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Case 30CH1:18-cv-1107 Document 191 Filed 10/11/2019 Page 1 of 26

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IN THE CHANCERY COURT OF JACKSON COUNTY, MISSISSIPPI ~~~~~~¥i

JACKSON COUNTY, MISSISSIPPI PLAINTIFF

V. CAUSE NO. 2018-1107NH

SINGING RIVER HEALTH SYSTEM AND


SINGING RIVER MOB, LLC, AN ALABAMA
LIMITED LIABILITY COMP ANY DEFENDANTS

PARTIAL SUMMARY JUDGMENT

THIS CAUSE came on for hearing on September 16, 2019, on multiple summary

judgment motions filed by the parties. All parties were represented by counsel. The Court,

after considering oral arguments on behalf of all parties, does hereby FIND, ORDER,

ADJUDGE and DECREE as follows, to-wit:

I.

JURISDICTION

The Court has jurisdiction over the parties and the subject matter herein.

II.

PROCEDURAL HISTORY

On June 7, 2018, the Plaintiff, Jackson County, Mississippi (hereinafter "Jackson

County"), filed their complaint against the Defendants, Singing River Health System (hereinafter

"SRHS") and Singing River MOB, LLC, an Alabama Limited Liability Company (hereinafter

"MOB").

On July 16, 2018, MOB filed their Notice of Filing Notice of Removal and removed the

case to Federal Court.

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On September 5, 2018, the United States District Court for the Southern District of

Mississippi Southern Division released a Memorandum Opinion and Order Gr~ting Plaintiffs

Motion to Remand but Denying Plaintiffs Motion for Costs, thereby remanding the case back to

the Jackson County Chancery Court.

On September 11, 2018, SRHS filed their Answer and Cross-Claim.

On October 11, 2018, MOB filed their Answer to Cross-Claim & Cross-Claim Against

SRHS. On that same day, MOB also filed their Motion to Transfer to Circuit Court.

On October 26, 2018, Jackson County filed their Response to MOB's Motion to Transfer

to Circuit Court. That same day, Jackson County filed a Motion foi: Leave to File Amended

Complaint.

On October 29, 2018, SRHS filed their Joinder in Plaintiffs Response to MOB's Motion

to Transfer to Circuit Court.

On November 5, 2018, all parties filed a Joint Motion to Stay Action.

On November 29, 2018, SRHS filed a Motion to Deposit Monies into the Registry of the

Court.

On February 15, 2019, MOB filed their Reply in Support of Motion to Transfer to Circuit

Court and Response to Motion to Amend Complaint. On that same date, MOB also filed their

Opposition to SRHS' s Motion to Deposit Monies into the Registry of the Court.

On February 19, 2019, SRHS filed their Reply to MOB's Response in Opposition to

Motion to Deposi! Monies into the Registry of the Court.

On February 21, 2019, this Court entered an Order denying the Motion to Transfer to

Circuit Court. That same day, a second Order was entered denying the Motion to Deposit

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Monies into the Registry of the Court. The Court entered a third Order this day, which granted

Jackson County's Motion for Leave to File Amended Complaint.

On February 26, 2019, Jackson County filed their Amended Complaint.

On March 4, 2019, MOB filed a Motion for Participation at Mediation.

On March 20, 2019, the Court entered an Order to Show Cause upon learning that there

was a pending Federal action filed after the present action. The Court directed the parties to

appear to show cause as to which cause of action should go forward before mediation.

On March 21, 2019, the Court entered an Order that amended the Order to Show Cause to

change the hearing date from March 22, 2019, to April 1, 2019.

On April 2, 2019, the Court entered an Order setting this matter for a five-day trial

beginning November 18, 2019. The Court further appointed Honorable David Wheeler and Mr.

Lindsey C. Boney, III, as the Court-appointed experts in this cause.

On April 11, 2019, MOB filed their Motion to Reconsider and to Vacate Order Entered

April 2, 2019.

On April 12, 2019, the Court entered an Order denying MOB's Motion to Reconsider and

to Vacate Order Entered April 2, 2019.

On May 14, 2019, the Court entered a Scheduling Order.

On May 15, 2019, MOB filed their Answer to Amended Complaint.

On May 23, 2019, SRHS filed their Answer to Amended Complaint and Amended Cross-

Claim.

On May 14, 2019, the Court entered an Order expanding the Scheduling Order of May

14, 2019.

On May 31, 2019, MOB filed their Answer to Amended Cross-Claim by SRHS.

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On June 6, 2019, SRHS filed their Responses to the Court's Scheduling Order Dated May

14, 2019, and the Court's Order Dated May 14, 2019.

On June 7, 2019, Jackson County filed their Memorandum Brief along with their

Response to Scheduling Order.

On that same date, MOB filed their Documents Pursuant to Scheduling Order, along with

their Memorandum Pursuant to Scheduling Order.

On June 10, 2019, the Court entered an Order unsealing the file. The Court also entered

an Order finding that MOB failed to comply with the Scheduling Order set out by this Court.

