MORAN v. FAIRLEY

BRIDGES, P.J., for the Court.

¶ 1. James Fairley, Jr. sued Terry Moran and Mark Seymour, Sr. in Harrison County Circuit Court. Fairley alleged (1) negligent misrepresentation, (2) fraud, and (3) breach of contract. Following the trial before the circuit court, the jury returned a general verdict for Fairley and awarded $975,000 in damages. Posttrial, Moran and Seymour filed unsuccessful motions for judgment notwithstanding the verdict, new trial, vacation or amendment of the judgment, and remittitur under Rules 50 and 59 of the Mississippi Rules of Civil Procedure. Aggrieved, Moran and Seymour appeal and assert seven issues, which we paraphrase for brevity's sake.

¶ 2. Moran and Seymour assert that Fairley presented insufficient evidence of (1) negligent misrepresentation, (2) fraud, (3) breach of contract, and (4) damages. Further, Moran and Seymour allege that (5) the verdict is against the overwhelming weight of the evidence and (6) the jury's award of $975,000 was the product of bias, passion, and prejudice and was contrary to the overwhelming weight of the evidence. Finally, Moran and Seymour claim that (7) the trial court erred in admitting certain irrelevant evidence.

¶ 3. Finding error, we reverse the decision of the circuit court and render judgment for Moran and Seymour.

¶ 4. In 1992, James Fairley, Jr., Terry Moran, and Mark Seymour, Sr., among others, formed a limited partnership entity called D'Iberville Landing Casino, LP. The partnership's goal was to establish a casino on property originally owned by Fairley and one other partner. The partnership called the property "D'Iberville Landing." Fairley, Moran, and Seymour each received a one-seventh interest in the partnership.

¶ 5. The partnership faced two obstacles that stalled its establishment of a casino at D'Iberville Landing: (1) finding a developer to build a casino at D'Iberville Landing, and (2) obtaining permits to build a casino at D'Iberville Landing. Regarding potential developers, the partnership engaged in negotiations with a group called Spectrum Gaming, but the Spectrum negotiations eventually fell through.

¶ 6. Regarding permit issues, wetlands comprise a portion of D'Iberville Landing. While the partnership was initially successful in obtaining the necessary permits, certain environmental groups, citing the presence of wetlands and the effect building a casino would have on those wetlands, sought to enjoin the group from building a casino at D'Iberville Landing. As time went on, the group became disheartened by the delays in reaching their goal of establishing a casino at D'Iberville Landing.

¶ 7. Meanwhile, Fairley experienced difficulty in another business venture. Fairley, along with his business partner, Bobby Taylor, owned and operated a restaurant on property separate from D'Iberville Landing. The restaurant became increasingly unprofitable and eventually faced impending foreclosure. Seeking to retain his ownership in the restaurant, Fairley entered into an agreement with Moran and Seymour. On May 22, 1997, Moran and Seymour agreed to bid up to $500,000 for the property at a foreclosure auction. The agreement contained a provision that Moran and Seymour were only obligated to bid on the property if the foreclosure initiated within sixty days of the contract date. At the same meeting, Fairley sold his one-seventh interest in D'Iberville Landing to Moran and Seymour for $150,000.

¶ 8. The People's Bank initiated foreclosure on June 25, 1997. That date was within the sixty day window contemplated in the foreclosure contract. However, Bobby Taylor, Fairley's partner in the restaurant, claimed an interest in the restaurant property so People's Bank abandoned their initial foreclosure and filed for judicial foreclosure on July 25, 1997. The filing for judicial foreclosure occurred four days after the sixty-day window expired. Moran and Seymour did not attend the foreclosure sale and the People's Bank bought the property for $200,000.

¶ 9. Eventually, Fairley sued Moran and Seymour on three causes of action: (1) negligent misrepresentation, (2) intentional misrepresentation (fraud), and (3) breach of contract. The negligent misrepresentation and fraud claims stem from Fairley's allegation that Moran and Seymour induced him to sell his interest in D'Iberville Landing. Fairley's breach of contract claim stems from Moran and Seymour's failure to bid on his restaurant property at the foreclosure sale. As mentioned, the jury returned a general verdict and determined that Moran and Seymour were liable to Fairley for $975,000.

