IN THE SUPREME COURT OF MISSISSIPPI
NO. 2013-CA-01535-SCT
PAT HARRISON WATERWAY DISTRICT
v.
COUNTY OF LAMAR, POLITICAL SUBDIVISION
OF THE STATE OF MISSISSIPPI; BOARD OF
SUPERVISORS OF LAMAR COUNTY, JOE
BOUNDS, PRESIDENT; TAX COLLECTOR OF
LAMAR COUNTY, JACK SMITH, COLLECTOR
DATE OF JUDGMENT: 08/29/2013
TRIAL JUDGE: HON. HOLLIS MCGEHEE
TRIAL COURT ATTORNEYS: NEVILLE H. BOSCHERT
KAYTIE M. PICKETT
JOLLY W. MATTHEWS
R. DAVID KAUFMAN
RICHARD CIRILLI, JR.
PERRY W. PHILLIPS
HAROLD E. PIZZETTA, III
COURT FROM WHICH APPEALED: FORREST COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: NEVILLE H. BOSCHERT
KAYTIE M. PICKETT
JOLLY W. MATTHEWS
ATTORNEYS FOR APPELLEES: OFFICE OF THE ATTORNEY GENERAL
BY: HAROLD E. PIZZETTA, III
R. DAVID KAUFMAN
R. RICHARD CIRILLI, JR.
PERRY W. PHILLIPS
NATURE OF THE CASE: OTHER
DISPOSITION: AFFIRMED - 03/19/2015
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC
DICKINSON, PRESIDING JUSTICE, FOR THE COURT:
¶1. Lamar County wishes to withdraw from the Pat Harrison Waterway District (“the
District”). The question presented is the amount of money Lamar County must pay to do
so. The chancery court found that Lamar County owed $337,088, excluding the District’s
perpetual park operating and maintenance obligations as “contractual obligations . . . that
are outstanding” under the statute. We affirm.
FACTS AND PROCEDURAL HISTORY
I. The Pat Harrison Waterway District
¶2. In 1962, in order to develop Mississippi’s water resources, the Mississippi Legislature
created the Pat Harrison Waterway District, which included Lamar and fourteen other
counties within the Pascagoula River Basin.1 Funding for the District primarily is provided
by assessments of the member counties.2
II. The District’s Governmental Contracts
¶3. After it was formed, the District worked with the United States Army Corps of
Engineers to develop a comprehensive development plan under which the District entered
into a series of eight contracts with various departments of the federal and state governments
to operate its water parks.3
1
Miss. Code Ann. § 51-15-103 (Rev. 2003). In addition to Lamar County, the
fourteen counties originally included in the District were Clarke, Covington, Forrest, George,
Green, Jackson, Jasper, Jones, Lauderdale, Newton, Perry, Smith, Stone, and Wayne
Counties.
2
Miss. Code Ann. § 51-15-129 (Rev. 2003).
3
These include: (1) the United States Department of the Interior’s Land and Water
Conservation Fund; (2) the United States Department of Agriculture’s Natural Resources
Conservation Service through programs with the Soil Conservation Service and National
Watershed Protection and Flood Prevention Act Program; (3) the United States Army Corps
2
A. Land and Water Conservation Fund Contracts
¶4. The District established four water parks under contracts with the United States
Department of the Interior, which provided funding from its Land and Water Conservation
Fund (“LWCF”).4 These contracts, under the “Project Termination” heading, provide that
the federal government may seek specific enforcement of its contracts in case of a breach of
performance by the State. And the District’s general obligations for the “Use of Facilities”
under the LWCF contracts require that:
1. The State shall not at any time convert any property acquired or
developed pursuant to this agreement to other than the public outdoor
recreation uses specified in the project proposal attached hereto without
the prior approval of the Director.
2. The State shall operate and maintain, or cause to be operated and
maintained, the property or facilities acquired or developed pursuant to
this agreement in the manner and according to the standards set forth
in the Manual.
¶5. Finally, the 2008 LWCF State Assistance Program Manual—referenced in the
District’s contracts—provides post-completion operation and maintenance obligations:
Property acquired or developed with LWCF assistance shall be operated and
maintained as follows:
1. The property shall be maintained so as to appear attractive and inviting
to the public.
2. Sanitation and sanitary facilities shall be maintained in accordance with
applicable health standards.
of Engineers; and (4) the Mississippi Natural Heritage Program.