On June 11, 2019, MOB filed their Documents Pursuant to Scheduling Order.

On June 19, 2019, MOB filed a Motion to Redact Sensitive and Private Information. On

that same day, the Court entered an Order directing Mr. Lindsey Boney to compile a list of

preliminary questions he had concerning the documents produced by the parties.

On June 25, 2019, the Court entered an Order directing the parties to answer Mr. Lindsey

Boney' s inquiries.

On June 26, 2019, Jackson County filed their Response to June 20, 2019, Questions

Submitted by Court-Appointed Expert. On that same day, the Court entered an Order appointing

the architecture and engineering firm, Machado-Patano, PLLC, as an expert in this case.

On June 28, 2019, SRHS filed their Response to Order Dated June 25, 2019, Regarding

Questions Propounded by Lindsey C. Boney, III, CPA, CFE, CVA. That same day, MOB filed

their Responses to Questions Posed by Court-Appointed Expert Through June 20, 2019, Letter.

On July 11, 2019, MOB filed a Motion to Inspect Documents Placed in the Evidence

Vault of the Chancery Clerk.

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On July 15, 2019, the Court entered a Status Order setting this matter for status hearing

on August 5, 2019. A second Order was entered this date, whereby the Court forwarded the

parties' responses to questions posed by Mr. Boney to him for review.

On July 19, 2019, SRHS filed a Motion for Protective Order requesting the Court block

MOB's attempts to depose Roy C. Williams, former attorney for the Board of Trustees of SRHS.

On July 23, 2019, Jackson County filed a Motion for Protective Order, along with a

Memorandum supporting the same, requesting the Court block MOB's attempts to depose Paula

S. Yancey, former attorney for the Board of Supervisors of Jackson County.

On July 26, 2019, the Court entered an Order granting MOB's Motion to Inspect

Documents PJaced in the Evidence Vault of the Chancery Clerk.

On July 29, 2019, MOB filed responses to both Jackson County and SRHS's motions for

protective orders.

On July 30, 2019, Jackson County filed their Reply in Support of its Motion for

Protective Order.

On July 31, 2019, SRHS filed their Reply in Support of its Motion for Protective Order.

On August 1, 2019, SRHS filed a Motion for Summary Judgment along with a

Memorandum in support of the motion.

On August 5, 2019, Jackson County filed a Motion for Inspection of Documents Placed

in the Evidence Vault of the Chancery Clerk. On that same day, the Court ~ntered cm Agreed

Order granting this motion.

On August 5, 2019, the Court also entered an Order allowing MOB to take the deposition

of Roy C. Williams on August 27, 2019, in Courtroom C of the Jackson County Chancery

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Courthouse. This Order also sealed the deposition of Roy C. Williams and denied MOB's

motion to take the deposition of Paula S. Yancey.

On August 14, 2019, the Court entered an Order stating that all summary judgment

motions of the parties would be heard on September 16, 2019, in George County, Mississippi.

The location of the September 16, 2019 would later be changed to Jackson County, Mississippi.

On August 26, 2019, the Court entered an Order allowing the parties to take the

deposition of Lindsey C. Boney, III, on September 16, 2019.

On August 30, 2019, Jackson County filed their Motion for Summary Judgment Against

Defendants SRHS and MOB. A Memorandum in support of said motion was also filed.

On September 5, 2019, MOB filed a M9tion for Summary Judgment along with a Brief in

support of said motion.

On September 11, 2019, SRHS filed their Response to MOB's Motion for Summary

Judgment. On that same date, SRHS filed their Response to MOB's Statement of Undisputed

Material Facts.

On September 12, 2019, Jackson County filed a Response and Memorandum Brief in

Opposition to MOB's Motion for Summary Judgment. That same day, MOB filed their Brief in

Opposition to Motions for Summary Judgment.

On September 17, 2019, the Court entered a Scheduling and Discovery Order, Expert

Witness Designation and Pre-Trial Order. This Order required the parties to designate all expert

witnesses within fourteen (14) days of the entry of the Order and for the parties to complete

discovery and disclose all witnesses by November 1, 2019. As of the date of entry of this Order

Granting Partial Summary Judgment, the parties have not designated any expert witnesses.

Since the parties attended the deposition of Mr. Boney on September 16, 2019, and no other

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expert witnesses were designated within 14 days of the September 11, 2019, Scheduling Order,

the Court will consider Mr. Boney's testimony as that of an expert in the findings to follow.

III.

