Reply Brief

E-Filed Document
Mar 25 2015 17:02:05
2014-CA-00412-SCT
Pages: 12
IN THE COURT OF APPEAL OF THE STATE OF MISSISSIPPI
NO.2014-CA-00412
NO.
2014-CA-00412
APPELLANT
CLAYTON HINTON
vs.
VS.
NATE ROLISON, Individually
NATE ROLISON d/b/a LINCOLN ROAD
AUTOPLEX; and CREDIT ACCEPTANCE CORPORATION
APPELLEE
REPLY BRIEF OF APPELLANT
ORAL ARGUMENT REQUESTED
L. CLARK HICKS, JR., MSB No. 8963
R. LANE DOSSETT, MSB No. 102927
HICKS LAW FIRM, PLLC
29thth Avenue, Suite 201 (39401)
211 South 29
Post Office Box 18350
Hattiesburg, MS 39404-8350
Telephone: (601) 544-6770
Facsimile: (601) 544-6775
Email: [email protected]
[email protected]
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IN THE COURT OF APPEAL OF THE STATE OF MISSISSIPPI
NO. 2014-CA-00412
CLAYTON HINTON
APPELLANT
vs.
NATE ROLISON, Individually
NATE ROLISON d/b/a LINCOLN ROAD
AUTOPLEX; and CREDIT ACCEPTANCE CORPORATION
APPELLEE
APPELLANT'S REPLY BRIEF
Appellant, Clayton Hinton, files this Reply and states:
INTRODUCTION
This circuit court case is an action at law to recover damages for a partnership
dispute over unpaid profits. The trial judge incorrectly dismissed this case by finding that
it was barred under res judicata due to a prior equitable claim in chancery court to correct
title to real property, which accrued nearly a year before the partnership dispute. The
two cases involve separate parties, facts, and claims. This case should not have been
dismissed, requiring reversal.
Res judicata requires four identities to be present before it applies: (1) identity of
the subject matter of the action; (2) identity of the cause of action; (3) identity of the
parties to the cause of action; and (4) identity of the quality or character of a person
against whom the claim is made. Hill v. Carroll Cnty., 17 So. 3d 1081, 1085 (Miss.
2009). "If all four identities are not present, then res judicata cannot serve as a bar to
future suits." Little v. V & G Welding Supply, Inc., 704 So. 2d 1336, 1342 (Miss.
2
1997)(citing Estate ofAnderson v. Deposit Guar. Nat'l Bank, 674 So.2d 1254, 1256
(Miss. 1996)). In this case, none of the elements are met and res judicata does not apply.
I.
Res judicata does not apply because this case and the chancery case involve
different parties, different claims, and different operative facts.
A.
The cases involve different subject matter.
The Mississippi Supreme Court has referred to "subject matter identity as identity
in the thing sued for." Hill v. Carroll Cnty., 17 So. 3d 1081, 1085 (Miss. 2009)(quoting
Black v. N Panola Sch. Dist., 461 F.3d 584 (5th Cir. 2006); Pray v. Hewitt, 254 Miss. 20,
179 So.2d 842, 844 (1965); Campbell v. Campbell, 231 Miss. 658, 97 So.2d 527,528
(1957). "More recently, the Court defined subject matter as the 'substance' of the
lawsuit." Hill, 17 So.3d at 1085.
The Complaint in this case states that "[t]his lawsuit is about Nate Rolison's
breach of an Agreement with Clayton Hinton to equally divide the profits from a used
auto sales business that Rolison and Hinton entered in August of2009." [R. at 7]. This
case is a partnership dispute based on the failure of one partner to pay profits to another.
The unpaid profits were earned by joint efforts that began in 2009 and extended through
2012. [R. at 10, ~ 10]. Clayton and Nate operated these businesses in multiple locations,
including one in Hattiesburg, Laurel and Columbia. [R. at 9, ~ 9]. This case concerns
unpaid profits from all three locations and seeks legal relief in the form of damages.
The chancery case centers on a wholly separate set of circumstances that occurred
much earlier. The Amended Complaint in the Chancery case states "On or about July 13,
2010, the Rolison Defendants collectively and in conspiracy with one another, agreed to
participate in and authorize the forgery of the names of Nathan Hinton and Seneca
Eubanks on a certain Warranty Deed on Property Owned by Nathan Hinton and Seneca
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Eubanks, said property located in Lamar County, Mississippi, a copy of the Warranty
Deed is attached as Exhibit' 1. ", [R. at 566]. The Complaint principally asserted a
request for equitable relief in the form of having the Court set aside a deed and enter an
appropriate order restoring title. The Amended Complaint also contained a claim for
unpaid rent relating to the same property. At the time the chancery Complaint was filed,
the partnership was still operating and it continued to operate until long afterward.
