but rather noted its limitations as

a final statement on value. The chancellor accepted the report of the forensic accountant but

found that the conclusions could not be accepted because of the unreliability of Gerald’s

books. This limitation on the use of expert evidence is within the decision-making power of

the chancellor.

                                      CONCLUSION

¶102. For the foregoing reasons, we affirm the judgment of the Hancock County Chancery

Court. We decline to address the issues about the Imbornone property and the easement for

ingress and egress, as they are not ripe for review.

¶103. AFFIRMED.

     DICKINSON AND RANDOLPH, P.JJ., LAMAR, KITCHENS, PIERCE, KING
AND COLEMAN, JJ., CONCUR.

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