STATEMENT OF CLAIMS

In their initial complaint filed on June 7, 2018 (Dkt. 2), and their Amended Complaint
'.
filed o~ February 26, 2019 (Dkt. 34), Jackson County requested the Court declare a lease

between Jackson County and SRHS as void for failure to comply with the enabling resolution

dated March 16, 2009. In the alternative, Jackson County requested that the lease between

Jackson County and SRHS be found voidable at the discretion of the Jackson County Board of

Supervisors on the basis that the lease improperly bound successor boards. In the event the lease

was declared void by Jackson County, Jackson County requested the Court grant them

possession of the land in question. Jackson County also requested that the Court grant whatever

general relief as may be appropriate in the premises,

In their Answer and Cross-Claim filed on September 11, 2018 (Dkt. 11 ), and their

Answer to Amended Complaint and Amended Cross-Claim (Dkt. 76), SRHS joined the relief

sought by Jackson County and requested that this Court find the lease between Jackson County

and SRHS void or voidable. SRHS also requested the Court deem the lease, sub-leases and

amended sub-leases between SRHS and MOB as void or voidable because the rental rate

pursuant to the lease, sub-leases and amended sub-leases was in excess qf the market rental rate

of comparable lease space, the lease, sub-leases and amended sub-leases improperly bound

successor boards and the lease, sub-leases and amended sub-leases were not properly spread

upon the minutes of the Board of Trustees of SRHS.

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In their Answer to Cross-Claim & Cross-Claim Against SRHS filed October 11, 2018

(Dkt. 12), MOB requested this Court grant a declaratory judgment finding the leases, sub-leases

and amended sub-leases between Jackson County, SRHS and MOB as valid and enforceable.

MOB further requested that if the Court declared the lease, sub-leases and amended sub-leases

void or voidable that the Court also direct SRHS to purchase MOB's interest in the premises.

MOB also made a claim for Court costs and attorney's fees.

IV.

STATEMENT OF FACTS

Based on the evidence presented to this Court, this case involves an initial transaction

between Jackson County and SRHS wherein Jackson County would lease to SRHS, by way of

a ground lease, a tract of land covering approximately- 13. 78 acres in Pascagoula, Mississippi.

After this initial ground lease, SRHS would lease the same property to Johnson Development,

LLC (hereinafter "Johnson Development"), to develop a medical office project. In tum,

Johnson Development would lease the medical office project back to SRHS, for which SRHS

would pay rent to Johnson Development.

The Board of Supervisors of Jackson County, on March 16, 2009, passed a resolution

that authorized the lease agreement between Jackson County and Board of Trustees for SRHS

pertaining to the Singing River Hospital Campus. (Dkt. 2). This resolution required the

following provisions to be included in the lease:

1. That the Lease Agreement shall be in compliance with all


requirements of Section 41-13-15 Mississippi Code
Annotated;
2. That the Lease Agreement shall include provisions for
termination for the Lease Agreement for convenience of
Owner of the subject property;

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3. That the Board of Trustees of Singing River Health System


may not encumber the property in any way without approval
of the Board of Supervisors;
4. That the Board of Supervisors hereby specifically authorizes
the Board of Trustees of Singing River Hospital System to
sublease a portion of the Singing River Hospital Campus to
Johnson Development Company for the System Medical
Office Project; and
5. That any other sub-lease or agreement desired by the Board of
Trustees of Singing River Hospital System must be approved,
in advance, by the Board of Supervisors.

Jackson County and SRHS entered into the above-mentioned lease on March 26, 2009,

and on April 6, 2009, the Jackson County Board of Supervisors passed a resolution ratifying
J
the lease agreement between Jackson County and SRHS. (Dkt. 2).

On October 28, 2009, SRHS and MOB entered into the following lease and sub.,.leases:

1. Ground Lease (SRHS as Lessor, MOB as Lessee);


2. Imaging (MOB as Landlord, SRHS as Tenant);
3. Option Space (MOB as Landlord, SRHS as Tenant);
4. Multiple Hospital Use Space (MOB as Landlord, SRHS as
Tenant); and
5. Wellness Space (MOB as Landlord, SRHS as Tenant).

The four sub-leases were amended on November 30, 2010 {hereinafter "amended sub-

leases"). Sometime between the original lease and sub-leases of October 28, 2009, and the

amended sub-leases of November 30, 2010, MOB began construction on the subject property.

The minutes do not contain the pertinent provisions of the amended sub-leases dated

November 30, ·2010.

The minutes presented by the parties for this Court to_ consider are as follows:

Minutes of the Jackson County Board of Supervisors:

1. Order and Minutes of the Board of Supervisors of Jackson


County, Mississippi of Executive Session dated March 16,
2009 (Dkt. 160-1); and

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2. Order and Minutes of the Board of Supervisors of Jackson


County, Mississippi of Executive Session dated April 6,
2009 (Dkt. 163-5).

Minutes of SRHS Board of Trustees:

1. Board of Trustees Meeting Minutes dated January 13,


2009 (Dkt. 122-2);
2. Board of Trustees Meeting Minutes dated January 28,
2009 (Dkt. 163-21);
3. Board of Trustees Meeting Minutes dated October 28,
2009 (Dkt. 122-3); and
4. Board of Trustees Meeting Minutes dated May 30, 2018.
(Dkt. 134-5).

The Court notes that, after the filing of this action, MOB filed an action in federal court

(Civil Action No.: 1:19-cv-33-LG-RHW) seeking to enforce the default and acceleration

provisions of the lease, sub-leases and amended sub-leases for SRHS's failure to pay rent

pursuant to the same. A copy of the Complaint filed by MOB against SRHS in the United States

District Court, Southern District of Mississippi, is attached to this Order as Exhibit "A".

