Court Opinion

ID: 864652
Source: CourtListenerOpinion
Date Created: 2013-04-27 00:20:41.495051+00
Date Added: 2024-06-11T11:47:20.148751
License: Public Domain

IN THE SUPREME COURT OF MISSISSIPPI

                              NO. 2002-CA-01245-SCT

EDWIN WELSH

v.

WILLIAM M. MOUNGER, II, E. B. MARTIN, JR.,
MSM, INC. AND MERCURY WIRELESS
MANAGEMENT, INC.

DATE OF JUDGMENT:                       6/27/2002
TRIAL JUDGE:                            HON. DENISE OWENS
COURT FROM WHICH APPEALED:              HINDS COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:                GRADY F. TOLLISON, JR.
                                        E. FARISH PERCY
                                        JOHN LEONARD WALKER
                                        PHILLIP J. BROOKINS
                                        DANA E. KELLY
                                        JAMES R. HUBBARD
ATTORNEYS FOR APPELLEES:                PAUL STEPHENSON, III
                                        GEORGE R. FAIR
                                        JOHN L. MAXEY, II
                                        DONNA ROSS PHILIP
NATURE OF THE CASE:                     CIVIL - TORTS-OTHER THAN PERSONAL
                                        INJURY & PROPERTY DAMAGE
DISPOSITION:                            AFFIRMED - 07/01/2004
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

      EN BANC.

      COBB, PRESIDING JUSTICE, FOR THE COURT:

¶1.   This appeal arises from a settlement agreement entered into by appellant Edwin

Welsh and William H. Mounger II, E.B. Martin Jr., MSM, Inc. (MSM), Mercury Wireless

Management, Inc. (MWM); and others in a civil action filed in the Hinds County Chancery
Court in 1997. As that matter was nearing trial in the fall of 1999, the parties and their

attorneys executed an Absolute Release with Covenants memorializing a settlement of

Welsh’s stock ownership claims. Upon joint motion of the parties, the chancery court

entered an order of dismissal with prejudice.

¶2.    The present action was filed by Welsh in August of 2000,1 alleging that the settlement

was procured by fraud. After testimony from more than twenty witnesses during eleven days

of trial, the Hinds County Chancery Court found in favor of Mounger and Martin. Welsh

now appeals. Finding no error, we affirm.

                                           FACTS

¶3.    Welsh, Mounger, Martin and Sullivan are all telecommunication executives. At one

time, Welsh served as vice-president for sales and marketing in Mounger, Martin and

Sullivan's wireless company, Tritel Corporation. In 1997, Welsh left the position after a

compensation dispute, claiming that as an inducement to leave his former employment,

Mounger, Martin and Sullivan had promised to convey to him 5% of their collective

ownership interest in Tritel.

¶4.    On March 28, 1997, Welsh filed suit against Mounger and Martin charging breach

of contract, breach of fiduciary duty, wrongful termination, promissory fraud and other

causes of action. After two years of discovery, as trial neared in the fall of 1999, Welsh

settled his claims against Mounger and Martin for $410,000. In December of 1999, the

       1
         Other defendants below included Jerry M. Sullivan, Mercury Southern, L.L.C., Airwave
Communications, L.L.C., Digital PCS, L.L.C., and Tritel. Sullivan was voluntarily dismissed and
Tritel, Digital, Airwave, and Mercury Southern settled prior to trial.

                                              2
Tritel Corporation went public, and the value of the stock went from virtually zero to nearly

$130 per share.

¶5.    Subsequently, Welsh filed an independent claim asserting that Mounger and Martin

fraudulently procured the settlement causing Welsh to relinquish his claim to 5% ownership

interest just three months before a successful initial public offering (IPO) of Tritel stock

substantially increased the value of the stock. Welsh alleges that Mounger and Martin made

false representations in their July 14, 1999, depositions regarding their intentions to go

public with Tritel and as to the value of the stock in the company. Welsh also claimed that

Mounger and Martin withheld material facts by not disclosing that interest in an IPO of

Tritel stock intensified between their July 1999 depositions and the execution of the

settlement on September 22, 1999.

¶6.    Mounger and Martin responded that they did not make false representations nor

conceal material facts, nor did they have plans to pursue an IPO at the time of settlement

negotiations with Welsh. They testified that they did not seriously consider an IPO until one

month after they settled with Welsh when a similar wireless company went public. Finally,

they asserted that they had no legal duty to supplement their deposition testimony after it was

given in July and prior to execution of the agreement in September. The chancery court,

after an extensive hearing, found for Mounger and Martin.

