Court Opinion

ID: 873532
Source: CourtListenerOpinion
Date Created: 2013-06-01 00:00:54.045913+00
Date Added: 2024-06-11T09:07:02.934963
License: Public Domain

Case: 12-60522       Document: 00512258599         Page: 1     Date Filed: 05/31/2013

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                           May 31, 2013

                                     No. 12-60522                          Lyle W. Cayce
                                   Summary Calendar                             Clerk

STUART DENMAN, Individually; JULIA DENMAN, Individually; and
DENMAN FARMS, LLC,

                                                  Plaintiffs-Appellants,
v.

TALLAHATCHIE DUCKS, LLC; and MARK MCILWAIN, Individually,

                                                  Defendants-Appellees.

                  Appeal from the United States District Court,
                  Northern District of Mississippi, Delta Division
                           U.S.D.C. No. 210-cv-00133

Before STEWART, Chief Judge, and KING and CLEMENT, Circuit Judges.
PER CURIAM:*
       Defendants-Appellees, Dr. Mark McIlwain and Tallahatchie Ducks, LLC,
entered into a 10-year hunting lease agreement with Plaintiffs-Appellants, Dr.
Stuart Denman, Julia Denman, and Denman Farms, LLC. The lease agreement
also contained provisions regarding a hunting lodge that was to be built on the
land during the lease period. Prior to the expiration of the lease, the hunting

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                       No. 12-60522

lodge was built and subsequently burned down. Dr. McIlwain collected the fire
insurance proceeds.        Plaintiffs-Appellants filed suit for breach of contract
demanding, inter alia, specific performance and/or actual and punitive damages.
Holding that the lease should be construed as written, the district court
rendered judgment in favor of Defendants-Appellees. For the reasons stated
herein, we affirm.
                                             I.
      In the summer of 2007, Alabama resident, Dr. Mark McIlwain entered into
a “Lease of Duck & Deer Hunting Rights Agreement” with Mississippi resident,
Dr. Stuart Denman. The lessee, Dr. McIlwain, entered into the lease through
Tallahatchie Ducks, LLC. The lessor, Dr. Denman, entered into the lease
through Denman Farms, LLC. Both parties were represented by counsel. There
were several exchanges and preliminary negotiations before the final terms of
the lease were agreed upon by both parties.
      The land subject to the lease was approximately 2,000 acres located in
Tallahatchie County, Mississippi and owned by Denman Farms, LLC. The lease
period was for a term of 10 years, from August 2007 through August 2017.1 The
lease provided that Dr. McIlwain would pay $65,000 per year2 during the term
of the lease for deer and duck hunting rights on the land. The lease also
provided that Dr. McIlwain intended to build a hunting lodge on the land.
Additionally, the lease contained provisions for liability insurance and fire and
extended risk insurance.
      The lease provided the following language in pertinent part:
               3.     Renter intends to construct a hunting lodge on
                      the premises at his expense. Upon the expiration

      1
         The lease contained an option to renew for two additional 5-year terms at the
expiration of the initial 10-year lease period.
      2
          Dr. Denman agreed to a reduction of the lease price for the year 2008 only.

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                                 No. 12-60522

                  of the primary ten (10) year term, the hunting
                  lodge shall become the property of the Owner.

            4.    Renter shall maintain insurance on the hunting
                  lodge against fire and extended risks on a
                  replacement cost basis. Renter is responsible to
                  insure its contents.       For purposes herein,
                  “replacement cost basis” shall mean the actual
                  replacement cost of the hunting lodge from time
                  to time. The cost of insurance will be paid by the
                  renter during the primary ten (10) year term.
                  Owner shall be responsible to maintain, at his
                  expense, said insurance during any renewal of
                  this lease. The responsible party shall furnish
                  the other party with proof of insurance. Further,
                  Renter shall pay property taxes on the hunting
                  lodge, utilities and all maintenance of the
                  hunting lodge during the primary ten (10) year
                  term.
                                         ...