However, the minutes listed above do 'not include language pertaining to the default and/or

acceleration provisions of the lease, sub-leases and amended sub-leases.

V.

SUMMARY JUDGMENT STANDARD

"It is well settled that a summary judgment motion is only properly granted when no

genuine issue of material fact exists." Nelson v. Holliday, 83 So. 3d 454,456 (Miss. Ct. App.

2012); Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534,535 (D. Md. 2007); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242,247 (1986); See also Miss. R. Civ. P. 56; Fed. R. Civ. P. 56(c).

"A fact is material if it 'tends to resolve any of the issues, properly raised by the parties."'

Woodv. Mossy Oak Properties, Inc., 120 So. 3d 443,446 (Miss. Ct. App. 2013) (quoting Webb

v. Jackson, 583 So. 2d 946, 949 (Miss. 1991)).

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The moving party has the burden of demonstrating that no genuine issue of material fact

exists within the pleadings, depositions, answers to interrogatories, and admissions on file,

together with the affidavits. Byrd v. Bowie, 933 So. 2d 899, 902 (Miss. 2006); Tucker v. Hinds

County, 558 So. 2d 869, 872 (Miss. 1990); Pulliam Inv. Co. v. Cameo Properties, 810 F.2d 1282,

1286 (4th Cir. 1987); Charbonnages de France v. Smith, 597 F.2d 406,414 (4th Cir. 1979).

"When considering a motion for summary judgment, evidence must be viewed in the

light most favorable to the nonmoving party." Hooker v. Greer, 81 So. 3d 1103, 1108 (Miss.

2012) (quoting Waggoner v. Williamson, 8 So. Jd 147, 152 (Miss. 2009)); See also Gill v.

Rollins Protective Services Co., 773 F.2d 592, 598 (4th Cir. 1985).

Partial summary judgment is permitted under Miss. R. Civ. P. 56(a). The rule states:

A party seeking to recover upon a claim, counter-claim, or cross-


claim, or to obtain a declaratory judgment may, at any time after
the expiration of thirty days from the commencement of the action
or after service of a motion for summary judgment by the adverse
party, move with or without supporting affidavits for a summary
judgment in his favor upon all or any part thereof.

M.R.C.P. 56(a).

Miss. R. Civ. P. 56(d) states:

If on motion under this rule judgment is not rendered on the whole


case or for all the r,elief asked and a trial is necessary, the court at
the hearing of the motion, by examining the pleadings and the
evidence before it and by interrogating counsel, shall if practicable
ascertain what material facts exist without substantial controversy
and what material facts are actually and in good faith controverted.
It shall thereupon make an order specifying the facts that appear
without substantial controversy, including the extent to which the
amount of damages or other relief is not in controversy, and
directing such further proceedings in the action as are just. Upon
the trial of the action the facts so.specified shall be deemed
established, and the trial shall be conducted accordingly.

M.R.C.P. 56(d); Brown v. Credit Center, Inc., 444 So. 2d 358, 363 (Miss. 1983).

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Partial summary judgment utilizes the same criteria for a grant or denial of a summary .

judgment. Waggoner, 8 So. 3d at 153; See also Covington County School Dist. V Magee, 29 So.

3d 1, 4 (Miss. 2010).

VI.

PUBLIC BOARDS AND THE "MINUTES REQUIREMENT"

It is well established in Mississippi faw that a "[p]ublic board 'speaks and ayts only

through its minutes."' Kennedy v. Claiborne Cnty., Miss. ex rel. Bd ofSupervisors, 233 So. 3d

825, 829 (Miss. Ct. App. 2017) (quoting Wellness, Inc. v. Pearl River Cnty. Hosp., .178 So. 3d

1287, 1290 (Miss. 2015)). "The minutes 'are the sole and exclusive evidencf of what the board

did' and 'must be the repository and the evidence of their official acts."' Kennedy, 233 So. 3d at

829 (quoting Pike Cnty., Miss. ex rel. Bd a/Supervisors v. Indeck Magnolia, LLC, 866 F. Supp.

2d 589, 591-92 (S.D. Miss. 2012)). The requirement that a board of supervisors can only act by

and through its minutes has been described as "stringent." See Warren Cnty. Port Comm 'n v.

Farrell Const. Co., 395 F.2d 901,904 (5th Cir. 1968) (noting that minutes requirement is so

stringent that order entered upon minutes is void if minutes are not signed by president of board).

Even further, the minutes requirement has been characterized by the Mississippi Supreme Court

as "'an important public policy issue,' cautioning that 'public interest requires adherence thereto;

notwithstanding the fact that in some instances the rule may work an apparent injustice."' Urban

Developers LLC v. City ofJackson, Miss., 468 F.3d 281,299 (5th Cir. 2006) (quoting Butler v.