                                       DISCUSSION

¶7.    The law favors settlement of disputes by agreement of the parties and, ordinarily, will

enforce the agreement which the parties have made, absent any fraud, mistake, or

overreaching. Hastings v. Guillot, 825 So. 2d 20, 24 (Miss. 2002). The elements of fraud

                                              3
in this state are well established. They include (1) a representation, (2) its falsity, (3) its

materiality, (4) the speaker’s knowledge of its falsity or ignorance of its truth, (5) his intent

that it should be acted upon by the person and in the manner reasonably contemplated, (6)

the hearer’s ignorance of its falsity, (7) his reliance on its truth, (8) his right to rely thereon,

and (9) his consequent and proximate injury. Martin v. Winfield, 455 So. 2d 762, 764 (Miss.

1984) (internal citations omitted). Fraud is essentially a question of fact. Id. Proving fraud

is difficult, as it ought to be. Clear and convincing evidence is required. Cotton v.

McConnell, 435 So. 2d 683, 685 (Miss. 1983). It is well-settled that “where conflicting

testimony is presented, expert and otherwise, the chancellor is required to make a judgment

on the credibility of the witnesses in order to resolve the questions before the court.” Id.

(citing Broadhead v. Bonita Lakes Mall, Ltd. P’ship, 702 So. 2d 92, 101 (Miss. 1997)).

¶ 8.   Welsh asserts that both Guastella v. Wardell, 198 So. 2d 227 (Miss. 1967) and the

Restatement (Second) of Torts § 551 apply to impose liability on Mounger and Martin for

fraudulent nondisclosure. Welsh argues that the defendants had a duty to inform him, prior

to executing the settlement, that an IPO of Tritel stock was imminent.

       I.      Guastella v. Wardell and the Restatement (Second) of Torts § 551.

¶9.    The resolution of this matter begins with Chief Justice Ethridge's opinion for the

Court in Guastella. In that case, we adopted the rule that is now embodied in the

Restatement (Second) of Torts § 551. Guastella, 198 So.2d at 230.

¶10.   Guastella involved a real estate developer (Guastella) who had made certain

representations to buyers who had purchased lots in a Pass Christian subdivision. Id. at 228.

Among those representations was that the subdivision would be restricted to building only

                                                 4
houses on the lots. Id. At closing, Guastella produced a receipt from the chancery clerk's

office that simply stated that restrictive covenants had been filed. Id. at 229. However, as

the plaintiffs soon found out, the restrictive covenant was only placed on their lots, leaving

Guastella free to do as he chose with the remaining ones. Id. When Guastella attempted to

build three apartment buildings in the subdivision, the plaintiffs sought an injunction. Id.

at 228. Guastella subsequently appealed the injunction to this Court. Id.

¶11.   This Court's opinion cited the then-proposed Restatement (Second) of § 551. Id. at

230. We noted that Guastella's silence regarding the manner in which the restrictions had

been imposed as opposed to the manner in which they had been represented amounted to "an

affirmation that a state of things existed which did not exist." Id. We then added:

       With knowledge of these material facts as to the limitations of the covenants
       as he had recorded them, Guastella was under a duty to disclose this
       information. Yet he remained silent. Such a case of failure to speak amounted
       to a suppression of material facts which should have been disclosed, and is in
       effect a fraud. Restatement (Second) of Torts § 551 (Tent. Draft No. 12,
       1966))."

Id.

¶12.   We added that a party in the same situation as Guastella owes a duty to disclose to the

other party, before consummation of the deal, information that corrects previous statements

"made to the other party which are untrue or misleading." Id. Noting that the information

about the covenants was material to the transaction and that Guastella was under a duty to

disclose, this Court affirmed the issuance of the injunction. Id. at 230-31.

¶13.   In the current case, the trial court held that Guastella was not applicable and that the

defendants had no duty to supplement their deposition testimony. The trial court found that

                                              5
the holding in Guastella applied only where Guastella had misrepresented the facts at the

outset and had a duty of disclosure to correct that affirmative falsehood. The trial court

concluded that Mounger and Martin did not misrepresent the facts during their July 1999

deposition testimony and therefore they had no duty to correct the testimony prior to

executing the settlement agreement. We agree.