4
Parks established under the LWCF program include: (1) Flint Creek Water Park in
1967; (2) Archusa Creek Water Park in 1969; (3) Little Black Creek Water Park in 1970; and
(4) Maynor Creek Water Park in 1972.
3
3. Properties shall be kept reasonably open, accessible, and safe for public
use. Fire prevention, lifeguard, and similar activities shall be
maintained for proper public safety.
4. Buildings, roads, trails, and other structures and improvements shall be
kept in reasonable repair throughout their estimated lifetime to prevent
undue deterioration and to encourage public use.
5. The facility shall be kept open for public use at reasonable hours and
times of the year, according to the type of area or facility.
6. A posted LWCF acknowledgment sign shall remain displayed at the
project site . . . .
¶6. The LWCF Manual also provides the following escape from operation and
maintenance costs when facilities become obsolete: “Project sponsors are not required to
continue operation of a particular recreation area or facility beyond its useful life.”
According to the District’s 2011 audits, the “estimated useful lives” of the District’s assets
are 5-30 years for buildings, 5-25 years for building improvements, 5-50 years for
improvements other than buildings, 5-20 years for equipment, and 15-50 years for capital
leases. Obsolescence may also arise, among other reasons, if “changing recreation needs
dictate a change in the type of facilities provided,” or “park operating practices dictate a
change in the type of facilities required.”
B. Soil Conservation Service and National Watershed
Protection and Flood Prevention Contracts
¶7. Three of the District’s water parks were established with funding through the United
States Department of Agriculture’s Soil Conservation Service Department and the National
4
Watershed Protection and Flood Prevention Act Program.5 Under the Dry Creek contract,
the relevant provision provides that:
The Dry Creek Water Management District and the Pat Harrison Waterway
District agree that all land acquired on which Federal assistance is provided
will not be sold or otherwise disposed of for the evaluated life of the project,
except to a public agency which will continue to maintain and operate the
recreational development in accordance with the operation and maintenance
agreement.
¶8. Under the Turkey Creek Soil Conservation Operations and Maintenance Agreement,
the District agreed to operate and maintain “project measures” developed through the
program and to use the real property “for the purpose for which it was acquired and in
accordance with the [Operations and Maintenance] agreement.” The District’s maintenance
obligations require only that:
A. The Sponsor will:
1. Be responsible for and promptly perform or have performed
without cost to the Service . . . all maintenance of the structural
measures determined by either the Sponsor or the Service to be
needed.
2. Obtain prior Service approval of all plans, designs and
specifications for maintenance work involving major repair.
B. The Service will upon request of the Sponsor and to the extent that its
resources will permit, provide consultative assistance in the preparation
plans, designs and specifications for needed repair of the structural
measures.
5
Parks established through the Soil Conservation Service and National Watershed
programs include: (1) Dry Creek Water Park in 1966; (2) Turkey Creek Water Park in 1967;
and (3) Big Creek Water Park in 1979. The District also received funding through this same
program for the creation and operation of a flood control structure at Sowashee Creek in
1971.
5
¶9. Notably, the contract provides that “[a]dmission or users fees shall be charged only
as necessary to produce revenues required by the Sponsor(s) to . . . provide adequate
inspection, operation, maintenance, and replacement of the [project measures].”
Additionally, under the National Watershed Program’s 2009 Manual, “[t]he term of the
[Operation and Maintenance] agreement expires when the evaluated life of the works of
improvement has been met.”
¶10. Finally, under the Big Creek Soil Conservation Agreement, the District agreed to
“assume responsibility for operation and maintenance in accordance with the Operation and
Maintenance Agreement.” Like the Turkey Creek contract, the Big Creek contract also
contains the same language from the National Watershed Program’s 2009 Manual about the
operation and maintenance agreement expiring at the end of the improvements’ life span.
C. Lease Agreement with the Army Corps of Engineers
¶11. In establishing the Okatibbee Creek Water Park, the District leased the land and water
areas from the United States Army Corps of Engineers. The term of the original lease
agreement was for fifty years—beginning July 1, 1968, and ending June 30, 2018. But in
1973, the District and the Army agreed to a supplemental lease agreement providing:
This lease may be relinquished by the lessee at any time prior to tender by the
Government and acceptance by the lessee of any cost-sharing payments
pursuant to The Contract by giving to the Secretary of the Army, through the
District Engineer, at least 30 days notice in writing. Subsequent to such tender
and acceptance, this lease may be relinquished by the lessee at any time after
30 June 1999 by giving notice as provided above.
So, while the District’s lease term does not expire until 2018, the District has the option to
terminate the lease at any time by giving thirty days’ written notice to the Army.