Bd ofSupervisors for Hinds Cnty., 659 So. 2d 578,579 (Miss. 1995)). "'[T]he policy of

protecting the public's funds for use by and for the public is paramount to other individual rights

which may also be involved."' Id

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When a "public board enters into business with another entity, a contract must be

recorded on the official minutes of the board and stated in express terms." Dhealthcare

Consultants, Inc. v. Jefferson Cnty. Hosp., 232 So. 3d 192, 194 (Miss. Ct. App. 2017). "'[T]here

can be no such thing as a verbal or oral order of [the] board,"' and "[n]o contract can be implied

or presumed." Burt v. Calhoun, 231 So. 2d 496, 499 (Miss. 1970) (quoting Smith Cnty. v.

Mangum, 89 So. 913 (Miss. 1921)). "However, a contract, though not spread on the minutes in

its entirety, may still be enforced 'where enough of the terms and conditions of the contract are

contained in the minutes for determination of the liabilities and obligations of the contracting

parties without the necessity of resorting to other evidence.'" Dhealthcare, 232 So. 3d at 194

(quoting Wellness, Inc., 178 So. 3d at 1291). The minutes must "evidence[] what the board did,

and show[] the substantial provisions of the contract." Bd ofSupervisors, Adams Cnty v. Giles,

68 So. 2d 483,488 (Miss. 1953). "[E]ach person, firm or corporation contracting with a board of

supervisors is responsible to see that the contract is legal and properly recorded on the minutes of

the board." Thompson v. Jones Cnty. Cmty. Hosp., 352 So. 2d 795, 797 (Miss. 1977).

VII.

UNJUST ENRICHMENT AND THE MAXIMS OF EQUITY

"Equity will not suffer a wrong without a remedy." Griffith, Mississippi Chancery

Practice, 2d Ed., 1950, § 35, p. 38. "Equity delights to do complete justice and not by halves."

Griffith, § 37, p. 39. "[E]quity must follow the law." Joel v. Joel, 43 So. 3d 424, 427 (Miss.

2010). "But where the law provides no remedy, equity may do so." Id.

Unjust _enrichment is an equitable re_medy. Willis v. Rehab Sols., PLLC, 82 So. 3d 583,

588 (Miss. 2012); Taylor Made Smiles, PLLC v. Franklin Collection Serv., Inc., 224 So. 3d 565,

568 (Miss. Ct. App. 2017). Unjust enrichment is based on the equitable principle that a person

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shall not be allowed to enrich himself unjustly at the expense of another. Avakian v. Wilmington

Trust, Nat'/ Ass'n, 242 So. 3d 961,971 (Miss. Ct. App. 2018); Beasley v. Sutton, 192 So. 3d 325,

332 (Miss. Ct. App. 2015).

"The doctrine of unjust enrichment or recovery in quasicontract applies to situations

where there is no legal contract but where the person sought to be charged is in possession of

money or property which in good conscience and justice he should not retain but should deliver

to another, the courts imposing a duty to refund the money or the use value of the property to the

person to whom in good conscience it ought to belong." Estate ofJohnson v. Adkins, 513 So. 2d

922, 926 (Miss. 1987) (quoting Hans v. Hans, 482 So. 2d 1117 (Miss. 1986)); See also Old

Men's Home v. Lee 's Estate, 4 So. 2d 23 5 (Miss. 1941) (discussing the equitable properties of a

"quasi contract").

"The amount of recovery for unjust enrichment is 'that to which the claimant is equitably

entitled."' Cates v. Swain, 215 So. 3d 492,495 (Miss. 2013) (quoting Estate ofJohnson, 513 So.

2d at 926).

VIII.

PARTIAL SUMMARY JUDGMENT AND FINDINGS OF THE COURT

The Court does hereby FIND, ORDER, ADJUDGE and DECREE as follows:

1.

The summary judgment standard cited hereinabove requires the Court to find that there

are no genuine issues of material fact that relate to the issue of the minutes containing the

essential terms of the leases, sub-leases and amended leases.

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2.

The law cited hereinabove regarding minutes of public bodies and public boards

requires this Court to find that the essential terms contained in the leases, sub-leases and

amended sub-leases are not contained in the minutes as stated hereinabove and in this

judgment, thereby rendering the leases VOID.

3.

However, the unjust enrichment law and the principles of equity require this Court to

find that although the leases are void as a matter of law ·and there is no genuine issue of

material fact, SRHS must pay some amount of money for the leases and some amount of

money to purchase the building, as stated herein.

4.

Furthermore, the Court is bound by the pleadings of the parties as stated herein.

5.

The law requires that the minutes of both the Jackson County Board of Supervisors and

SRHS Board of Trustees contain essential elements as to the terms of any leases, sub-leases and

amended sub-leases for the same to be valid. The Court finds two essential provisions of the

leases, sub-leases and amended sub-leases that are not contained in either the minutes of the

Jackson County Board of Supervisors or in the minutes of the SRHS Board of Trustees: (1)

default provisions and (2) amended sub-lease provisions. The amended sub-lease provisions

setting forth the amounts to be paid by SRHS to MOB are not contained in any minutes of SRI-IS

Board of Trustees or the Jackson County Board of Supervisors, as required by law. The law

requires this Court to find all of the leases, sub-leases and amended sub-leases VOID.