¶14.   Additionally, Restatement (Second) of Torts § 551 clearly governs business

transactions:

       (1) One who fails to disclose to another a fact that he knows may justifiably
       induce the other to act or refrain from acting in a business transaction is
       subject to the same liability to the other as though he had represented the
       nonexistence of the matter that he has failed to disclose, if, but only if, he is
       under a duty to the other to exercise reasonable care to disclose the matter in
       question.
       (2) One party to a business transaction is under a duty to exercise reasonable
       care to disclose to the other before the transaction is consummated,
                                           * * *
       (b) matters known to him that he knows to be necessary to prevent his partial
       or ambiguous statement of the facts from being misleading; and
       (c) subsequently acquired information that he knows will make untrue or
       misleading a previous representation that when made was true or believed to
       be so . . . .

Restatement (Second) of Torts § 551 (1977) (emphasis added). In Guastella, the business

transaction was the sale of real property. Moreover, Guastella involved a vendor who not

only knew that his statement to the purchasers of subdivision lots was erroneous before the

transaction was complete, but also deliberately filed restrictive covenants applicable only to

the two lots purchased and then led the closing attorney to believe that the restrictive

covenants covered all the lots. In the current case, the misrepresentation in question was the

answer to a deposition question within the context of a law suit. Mounger’s answer to the

                                              6
question regarding discussions with Martin or Sullivan about the possibility of an IPO

occurring, as well as Mounger’s qualifications “nothing that I would consider discussions”

and “other than the fact that that is a possible scenario at some point in the future” are

responsive to the narrow questions posed, and Welsh’s attorney could have followed up with

more probing questions.

¶15.   Although Mounger and Martin were contacted, subsequent to the depositions, by six

different investment firms who presented sales “pitches” regarding their services of

providing equity financing, and the possibility of an initial public offering (IPO), the idea

of “going public” was only one of several options under consideration at the time the

settlement agreement with Welsh was reached on September 22, 1999. The record supports

the chancery court’s finding that only after the similar wireless company (Triton) went

public with a tremendously successful IPO in October 1999 was the decision made to go

public. The chancery court found that:

       Looking at the testimony of Martin and Mounger as a whole, this Court finds
       that there was sufficient disclosure. Had there only been deposition testimony
       from Mounger before this Court the result may have been different. This
       Court finds that Mounger’s deposition testimony was evasive, however, it was
       responsive to the narrow questions posed by opposing counsel. Counsel for
       the plaintiff failed to follow up with probative questions to elicit substantive
       information regarding the company’s IPO discussions.

¶16.   We find no error with the trial court's decision that Guastella is distinguishable.

       II.    Mississippi Rule of Civil Procedure 26(f).

¶17.   The Mississippi Rule of Civil Procedure 26(f) provides the appropriate answer to

whether, subsequent to the depositions, Mounger and Martin had a duty to disclose their

contacts with investment banks in this litigation situation, as follows :

                                              7
       (f) Supplementation of Responses. A party who has responded to a request for
       discovery with a response that was complete when made is under no duty to
       supplement the response to include information thereafter acquired except as
       follows:
                                          * * *
       (2) A party is under a duty seasonably to amend a prior response if that party
       obtains information upon the basis of which (A) the party knows that the
       response was incorrect when made, or (B) the party knows that the response,
       though correct when made, is no longer true and the circumstances are such
       that a failure to amend the response is in substance a knowing concealment.

Miss. R. Civ. P. 26(f).

¶18.   An explanation of Miss. R. Civ. P. 26(f)’s “knowing concealment” in the settlement

fraud context is found in C.J.S. as follows:

       An unfair concealment of material facts may constitute grounds for relief
       against a compromise, as where one of the parties has superior means of
       ascertaining the facts and conceals the true state of affairs, especially if the
       concealment is of facts which the adverse party has a right to be informed.
       Every omission to communicate facts, although material, is not necessarily
       fraudulent. Where the parties are dealing at arm’s length, a mere failure of
       one party to disclose facts which are not asked about is not sufficient to
       invalidate the agreement, where the party has done nothing to mislead the
       other party . . . Moreover, to make a nondisclosure a fraudulent concealment,
       it must be intentional.

15A C.J.S. Compromise & Settlement § 53 (2002). The chancery court properly applied

Miss. R. Civ. P. 26(f) to Welsh’s settlement fraud claim. Furthermore, the chancellor

applied the Corpus Juris Secundum analysis when she found that Mounger and Martin did

not have “superior means of ascertaining the facts.” (“The Plaintiff had equal access to the

stock market to compare the productivity of similar companies and determine for himself

whether the value offered for his stock was adequate.”) The chancery court found that the

parties were “dealing at arm’s length”and that Mounger and Martin’s failure to disclose was

“a mere failure of one party to disclose facts which are not asked about."