ANALYSIS I. Did Fairley present sufficient evidence of negligent misrepresentation? ¶ 10. In the first issue presented to this Court for review, Moran and Seymour argue that the trial court erred in denying their motion for judgment notwithstanding the verdict because Fairley failed to prove the essential elements of negligent misrepresentation. Moran and Seymour request that this Court review the circuit court's decision to deny Moran and Seymour's motion for judgment notwithstanding the verdict.

¶ 11. When reviewing the sufficiency of the evidence, we must examine all of the evidence, not just evidence supporting the non-movant's case, in the light most favorable to the non-moving party. Harrison v. McMillan, 828 So.2d 756 (¶ 22) (Miss. 2002). We are authorized to reverse if the evidence is such that reasonable and fair-minded jurors could not have found Moran and Seymour liable for negligent misrepresentation. See Edwards v. State, 797 So.2d 1049 (¶ 14) (Miss.Ct.App. 2001).

¶ 12. Fairley claims that he put on sufficient evidence to sustain a finding of negligent misrepresentation on behalf of Moran and Seymour.

In order to establish a prima facie case of negligent misrepresentation, a plaintiff is required to show: (1) a misrepresentation or omission of a fact; (2) that the representation or omission is material or significant; (3) that the defendant failed to exercise that degree of diligence and expertise the public is entitled to expect of it; (4) that the plaintiff reasonably relied on the defendant's representations; and (5) that the plaintiff suffered damages as a direct and proximate result of his reasonable reliance.

¶ 13. The first element of negligent misrepresentation, misrepresentation of a fact, must concern a past or present fact, as contrasted with a promise of future conduct. Spragins, 605 So.2d at 780. (citing Bank of Shaw, 573 So.2d at 1360-61). Moran and Seymour argue that Fairley's claim is not based on a present fact. They assert that Fairley's claim is based on a promise of future conduct.

¶ 14. Fairley testified that during board meetings, Moran and Seymour misrepresented to him that " there would never be a casino" at D'Iberville Landing. (emphasis added). Is this a misrepresentation of a past or present fact or a promise of future conduct?

¶ 15. Where a bank officer, contacted by a third party regarding the credit worthiness of the bank's account holder, misrepresents that account holder's financial security while knowing such representations were false when made, such a misrepresentation may expose the bank to liability. Berkline Corp. v. Bank of Mississippi, 453 So.2d 699, 702 (Miss. 1984). Thus a representation that "Jones is financially secure" is a past or present existing fact, rather than a promise of future conduct. Id.

¶ 16. Similarly, where a bank officer represents to an importer that a third party manufacturer made financial arrangements with the bank so the manufacturer could purchase the importer's materials, and the bank officer knew the manufacturer had not made such arrangements, such a misrepresentation may expose the bank to liability for negligent misrepresentation. Shogyo International Corp. v. First National Bank of Clarksdale, 475 So.2d 425, 427-28 (Miss. 1985). Thus a representation that "Jones has made financial arrangements to purchase property" is a past or present existing fact, rather than a promise of future conduct. Id.

¶ 17. However, where a defendant misrepresents his commitment to loan money at particular terms, such a representation is insufficient to find that defendant liable for negligent misrepresentation because that misrepresentation does not concern a past or present existing fact. Bank of Shaw, 573 So.2d at 1360-61. Also where a defendant allegedly misrepresents to a plaintiff that a defendant bank would lend money to the plaintiff should a third party deny the plaintiff's loan application, such a representation does not concern a past or present fact and is, therefore, insufficient to convey liability for negligent misrepresentation. Id. Accordingly, we know that representations of "we will lend Jones money at certain terms" or "if Smith does not lend Jones money, we will" are both insufficient to convey liability for negligent misrepresentation.

¶ 18. Likewise, where a plaintiff alleges negligent misrepresentation based on a defendant's promise to buy real property at a prospective foreclosure sale, that alleged representation did not concern a past or present fact, but a promise of future conduct. Spragins, 605 So.2d at 780. Thus, an allegation of negligent misrepresentation cannot be based on a representation that "we will bid on that property when it is foreclosed upon." Finally, where a plaintiff based a negligent misrepresentation claim on an allegation that a defendant misrepresented to plaintiff that the defendant planned to build a hotel and, as a result, induced the plaintiff to sign a partnership agreement, that representation pertained to a promise of future conduct. Skrmetta, 806 So.2d at (¶ 16). This means an alleged misrepresentation of "we will build a hotel" is a promise of future conduct.