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In violation of the law, since the provisions stated hereinabove were not in the minutes

and are essential terms, MOB improvidently filed a Federal Court action seeking to enforce the

default provisions and accelerate the rent against SRHS as set forth in the terms of a Ground

Lease.

The Court finds that there are no genuine issues of material fact concerning the terms of

the leases, sub-leases and amended sub-leases in this matter, as the essential elements of the

terms of the leases, sub-leases and amended sub-leases are not contained in either the minutes of

the Jackson County Board of Supervisors or in the minutes of the Board of Trustees for SRHS.
\
The Court therefore finds that the lease between Jackson County and SRHS dated March 26,

2009, the Ground Lease between SRHS and MOB dated October 28, 2009, the four (4) sub-

leases between MOB and SRHS dated October 28, 2009, and the four (4) amended sub-leases

between MOB and SRHS dated November 30, 2010, are void as a matter oflaw. The public has

a right to know when public money is used and paid to a private party. Here, the essential terms

of the leases, sub-leases and amended sub-leases are not in the minutes.

The law and the principles of equity require the Court to determine the value of the rental

tate for the space used in the building from October 28, 2009, to the present date. The law

requires this Court to calculate the rental rate based on value of the building. On September 17,

2019, this Court entered an Order directing that an appraisal be conducted by Valbridge Property

Advisors. This appraisal was completed and filed with the Court on October 7, 2019. The

appraisal found the fair market value of the building to be $17,800,000.00, and a fair market

annual rental rate of $1,681,249.00. (Dkt. 184-1). The Court has figured the monthly rental rate

to be $140,104.08. The Court also notes that the void leases, sub-leases and amended sub-leases

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impose a triple-net lease without reference to same in the minutes simply because the amounts

paid under all the leases are not reflected in the minutes. Although the leases in question in this

matter are void as a matter of law, the principles of equity and the doctrine of unjust enrichment

mandate that the hospital system and/or others pay the fair market value for the rental and the

purchase price of the building.

7.

The Court finds that, since the leases, sub-leases and amended sub-leases are void, the

Court sustains MOB's prayer in their pleadings that SRHS purchase MOB's interest in the

building pursuant to their pleadings. (Dkt. 12).

8.

The Court finds that the duty to ensure that the minutes were accurate and properly

spread upon the minutes of the boards is upon MOB and Mr. Johnson. The Court finds that

MOB and Mr. Johnson failed in this duty. See Thompson, 352 So. 2d at 797.

9.

Since the Court has found that the leases, sub-leases and amended sub-leases described

hereinabove are void as a matter of law, it now becomes the duty of this Court to determine the

liability for all remaining funds, if any, owed by past trustees, past supervisors and/or the

following entities or persons: Johnson Development, LLC; Singing River MOB Manager, LLC;

Mississippi PW JJ Investments, LLC; DY-Singing River QEI, LLC; MBFC Sub-CDE I, LLC;

CCG Sub-CDE 10, LLC; Dudley Ventures Hancock Fund, LLC; JD 2011, LLC; Perry White;

Sallie R. Johnson; and Milton R. Johnson. This shall include any and all banks and/or financial

institutions involved, either directly, indirectly or collaterally.

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Case 30CH1:18-cv-1107 Document 191 Filed 10/11/2019 Page 18 of 26

10.

The law requires this Court to determine what benefit, if any, SRHS received as a result

of occupying the building even though the leases, sub-leases and amended sub-leases are void.

Furthermore, the Court finds that based on Mr. Boney's reports and deposition testimony,

Johnson Development, owned by Mr. Johnson and/or others, holds an alleged debt, apart from

the deed of trust, on the building. MOB claims this debt as being owed and payable by them to

another entity, which is also owned by Mr. Johnson. This debt has been referred to by the parties

in the pleadings and at the hearings as a "B" Note. However, the debt claimed is not filed of

record in the Chancery Clerk papers as a deed of trust or a lien as required by the law.

Mr. Boney, as a Certified Public Accountant, Certified Fraud Examiner and Certified

Valuation Expert (See Dkt. 149), opined that since the doc~ments presented to him for review

show that related parties owned both sides of the debt in question, the outstanding debt is

effectively cancelled out and not owed. See Expert Witness Report of Lindsey C. Boney, III

dated August 12, 2019 (Dkt. 149), and September 25, 2019 Supplement to Expert Witness

Report of Lindsey C .. Boney, III (Dkt. 176); See also Deposition of Lindsey C. Boney, III, pp.

76-85.

IX.