                                               8
¶19.   The chancery court found that Mounger and Martin had “done nothing to mislead the

other party," and that Mounger and Martin did not “intentionally” conceal the facts as they

knew them to be in the July 1999 deposition testimony. We find no error.

       III.   Exclusion of memorandum.

¶20.   Finally, Welsh argues that the trial court erred in excluding a memorandum that he

offered into evidence which purported to show that the defendants had expressed plans to

offer Tritel stock for sale in the first quarter of 2000. The internal memo was written by a

representative of Donaldson, Lufkin & Jenrette (DLJ) following a meeting with Mounger

and Martin on August 25, 1999. Welsh notes that this was highly probative of the central

issue of whether Mounger and Martin had plans or expectations of going public with Tritel

a full month before executing the settlement agreement.

¶21.   Welsh first attempted to introduce the memorandum during direct examination of

Mounger. The defense objected on hearsay grounds. Welsh then attempted to lay the

foundation by questioning a senior manager of DLJ, who testified that he did not prepare the

memo and did not know who had prepared it; but that it was a regular business practice of

DLJ to document such a meeting. The trial court excluded the document, holding that Welsh

failed to lay a proper foundation to admit the document over the hearsay objection.

¶22.   Welsh now argues that the DLJ memo was offered for admission through a qualified

authenticating witness under the business record exception to the hearsay rule, M.R.E.

803(6). He contends that M.R.E. 803 requires only that the source of the material be "an

informant with knowledge about who is acting in the course and scope of regularly

                                             9
conducted activity," and that the document should not be excluded unless the "source of the

information...lacks trustworthiness."

¶23.   This Court reviews a chancery court’s decision to exclude evidence for abuse of

discretion — that is, this Court defers to the chancery court’s decision and will not reverse

the decision unless it was unreasonable and unduly prejudicial. Harrison v. McMillan, 828
So. 2d 756, 765 (Miss. 2002).

¶24.   The memorandum provides in part:

       This summer we contacted the Company regarding a potential IPO and we met
       with the Company in August to discuss such transactions. At that time, Tritel
       indicated it would likely wait until the first quarter of 2000 to pursue an IPO
       so that it could instead focus its attention on successfully launching
       commercial service in certain of its markets.

¶25.   The Mississippi Rules of Evidence govern whether a document has been

authenticated:

              The requirement of authentication or identification as a condition
       precedent to admissibility is satisfied by evidence sufficient to support a
       finding that the matter in question is what its proponent claims.
              By way of illustration only, and not by way of limitation, the following
       are examples of authentication or identification conforming with the
       requirements of this rule:
              Testimony that a matter is what it is claimed to be. . . .

Miss. R. Evid. 901.

¶26.   Additionally, the “business records” exception to the hearsay rule provides:

       A memorandum, report, record, or data compilation, in any form, of acts,
       events, conditions, opinion or diagnosis, made at or near the time by, or from
       information transmitted by, a person with knowledge, if kept in the course of
       a regularly conducted business activity, and if it was the regular practice of
       that business activity to make the memorandum, report, record, or data
       compilation, all as shown by the testimony of the custodian or other qualified
       witness or self-authenticated pursuant to Rule 902(11), unless the source of

                                             10
       information or the method or circumstances of preparation indicate lack of
       trustworthiness.

Miss. R. Evid. 803(6).

¶27.   The chancery court did not abuse its discretion when it excluded the memorandum

from evidence. Welsh never authenticated the document because Welsh’s witness never

identified the memorandum as one that documented the meeting, i.e. that it was “what it is

claimed to be” or a “business record.” Although Welsh’s witness testified that such a

memorandum “was used internally with our equity department,” he never testified: that it

was “made at or near the time by, or from information transmitted by, a person with

knowledge”; that it was “kept in the course of regularly conducted business activity”; and

that “it was the regular practice of that business activity to make the memorandum.”

Although Welsh’s witness worked for Donaldson, Lufkin & Jenrette, he “was not involved

in the preparation” of the memorandum, and did not “testify to the accuracy” of the

memorandum. Therefore, the chancery court did not err in excluding the memorandum.