This case does not concern a dispute over of the ownership of property in
Hattiesburg, Mississippi or seek to clear title. The chancery case did not concern the
breach of a partnership agreement or the recovery of unpaid profits earned at multiple car
lots over an extended period oftime, including after Aprill3, 2012, when the chancery
case was filed. For these reasons, the cases involve different subject matter.
Rolison misconstrues the bases ofthe two separate cases by confusing the issues
involved, when they are actually different and distinct matters. He incorrectly argues that
[b ]oth the Chancery Court Action and Circuit Court Action alleged
breach of an alleged August 2009 Agreement between Hinton and
Rolison. Paragraph 6 of the Circuit Court Complaint refers to the
lease which Hinton complains was breached in the Chancery Court
Action. In both cases, Hinton claims injury because of Rolison's
alleged breach of that Agreement.
[Rolision's Brief at 9-10]. These statements could not be further from the truth. As
stated numerous times, the chancery case involved an alleged fraudulent deed and a claim
to restore title. Rolison asserted that he was the title owner to the Hattiesburg car lot,
and, based on his assertion of ownership, he stopped paying rent on the property, which
was due and owing under a signed written lease agreement. [R. at 21]. Counsel included a
claim for unpaid rent under the written agreement in the chancery case because it
involved the same property and arose at the same time.
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On the other hand, this case does not in any way concern a claim for unpaid rent
or a breach of the written lease agreement to pay rent. Counsel Bradley Glaze attached
the lease agreement to Complaint in this case because it was signed by both parties and it
references Rolison and Hinton "as equal partners" in Paragraph 5 of the lease agreement.
The written lease agreement is obviously not a partnership agreement, but it serves as
evidence of the partnership agreement and the parties' intent to enter into a joint venture,
which Rolison breached. Conversely, Rolison lumps the written lease agreement and the
partnership/joint venture together in an effort to make two separate issues appear as one.
Res judicata does not apply because both cases involve different subject matter,
which by their very nature are required to be filed in separate courts, one in equity (to
clear title to land) and one at law (for damages arising under a breached partnership). At
the time the chancery Complaint was filed, the partnership was still operating and it
continued to operate unti110ng afterward. The chancery case did not concern the breach
of a partnership agreement or the recovery of unpaid profits earned at multiple car lots
over an extended period of time. This Court should reverse the trial Court because the
"subject matter" element of res judicata is not met.
B.
The causes of action are different.
"This identity requires the 'cause of action' in both suits to be the same. This
Court has defined 'cause of action' as the underlying facts and circumstances upon which
a claim has been brought." Hill, 17 So.3d at 0085.
Appellant's Brief contains an in-depth review of the differences between the
claims and causes of action asserted in the circuit and chancery court Complaints, which
is not repeated to avoid redundancy. Rolison's argument concerning this element is the
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same argument he set forth in the prior element, that "both suits arise out of the same
transaction and have the same origin, that being the lease agreement." [Rolison Brief at
11]. As discussed above, this case does not concern a breach of the written lease
agreement, but a partnership dispute evidenced by the lease agreement. This case does
not seek to recover unpaid rent.
The differences between the circuit and chancery cases may be seen in an
analogy. Assume Person A and Person B are involved in an auto accident in 2009. Later
in 2012, they meet and discuss the auto accident in an attempt to workout their
differences, but, in the process, Person A punches Person B, assaulting him. Rolison
argues that the cases should be brought together because they could have been presented
together. They are not required to be brought together under Mississippi Rule of Civil
Procedure 18, concerning permissive claim joinder. In the example, it is true that both
situations, to a degree, involve the same auto accident, but the "cause of action" or "thing
sued for" is different- one being a personal injury auto accident sounding in negligence
that occurred in 2009; the other an intentional tort that accrued much later.
In this case, the circuit and chancery case involve different operative facts. The
chancery case concerned the restoration of title and unpaid rent to a parcel of real
property in Hattiesburg that was owned by Seneca Eubanks and Nathan Hinton in 2010,
while this case concerns unpaid profits from a partnership between Hinton and Rolison
earned at car lots in Hattiesburg, Laurel and Columbia through 2012. This Court should
reverse the trial courts dismissal of this cause because the cause of action element of res
judicata is not satisfied.