PARTIAL SUMMARY JUDGMENT AND ORDER OF THE COURT

It is therefore,

ORDERED, ADJUDGED and DECREED that the leases, sub-leases and amended sub-

leases described hereinabove are VOID as a matter of law;

ORDERED, ADJUDGED and DECREED that based on the fair market yearly rental rate

of $1,681,249.00, as found in the October 7, 2019, appraisal, Singing River Health System shall

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Case 30CH1:18-cv-1107 Document 191 Filed 10/11/2019 Page 19 of 26

I
pay rent to Singing River MOB, LLC for the month of November 2019 and only the month of

November 2019 in the amount of One Hundred Forty Thousand One Hundred Four Dollars and

Eight Cents ($140,104.08). This rent shall be payable by Singing River Heal~h System on

November 1, 2019, and Singing River Health System shall not pay any further monthly rental

rate;

ORDERED, ADJUDGED and DECREED that based on the fair market value of the

building, Singing River Health System shall pay the amount of Seventeen Million Eight Hundred

Thousand Dollars and Zero Cents ($17,800,000.00) to Singing River MOB, LLC, for the

purchase of the building. This amount shall be paid-in-full on or before December 1, 2019, and

part of these funds shall be used to pay off all of the Hancock Bank deed of trust in the amount

of approximately $13 million; and

ORDERED, ADJUDGED and DECREED that the Court will determine the liability, if

any, others may have for the amounts wrongfully paid pursuant to the foregoing leases, sub-

leases and amended sub-leases that were held void as a matter of law. The parties are hereby

directed to issue process and/or subpoena all parties they contend are responsible for the amount

of money that was paid pursuant to the leases, sub-leases and amended sub-leases from October

28, 2009, to October 31, 2019. This is issue that the Court will hear and adjudicate during the

. week of November 18, 2019.

ORDERED, ADJDUGED and DECREED this th~ -1l day of October, 2019.

(J~s~
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IN THE UNITED STATES DISTRICT COURT


FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DMSION

SINGING RIVER MOB, LLC, )


)
Plaintiff, )
)
v. ) CML ACTION NO.: 1: 19-cv-33-LG-RHW
)
SINGING RIVER HEALTH )
SYSTEM, )
)
Defendant. )

COMPLAINT

Singing River MOB, LLC ("Singing River MOB" or "Plaintiff') hereby submits this

Complaint against Singing River Health System ("SRHS" or ''Defendant") to recover rent and

other amounts owed under the four subleases between Singing River MOB and SRHS.

PARTIES, JURISDICTION, AND VENUE

1. Singing River MOB is an Alabama limited liability company doing business in

Jackson County, Mississippi through its ownership of a medical office building built pursuant to

agreements with SRHS. Singing River MOB's members are citizens of the state of Alabama.

2. SRHS is a community hospital owned by Jackson County, Mississippi ("Jackson .

County"), and is a political subdivision of the State of Mississippi.

3. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C.

§ 1332 because the parties are completely diverse and the amount in controversy exceeds

$75,000.

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4. Venue is proper in the Southern Division of the U.S. District Court for the

Southern District of Mississippi because Defendant SRHS is located in and owned by Jackson

County, which is located in the Southern Division. See 28 U.S.C. § 1391.

FACTUAL ALLEGATIONS

5. In or about 2008, SRHS invited Johnson Development, LLC ("Johnson

Development"), an Alabama limited liability company, to make a proposal to assist SRHS in·

connection with the development of a design/build-to-suit .medical office building. In connection

therewith, Johnson Development presented SRHS with proposals that would allow for the

development of the medical office building using advantageous financing through the use of

GoZone tax exempt bond financing and the use of new market tax credits.

6. Singing River MOB was formed as an affiliate · of Johnson Development in

reliance upon representations of SRHS regarding its verified authority to enter into a series of

transactions that included an initial ground lease from Jackson County (''the Prime Ground

L¥ase") and a sub-ground lease to Singing River MOB ("the SRHS Ground Lease"), followed by

leasebacks of improved property to SRHS (the "SRHS Subleases").

7. As a predecessor transaction to the SRHS Ground Lease and the SRHS Subleases,

on March 26, 2009 Jackson County and SRHS entered into the Prime Ground Lease, in which

Jackson County leased unimproved real property to SRHS for the leasehold improvements

contemplated by the SRHS Ground Lease and the SRHS Subleases.

8. SRHS proceeded to enter into subleases with Singing River MOB, namely the

SRHS Ground Lease and the SRHS Subleases. Copies of the SRHS Ground Lease and the SRHS

Subleases are attached hereto as Exhibits A and Bl-B4, respectively.

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9. Singing River MOB then entered into binding financing agreements and

proceeded with construction of the medical office complex for the benefit of SRHS.

10. The SRHS Subleases consist of four twenty-five year leases for: an "Imaging

Space" with a current annual lease payment of $341,965.11, an "Option Space" with .a current

annual lease payment of $118,601.28, a "Multi-Use Space" with a current annual lease payment

of $612,322.25, and a "Wellness Space" with a current annual lease payment of $666,366.34.

These amounts are calculated according to the "Rental" section of each sublease. See Exhibits

Bl-B4 at Section 5.

11. The SRHS Subleases each provide that SRHS shall make a monthly lease

payment on the first day of e·ach calendar month. Id. at Section 5.1.