            8.    Renter must maintain liability insurance and list
                  Owner as an additional insured.

      Dr. McIlwain completed construction of the hunting lodge on the leased
property in late 2007. The total cost of construction was just under $500,000.
To finance the construction of the lodge, First Metro Bank extended a loan on
Dr. McIlwain’s line of credit for the approximate amount of $400,000 which Dr.
McIlwain subsequently loaned to Tallahatchie Ducks, LLC. Additionally, Dr.
McIlwain made personal loans to the LLC totaling the approximate amount of
$275,000. The money loaned to the LLC by Dr. McIlwain was used in part
toward the construction and maintenance of the lodge and in part toward the
operation and maintenance of the LLC. Dr. McIlwain also obtained a fire and
extended risk insurance policy with StarNet Insurance Company to insure the
lodge and its contents.

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                                  No. 12-60522

      The lodge burned down on February 7, 2010 and the fire was deemed an
accident. Dr. McIlwain reported the burning of the lodge to his insurance
company and ultimately collected $438,000 in insurance proceeds to cover the
loss. Dr. McIlwain used the insurance proceeds to repay himself for the loans
he made to the LLC.
      In May 2010, after an in-person visit from Dr. McIlwain regarding his
unwillingness to continue the lease in its then-current form, Dr. Denman
inquired via written letter as to Dr. McIlwain’s plans to replace the lodge. Dr.
McIlwain responded via written letter and informed Dr. Denman that the
“[i]nsurance proceeds were used to pay off debt associated with construction” of
the lodge and that it was not “financially feasible to rebuild the lodge after the
fire loss occurred.” Additionally, Dr. McIlwain again stated that Tallahatchie
Ducks was not in a “financial position to continue the present lease.” Dr.
McIlwain went on to state that he would consider the lease terminated by June
7, 2010 unless he heard otherwise from Dr. Denman.                The lease was
subsequently terminated.
      In July 2010, Plaintiffs-Appellants filed suit against Defendants-Appellees
for breach of contract, asserting, inter alia, allegations of negligence, unjust
enrichment, conversion, and conspiracy. Plaintiffs-Appellants prayer for relief
included specific performance via replacement of the lodge and/or actual and
punitive damages. As stated, the trial judge ruled against Plaintiffs-Appellants,
providing the following reasoning: (1) both parties were educated, experienced,
and represented by attorneys who negotiated the terms of the lease before
agreeing on the final version; (2) Defendants were responsible under the lease
for the majority of the costs associated with the lodge until the expiration of the
10-year lease term; (3) the lease mandated that Plaintiffs be named as additional
insureds on the liability insurance policy but not on the fire and extended risk
insurance policy; (4) the lease does not provide that Plaintiffs have any

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                                  No. 12-60522

ownership interest in the lodge (or in any of Defendants’ real property or fixtures
located on the land subject to the lease agreement) prior to the expiration of the
10-year lease term or Defendants’ default on the lease; and (5) the lease does not
provide that Defendants must rebuild the lodge if it burns down or that
Plaintiffs are entitled to any of the fire and extended risk insurance proceeds if
it does. In light of this analysis, the district court concluded that the lease must
be “enforced as written” and ruled in favor of Defendants, thereby denying
Plaintiffs any compensatory or equitable relief. Plaintiffs filed the instant
appeal.
                                       II.
       “The standard of review for a bench trial is well established: findings of
fact are reviewed for clear error and legal issues are reviewed de novo.” Preston
Exploration Co., L.P. v. GSF, LLC, 669 F.3d 518, 522 (5th Cir. 2012) (quoting
Kona Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000)).
Where federal jurisdiction is based on diversity of citizenship, a federal court
looks to the substantive law of the forum state. See Erie R.R. Co. v. Tompkins,
304 U.S. 64, 78-79 (1938); Colony Ins. Co. v. Peachtree Constr., Ltd., 647 F.3d
248, 252 (5th Cir. 2011)(citations omitted). The parties do not dispute that
Mississippi law applies in these proceedings.
                                        III.
      After considering the parties’ arguments as briefed on appeal, and after
reviewing the record, the plain, unambiguous language of the “Lease of Duck &
Deer Hunting Rights Agreement” at issue, the applicable statutory, state and
federal case law, the district court’s well-reasoned interpretation of the lease,
and its judgment and reasoning, we AFFIRM the district court’s judgment and
adopt its analysis in full.

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