¶ 19. So is Fairley's claim like those in Berkline and Shogyo or those in Bank of Shaw, Spragins, and Skrmetta? The substance of Fairley's alleged misrepresentation is the alleged falsity of the statement that Moran and Seymour intended to abandon plans to develop a casino at D'Iberville Landing because they would never receive permission to build a casino at D'Iberville Landing. Reason dictates that a representation of "there will never be a casino" somewhere is a commitment to certain future conduct, just as a promise "there will be a hotel" somewhere is a promise of future conduct. See id. The only difference is that the former is a negative commitment to conduct, while the latter is an affirmative commitment to conduct. That is, one is a promise to do something, while the other is a promise never to do something.

¶ 20. No evidence suggests that Moran and Fairley ever promised to stop attempts to develop D'Iberville Landing as a casino site. No evidence suggests that Moran and Seymour misrepresented the status of the attempts to receive a permit to develop a casino at D'Iberville Landing. Fairley did not allege that Moran and Seymour said "there cannot be a casino at D'Iberville Landing." Rather, Fairley claimed that Moran and Seymour said "there will never be a casino at D'Iberville Landing." (emphasis added). At the time of the trial and judgment in this case, there was still no casino at D'Iberville Landing.

¶ 21. What is more, there is no evidence in the record that indicates Moran and Seymour made the representation Fairley alleges at the time Fairley sold his interest in D'Iberville Landing. All testimony indicates that it was Fairley who offered to sell his interest to Moran and Seymour. Fairley testified that Moran and Seymour made the alleged representations at board meetings over a period of time. Accordingly, the circuit court erred by denying Moran and Seymour's motion for judgment notwithstanding the verdict because Fairley failed to prove negligent misrepresentation. We reverse the decision of the circuit court and render judgment for Moran and Seymour.

¶ 22. Moran and Seymour claim that Fairley did not submit sufficient evidence of fraudulent misrepresentation and that the trial court erred by failing to grant their motion for judgment notwithstanding the verdict. When reviewing the sufficiency of the evidence, we must examine all of the evidence, not just evidence supporting the non-movant's case, in the light most favorable to the non-moving party. Harrison, 828 So.2d at (¶ 22). We are authorized to reverse if the evidence is such that reasonable and fair-minded jurors could not have found Moran and Seymour liable for negligent misrepresentation. See Edwards, 797 So.2d at (¶ 14).

¶ 23. To demonstrate a prima facie case of intentional misrepresentation, a plaintiff must show, by clear and convincing evidence, (1) a representation (2) that is false (3) and material (4) that the speaker knew was false or was ignorant of the truth (5) combined with the speaker's intent that the listener act on the representation in a manner reasonably contemplated (6) combined with the listener's ignorance of the statement's falsity (7) and the listener's reliance on the statement as true (8) with a right to rely on the statement, and (9) the listener's proximate injury as a consequence. Southeastern Med. Supply, Inc. v. Boyles, Moak, and Brickell Ins. Inc., 822 So.2d 323 (¶ 39) (Miss.Ct.App. 2002) (citations omitted).

¶ 24. While one may prove negligent misrepresentation by a preponderance of the evidence, one must prove fraud by clear and convincing evidence. Id. Clear and convincing evidence is:

that weight of proof which produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to enable the fact finder to come to a clear conviction, without hesitancy, of the truth of the precise facts of the case.

¶ 25. Here, Fairley's allegations of negligent and intentional misrepresentation are based on the same exchange or set of events. Fairley alleges fraud in Moran and Seymour's comments in board meetings that "there would never be a casino at D'Iberville Landing." Fairley faces the same hurdles in proving his fraud claim as he faced in proving negligent misrepresentation. A successful claim for fraudulent representation must relate to past or present existing facts, and cannot be based on a promise, except where a contractual promise is made with the present undisclosed intention of non-performance. Skrmetta, 806 So.2d at (¶ 17) (citations omitted).

¶ 26. As mentioned in our analysis of Fairley's negligent misrepresentation claim, Fairley's allegation of fraud is not sufficient to sustain a verdict. Moran and Seymour's representations are not based on past or present facts. None of those statements were regarded as contractual promises. Further, Moran and Seymour's statement was true at the time they spoke. There was no developer interested in building a casino at D'Iberville Landing at that time. Moreover, pending the outcome of the environmental litigation, it is possible that there never would be a casino at D'Iberville Landing. At the time of the trial and the judgment rendered in this case, there was no casino at D'Iberville Landing.