12. SRHS has not made the payments due January 1, 2019 under the SRHS

Subleases.

13. The SRHS Subleases each provide that "[a] late fee often percent (10%) of the

Base Rental then in effect shall be due and payable with respect to all installments of Rent more

than ten (10) days past due." Id. at Section 5.3. Those late fees incurred on January 11, 2019 total

$18,261.51.

14. SRHS has not paid the 10% late fee on the past due rent installments.

15. Each of the SRHS Subleases defines "any failure of Tenant to pay any Rental or

other sums of money when due hereunder" as an event of default by which SRHS "shall be

deemed in breach and default of this Lease ...." Id. at Section 24.1. "Rental" is defined as ''the

Base Rental and any other sums to be paid by Tenant to Landlord hereunder." Id. at Section 1.2.

16. In the event of default by SRHS, Singing River MOB is entitled to, "without

further notice or demand of any kind" and in addition to other available remedies, accelerate the

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rent due under the subleases._ Additionally, Singing River MOB may "proceed by ... suit or

otherwise to collect" delinquent or accelerated rent and any other amounts due under the

subleases. Id at Section 24.2(a)(l) and (2).

17. The SRHS Subleases each provide for the recovery of attorneys' fees and court

costs incurred by Singing River MOB in the event of default by SRHS and in connection with a

breach by SRHS. Id at Sections 24.2(b) and (c).

18. The SRHS Subleases each provide for the recovery of interest on past due rental

amounts and on "any costs or expenses incurred by Landlord" in the event of default. Id at

Sections 24.2(b) and (c).

19. On January 24, 2019, Singing River MOB, through its counsel, issued four

demand letters to SRHS for the rental payments and late fees owed. However, to date, SRHS has

not paid the past-due amounts owed under the SRHS Subleases. See Exhibits Cl-C4.

20. On the morning of January 28, 2019, Singing River MOB, through its counsel,
I , ,

issued four notices of acceleration for the respective SRHS Subleases. See Exhibits D 1-D4.

COUNT ONE: BREACH OF CONTRACT

21. Singing River MOB incorporates the allegations in paragraphs 1 through 20 of

this Complaint as if fully alleged herein.

22. On March 26, 2009, SRHS entered into the four SRHS Subleases with Singing

River MOB. Under the SRHS Subleases, SRHS agreed to make monthly lease payments on the

first day of each calendar month and to pay late fees on past due lease payments.

23. SRHS has defaulted according to the terms of the SRHS Subleases and has

breached the subleases by failing to make the lease payments due January 1, 2019 and the late

fees due January 11, 2019.

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24. As a result, Singing River MOB is. entitled to judgment against SRHS in the

amount of the lease payments due January 1, 2019, and the late fees due January 11, 2019, which

amount totals $200,876.59.

25. Also as a result of SRHS's default, Singing River MOB has accelerated the

remaining rental amount due under the SRHS Subleases according to the terms of the subleases.
\
Singing River MOB is entitled to the accelerated rent, which amount totals $49,295,542.79.

26. Under the SRHS Subleases, Singing River MOB is additionally entitled to its

reasonable attorneys' fees and court costs incurred in collec;ting these past-due amounts.

27. Under the SRHS Subleases, Singing River MOB is entitled to interest on the

accelerated rental amounts and on its attorneys' fees and court costs incurred in collecting these

past due-amounts.

28. WHEREFORE, Singing River MOB prays that this Court will enter an order

awarding Singing River MOB:

a. Damages in the amount of $49,496,419.38, representing the past-due lease

payments and late fees and the remaining rental amount due under the SRHS

Subleases;

b. its attorneys' fees and court costs incurred in bringing this action and in

connection with SRHS' s default, in a final amount to be determined; and

c. interest on these amounts at a rate to be calculated in accordance with the SRHS

Subleases.

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Respectfully submitted this 28th day of January~ 2019.

Isl John N Bolus


John N. Bolus (MSB10058~)
Maynard Cooper & Gale, P .C.
1901 Sixth Avenue North
Suite 2400 Regions/Harbert Plaza
Birmingham, AL 35203
Telephone: (205) 254-1000
Facsimile: (205) 254-1999

Peter C. Abide (MSB 1026)


Currie Johnson &-Myers, P.A.
925 Tommy Munro Drive
Suite H
Biloxi, MS 39532
Telephone: (228) 385-1010
Facsimile: (228) 385-1011

Attorneys for Defendant Singing River


MOB,LLC

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CERTIFICATE OF SERVICE

· I hereby certify that I have served a copy of the foregoing document on the following by
U.S. First Class Mail, hand delivery, fax, or email on this the 28th day ofJanuary, 2019.

Patrick R. Buchanan
Michael E. Bruffey
· Brown Buchanan, P.A. - Biloxi
P.O. Box 1377
Biloxi, MS 39533-1377
Telephone: (228) 374-2999
mailb@brownbuchanan.com
Attorneys for Defendant Singing River Hospital System

Isl John N. Bolus


OF COUNSEL