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C.
The parties are different.
"Mississippi follows the general rule that parties must be substantially identical
for res judicata to apply." EMC Mortgage Corp. v. Carmichael, 17 So. 3d 1087, 1091
(Miss. 2009). This inquiry is to both plaintiffs and defendants. Cherry v. Anthony,
Gibbs, Sage, 501 So. 2d 416, 418 (Miss. 1987)(examining identity of co-defendants and
finding that res judicata is not present where party is sued in one capacity and later in
another).
Rolison does not dispute, but concedes, that the two cases involve different parties
in interest. Instead, he argues, without facts or citation to the record, that everyone is in
privity with everyone, satisfying this element.
The Plaintiffs in the chancery case included Nathan Hinton, Seneca Eubanks and
Clayton Hinton and the defendants included Nate Rolison, Nate Rolison, Inc. and Karen
Chadwell. Third party defendants included Zaffit Hinton; CZ, Inc.; CNRS&Z, Inc.; and
Wells Fargo Bank. [R. at 565]. In this case, the Plaintiff is Clayton Hinton and the
Defendants are Nate Rolison, individually, Nate Rolison D/B/A Lincoln Road Autoplex,
NWEC, Inc., and Credit Acceptance Corporation, Inc. [R. at 47].
In addition to ignoring the different parties and co-parties in the two suits, Rolison
ignores the capacities and classes of the parties. This element requires substantial
identity, and, when the parties are involved in different capacities, the identity of the
parties is not satisfied. Cherry v. Anthony, Gibbs, Sage, 501 So. 2d 416, 418 (Miss.
1987)(examining co-defendants and find that res judicata did not apply where a party is
sued in different capacities); Dunaway v. WH Hopper & Associates,.Jnc., 422 So. 2d
749, 751 (Miss. 1982)(examining class oflitigant under statutory causes of action).
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The plaintiffs in the chancery case did not sue Nate Rolison in a representative
capacity under the trade business name Lincoln Road Autoplex, and the chancery case
was not against NWEC, Inc. or Credit Acceptance. Clayton Hinton did not have a direct
interest in the outcome of the chancery case, but was joined only as a necessary party due
to his mortgage interest, putting him in a separate class of plaintiff as in this case, where
he is a direct party in interest. The chancery case was to quiet title in the names of
Nathan Hinton and Seneca Eubanks, whereas this case seeks to recover lost profits owing
to Clayton Hinton. The identity of the parties are not the same, defeating res judicata.
D.
The quality or character against whom the claims were made is different.
"Regarding the last identity of the quality or character of the person, this Court
has stated if someone is appearing in a limited or representative capacity in one case
and personally in another, that party's 'quality or character' is not the same in the two
actions." Strait v. McPhail, 145 So. 3d 696, 704 (Miss. App. 2013)(rev'd, 145 So. 3d 664
(Miss. 2014)
The ad damnum clause of the Amended Complaint in the Chancery case
requested title to be restored to Nathan Hinton and Seneca Eubanks. [R. at 570]. Clayton
was joined "in a limited" capacity as the mortgage holder, which is entirely different then
his direct interest in the outcome of this case, as set forth by Strait. 1 In this case, Nate is
sued in a representative capacity under his trade/business name, Lincoln Road Autoplex.
Although only one difference is required to defeat this element, both cases involved
different capacities or character of the parties involved.
II.
The Complaint states a viable claim against Credit Acceptance.
1
To the extent this element requires divergence of a character "against" whom a claim is made, Clayton
was a Counter-Defendant in the chancery case.
8
The trial court dismissed this case on a M.R.C.P. 12(b)(6) Motion to Dismiss.
Appellant's Brief contains citations to authority for the notice pleading requirements
under Mississippi Law that adequately support the well-pled Complaint in this case.
As this case is on de novo appeal the Court can decide for itself whether the
Complaint and Amended-Complaint placed Credit Acceptance on notice that an
injunction was being sought against it. That is the only issue on appeal against Credit
Acceptance.