                                     CONCLUSION

¶28.   The record in this case does not reveal anything approaching fraud, mistake, or

overreaching, and the chancellor was in the best position to decide that issue. Moreover,

fraud is a finding of fact, and this Court will not disturb findings of fact on appeal unless

they are against the manifest weight of evidence or clearly erroneous. We affirm the

judgment of the chancery court.

¶29.   AFFIRMED.

                                             11
     SMITH, C.J., CARLSON AND DICKINSON, JJ., CONCUR. EASLEY, J.,
DISSENTS WITH SEPARATE WRITTEN OPINION. WALLER, P.J., DIAZ,
GRAVES AND RANDOLPH, JJ., NOT PARTICIPATING.

       EASLEY, JUSTICE, DISSENTING:

¶30.   Welsh brings this appeal from an adverse ruling alleging that the chancellor failed to

recognize both that the settlement of a previous lawsuit was a business transaction settlement

and our previous ruling in Guastella v. Wardell, 198 So. 2d 227 (Miss. 1967), adopting the

Restatement of Torts (Second) § 551 setting out the disclosure requirement in a business

transaction. As I agree, I must respectfully dissent and would reverse and remand for further

proceedings.

¶31.   In March 1997, Welsh commenced an action against several parties, including but not

limited to, William M. Mounger, II, E.B. Martin, Jr., MSM, Inc. and Mercury Wireless

Management, Inc., collectively known as the Defendants. Welsh alleged, inter alia, wrongful

termination, breach of contract, and other causes of action which revolved around the

Defendants' refusal to convey a percentage of stock in certain entities which held digital

Personal Communication Services (PCS) from the Federal Communications Commission.

Welsh alleged that the Defendants had promised him stock ownership in the entities as an

enticement to take a job as an executive at MSM.

¶32.   Before trial, the parties settled their claims but only after two years of extensive

discovery. Subsequent to the execution of the settlement, the Defendants engaged in an

Initial Public Offering (IPO) of stock for Tritel, Inc., a corporation that formed during the

                                             12
discovery period.2 This IPO led to the current cause of action as Welsh has claimed fraud

in the inducement of the settlement.

¶33.   During discovery in the initial 1997 lawsuit, the Defendants made several

representations to Welsh. These included: there were no expectations of Tritel making an

IPO; there was no plan for an IPO; the Tritel board of directors were of the opinion that

Tritel shares were worth zero; Tritel had received no information from any investment firm

in regards to the potential value of Tritel shares if an IPO were to take place; the Tritel board

had not discussed contacting an investment firm; and no investment firms had been

contacted about an IPO.

¶34.   At trial below of this action, Welsh argued that this information played a large part

in his acceptance of the settlement of the 1997 case. His position was that information

produced during discovery and at trial showed that subsequent to and/or during the time that

these representations were made to him, the Defendants were actively discussing, meeting,

contacting and planning an IPO. Indeed, Tritel's board of directors approved an IPO less

than two full months after the execution of the settlement agreement.

¶35.   Welsh claimed that even if the representations made by the Defendants were true at

the time they were made, subsequent occurrences made that information false and/or

misleading. Indeed, a number of events occurred less than 10 days after the depositions in

the 1997 lawsuit. Some of these facts included a meeting with Merrill Lynch representatives

the same day of the depositions, a presentation by Merrill Lynch the day after the

       2
        Tritel was now the holder of most of the PCS licenses and is the corporation in which
Welsh claims he should have been given a percentage of stock.

                                               13
depositions, a second recommendation by another firm four days after the depositions and

Tritel sent a letter indicating that it was considering going public and the board of directors

received a report that many investment companies recommended going public less than 10

days after the depositions. Therefore, the Defendants were under a duty to correct their

earlier representations. The chancellor found that the Defendants were under no duty to

disclose their new information because the Defendants' statements were true at the time they

were made. As a result, the chancellor found that Welsh had failed to establish his case by

clear and convincing evidence and found for the Defendants. Aggrieved, Welsh appeals to

this Court.

¶36.      The resolution of this matter begins and ends with Chief Justice Ethridge's opinion

for the Court in Guastella v. Wardell, 198 So. 2d 227 (Miss. 1967). In that case, we adopted

the rule that is now embodied in the Restatement (Second) of Torts § 551. See 198 So.2d

at 230.

¶37.      Guastella involved a real estate developer (Guastella) who made certain

representations to buyers who had purchased lots in a Pass Christian subdivision. Id. at 228.