¶ 27. Fairley did not present clear and convincing evidence that Moran and Seymour intended for Fairley to sell his interest in D'Iberville Landing when they made their statement that serves as the basis of Fairley's fraud claim. The only evidence of any alleged misrepresentation came from Fairley's testimony. Fairley testified that Moran and Seymour made their statements at board meetings, over a period of time. No evidence suggests that they induced Fairley to sell his interest at the time he sold it. In fact, Fairley approached Moran and Seymour and offered to sell his interest. The record suggests that Fairley knew Moran and Seymour still wanted to build a casino.

¶ 28. Because of Fairley's failure to present a prima facie case of fraud, no reasonable juror, even properly instructed, could have found in favor of Fairley. See Herrington v. Spell, 692 So.2d 93, 97 (Miss. 1997). The trial court committed error by presenting Fairley's claim of fraudulent misrepresentation to the jury, as the evidence was not sufficient to create an issue upon which reasonable jurors could disagree. Daughtry v. Kuiper, 852 So.2d 675 (¶ 12) (Miss.Ct.App. 2003). Accordingly, we reverse the judgment of the circuit court and render judgment for Moran and Seymour.

¶ 29. Fairley's claim for breach of contract stems from the agreement between Moran and Seymour obligating Moran and Seymour to bid up to $500,000 on property owned by Fairley and Bobby Taylor. The agreement made that obligation conditional upon foreclosure proceedings being initiated within sixty days of entering the agreement.

¶ 30. Moran and Seymour argue that there is no evidence of breach of the contract to purchase property because the foreclosure proceedings were not within the sixty-day window contemplated by the contract. They argue that while a foreclosure proceeding was initiated within that period, that proceeding stopped and no sale occurred. Additionally, they contend that People's Bank initiated the judicial proceeding that resulted in the sale of the property outside the sixty-day window of the contract, so they were not obligated to bid at the resulting foreclosure sale.

¶ 31. Fairley responds that Moran and Seymour breached the contract because foreclosure proceedings were initiated within the sixty-day contract window. Fairley states that the fact that those proceedings never reached fruition only leads to more than one reasonable interpretation of the contract and, accordingly, was an issue for jury interpretation and resolution. We disagree.

¶ 32. First, we must attempt to ascertain the parties' intent by examining the language contained within the four corners of the instrument. Pursue Energy Corp. v. Perkins, 558 So.2d 349, 352 (Miss. 1990) (citations omitted). The contract stated that: "[i]n the event that The People's Bank and/or Southern Mississippi Planning and Development District, Inc., initiates foreclosure proceedings on [Fairley's restaurant property] within 60 days form [sic] the date hereof, then in such event Mark M. Seymour, Sr., and Terry Moran hereby agree to bid at said foreclosure the sum of $500,000 for subject property." Clearly, the contract obligated Moran and Seymour to bid on a foreclosure sale resulting from said foreclosure. That connected the foreclosure sale to a foreclosure initiated within sixty days of entering the contract.

¶ 33. There is no requirement to bid at a later foreclosure proceeding on the restaurant, but only to bid at a foreclosure initiated within sixty days. Accordingly, there is no evidence among the record that would obligate Moran and Seymour to bid on a foreclosure sale resulting from a foreclosure proceeding initiated outside the sixty-day window. As there is no evidence supporting the contention that Moran and Seymour committed a breach of contract, this issue is reversed. We render judgment for Moran and Seymour

¶ 34. Having rendered judgment for Moran and Seymour on the issues of negligent misrepresentation, fraud, and breach of contract, the four remaining issues are moot.

¶ 35. THE JUDGMENT OF THE HARRISON COUNTY CIRCUIT COURT, FINDING NEGLIGENT MISREPRESENTATION, INTENTIONAL MISREPRESENTATION, AND BREACH OF CONTRACT, IS REVERSED AND RENDERED FOR THE APPELLANTS. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLEE.

MYERS, GRIFFIS, BARNES AND ISHEE, JJ., CONCUR. IRVING, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION, JOINED IN PART BY CHANDLER, J. CHANDLER, J., DISSENTS WITH SEPARATE WRITTEN OPINION, JOINED BY KING, C.J. LEE, P.J., NOT PARTICIPATING.