Credit Acceptance's lengthy Brief contains a plethora of citations to cases where
injunctions have failed, quotations to the strict requirements for "substantial likelihood of
success on the merits" and the requirements for "irreparable injury." All of these issues
must be decided on the merits, after the presentation of evidence and testimony. This
case was dismissed at the pleading stage on a Motion to Dismiss. Clayton Hinton was
never given the opportunity to address the likelihood of success on the merits or the
irreparable harm that would befall him if an injunction were not allowed. His Complaint,
however, addressed each of these issues, constituting an adequate pleading. It states,
In order to preserve the status quo and prevent irreparable harm,
Credit Acceptance should be enjoined by a temporary restraining
order and a preliminary injunction from paying any further funds
to Rolison generated from the pools obtained as part of the
business between Hinton and Rolison. Credit Acceptance should
be ordered to hold all such funds in trust, until final judgment is
rendered. Failure to hold all such funds in trust will result in
spending, using, wasting of the funds and prevent Hinton from
being compensated upon any future judgment of the Court finding
Rolison in breach.
[R. at 11]. These statements, in addition to the other statements set forth throughout the
Complaint concerning the formation of a partnership and breach of the partnership,
9
contain sufficient facts that place Credit Acceptance on notice that the funds may be due
and owing to the partnership, not Nate Rolison individually. These funds could be held
by Credit Acceptance or a receiver, and would require no further action on the part of
Credit Acceptance.
Credit Acceptance's arguments regarding pre-judgment injunctive relief of a third
party is misplaced. Credit Acceptance cites the unconstitutionality of certain prejudgment sequestration statutes, which have been found unconstitutional due to lack of
notice. [Credit Acceptance Brief at 17]. Pursuant to the statutes,
injunctions/sequestrations were authorized by the clerk without notice to the other side.
Mississippi courts' inherent power to issue injunctions upon proper notice has never been
called into question constitutionally. To the contrary, M.R.C.P. 64 expressly authorizes
sequestration of assets to protect a potential judgment. Rule 64 states,
At the commencement of and during the course of an action, all
remedies providing for the seizure of person or property for the
purpose of securing satisfaction of the judgment ultimately to be
entered in the action are available under the circumstances and in
the manner provided by law. These remedies include attachment,
replevin, claim and delivery, sequestration and other corresponding
or equivalent remedies, however designated and regardless of
whether the remedy is ancillary to an action or must be obtained by
an independent action.
Credit Acceptance has not challenged this Rule.
CONCLUSION
In order for res judicata to apply, four elements must be met. In this case,
none of the four required elements is satisfied. The trial court erred in dismissing
10
this case because this partnership dispute over unpaid profits is wholly separate
from the prior chancery case involving a dispute over title ownership to real
property.
The Complaint and Amended Complaint in this case state a viable claim
against Credit Acceptance. The partnership sold cars that were financed through
Credit Acceptance, and those sums were due to be paid to the partnership or
adequately protected by the requested injunction. At a minimum, Clayton should
be entitled to put forth evidence concerning the merits of his claim, which was
adequately pled.
WHEREFORE, Appellant, Clayton Hinton, requests that this Court
reverse the trial court's dismissal and remand this case for proceedings consistent
with this Court's findings.
Respectfully submitted, this the 25th day of March, 2015.
Is/ Clark Hicks
CLARK HICKS, JR., MSB No. 8963
R. LANE DOSSETT, MSB No. 102927
Attorneys for Appellant, Clayton Hinton
HICKS LAW FIRM, PLLC
211 South 29th Avenue, Suite 201 (39401)
Post Office Box 13850
Hattiesburg, MS 39404-8350
Telephone: 601.544.6770
Facsimile: 601.544.6775
Email: clark@hi cksattomeys. com
[email protected]
CERTIFICATE OF SERVICE
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I hereby certify that on t his day I electronically filed the fo regoing pleading or
other paper with the Clerk of Court using the MEC system which sent notifications of
such tiling on the folLowing:,
Carroll H. Tngram, Esq.
Jennifer Ingram Wilkinson, Esq.
Ingram & Wilkinson
Post Offtc.e Box 15039
Hattiesburg, MS 39404-5039
carroll(Ci),ingramlawyers.oom
1ennifer@ingramlawyers. com
John Corlew, Esq.
Corlew, Munford & Smith, PLLC
Post Office Box 16807
Jackson, MS 39~36
[email protected]
Mark H. Tyson, Esq.
McGlinchey Stafford
P. 0. Box 22949
Jackson, MS 39225-2949
[email protected]
Further, I hereby certify that I have mailed by United States Mail the document to the
following non-MEC pa1iicipants:
Honorable Johnny L W illiams
Lamar County Chancery 8ourt
Post Office Box 1664
Hattiesburg, MS 39403-1664
THIS the 25th day of March, 20 l5.
lsi Lane Dossett
CLARK HlCKS, JR., MSB No. 8963
R. LANE DOSSETT, MSB No. I 02927
Auorneysfor Appellcml, Clayton Hinton
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