Among those representations was that the subdivision would be restricted to building only

houses on the lots. Id. At closing, Guastella produced a receipt from the chancery clerk's

office that simply stated that restrictive covenants had been filed. Id. at 229. However, as

the plaintiffs soon found out, the restrictive covenant was only placed on their lots, leaving

Guastella free to do as he chose with the remaining ones. Id. When Guastella attempted to

build three apartment buildings in the subdivision, the plaintiffs sought an injunction. Id.

at 228. Guastella subsequently appealed the injunction to this Court. Id.

                                              14
¶38.   This Court's opinion cited the then-proposed Restatement (Second) of § 551. 198

So.2d at 230. We noted that Guastella's silence regarding the manner in which the

restrictions had been imposed as opposed to the manner in which they had been represented

amounted to "an affirmation that a state of things existed which did not exist." Id. We then

added the following:

       With knowledge of these material facts as to the limitations of the covenants
       as he had recorded them, Guastella was under a duty to disclose this
       information. Yet he remained silent. Such a case of failure to speak
       amounted to a suppression of material facts which should have been
       disclosed, and is in effect a fraud. Restatement (Second) of Torts § 551
       (Tent. Draft No. 12, 1966))."

Id. (emphasis added).

¶39.   We added that a party in the same situation as Guastella owes a duty to disclose to the

other party, before consummation of the deal, information that corrects previous statements

"made to the other party which are untrue or misleading." Id. Noting that the information

about the covenants was material to the transaction and that Guastella was under a duty to

disclose, this Court affirmed the issuance of the injunction. Id. at 230-31.

¶40.   As now, Restatement (Second) of Torts § 551 (2)(c) provides that a party to a

transaction maintains a duty "to exercise reasonable care to disclose to the other before the

transaction is consummated... (c) subsequently acquired information that he knows will make

untrue or misleading a previous representation that when made was true or believed to be

so."

¶41.   In the case sub judice, I find a similar situation. During settlement negotiations for

a suit based on an underlying business transaction, the Defendants in this case made various

                                             15
representations to Welsh that there was no market for their stock and that there were no

expectations that their company would go public, i.e. no plans for an IPO. These

representations were made during depositions that took place on July 14, 1999. The very

day of the deposition, the Defendants had a meeting with representatives from Merrill

Lynch. During a presentation the following day, Merrill Lynch recommended that the

Defendants take Tritel public.

¶42.   Four days later, Robinson-Humphrey made a recommendation that the Defendants

take Tritel public. On July 23, 1999, less than 10 days after the depositions, the company

issued a letter that it was considering going public. That same day, it was reported to Tritel

board of directors that there was an inundation of recommendations from various investment

banking firms that they go public. In the same report, the board was notified that Tritel

management was actively considering whether to go public.

¶43.   As a result of these and other similar occurrences, it is clear that around the middle

of August 1999, the representations made to Welsh were no longer correct, or at the very

least, were now misleading. These representations involved the valuation of stock which

was one of the basic and essential factors involved in the settlement negotiations between

the parties. Therefore, at that point the Defendants owed a duty to correct the misleading or

untrue characteristics of their earlier statements.

¶44.   However, the Defendants took no steps to correct the situation. The parties held a

final settlement meeting with Welsh on August 25, 1999. At this meeting, the Defendants

made the representation that they would not be going public any time in the foreseeable

                                              16
future. The parties later agreed to a settlement in principle on August 28, 1999. The

settlement agreement was finally executed on September 22, 1999.

¶45.   Between the final settlement meeting and the execution of the agreement, the record

indicates further discussions with investment firms regarding IPO's of Tritel's stock. These

discussions culminated in the board of directors authorizing the filing for the IPO on

November 12, 1999, less than three full months after the final settlement meeting and less

than two months after the execution of the settlement agreement.

¶46.   The chancellor distinguished Guastella from the case at bar finding that the

representations made by the Defendants were true when made. However, Guastella, in

conjunction with the Restatement (Second) of Torts § 551, requires that when one obtains

knowledge which makes earlier representations either false or misleading, he has an

affirmative duty not remain silent and to correct those representations.

¶47.   Assuming the veracity of the Defendants' representations at the time they were made,

the facts demonstrate that such representations subsequently became either untrue, or at the

very least, misleading. Therefore, in my view the Defendants had a duty to correct this

information, as they knew it was material to the settlement agreement. The chancellor's

decision is inconsistent with our decision in Guastella. Therefore, I must respectfully

dissent as I would reverse and remand this case.

                                            17