6
D. Agreement with the Mississippi Wildlife Heritage
Committee
¶12. Finally, the District maintains a state historic site at Dunn’s Falls through a 1982
agreement with the Mississippi Wildlife Heritage Committee. As part of its agreement with
the State, the District agreed to various obligations, including:
4. Pat Harrison Waterway District agrees to maintain with paint the
property lines which have been established by the property survey . . .
.
5. Pat Harrison Waterway District agrees to assign an employee to live on
the Dunn’s Falls property and shall be responsible for any salary or
other expenses which might result from this employment.
6. Pat Harrison Waterway District agrees to enforce the rules and
regulations adopted by the Pat Harrison Waterway District Board . . .
.
III. Lamar County’s Withdrawal from the District and the Withdrawal
Statute
¶13. On September 6, 2011, Lamar County notified the District that it was exercising its
right to withdraw under Mississippi Code Section 51-15-118, which provides that “[t]he
withdrawing county shall be responsible for paying its portion of any district bonds,
contractual obligations, and any other indebtedness and liabilities of the district that are
outstanding on the date of such county’s withdrawal from the district.” 6 Under the statute,
the withdrawing county’s obligation “shall be determined through an independent audit
conducted by a certified public accountant.” 7
IV. Litigation Between the District and Lamar County
6
Miss. Code Ann. § 51-15-118 (Rev. 2003).
7
Id.
7
¶14. In January 2012, Wolfe, McDuff & Oppie, PA—the District’s own certified public
accounting firm—sent Lamar County an “Independent Accountant’s Report” which claimed
that Lamar County’s portion of district bonds, contractual obligations, and other indebtedness
and liabilities was $9,201,619. Lamar County disagreed, and this litigation soon followed.
A. Petition for Injunction and Appointment of
Independent Auditor
¶15. The District fired the first shot in May 2012, by filing a petition in the Chancery Court
of Forrest County, seeking an injunction. Lamar County responded with a motion for partial
summary judgment, claiming it did not owe the District for contractual obligations incurred
after September 6, 2011. Lamar County also requested that the court appoint an independent
auditor to determine the amount it owed under Section 51-15-118.
¶16. After all of the Forrest County Chancery Court judges recused from the case, this
Court appointed the Honorable Hollis McGehee as Special Judge. Judge McGehee promptly
held a hearing and issued an order granting partial summary judgment to Lamar County.
Judge McGehee rejected the Wolfe audit and ordered the parties to attempt to agree on a
certified public accountant to perform an independent audit to determine Lamar County’s
obligation as of September 6, 2011. Both parties later agreed on the certified public
accounting firm of Tann, Brown & Russ Co., PLLC, to perform the independent audit.
B. Independent Audit and Fight Over Contractual
Obligations
¶17. Tann, Brown & Russ produced an “Independent Auditor’s Report,” a “Schedule of
Lamar County’s Portion of the Pat Harrison District’s Bonds, Contractual Obligations, and
Other Indebtedness and Liabilities,” and “Notes to the Schedule of Lamar County’s Portion
8
of Bonds, Contractual Obligations, and Other Indebtedness and Liabilities.” Lamar County
filed these audit reports with the court in December 2012. The audit excluded the District’s
perpetual park operating costs from the schedule of contractual obligations.
1. Tann, Brown & Russ’s Audit
¶18. In its audit, Tann, Brown & Russ excluded the perpetual park operating costs from its
calculation of the portion of the District’s contractual obligations Lamar County was
obligated to pay, explaining:
As discussed in Note 6 to the schedule, the District has included $146,524,357
as an estimate of the present value of the District’s future costs (net of park
user fee revenues) to operate the Okatibbee Creek Park through June 30, 2018,
and to perpetually operate its other recreational parks. In our opinion, the
estimated future costs to operate the Okatibbee Creek Park through June 30,
2018, and to perpetually operate the District’s other recreational parks should
not be included in the schedule because they are not contractual obligations of
the District as of September 6, 2011, in accordance with Section 51-15-118 of
the Mississippi Code.8
¶19. The report further explained why the perpetual park operating costs were not
contractual obligations:
The District’s lease agreement with the U.S. Corps of Engineers for the
Okatibbee Creek Park is not a contractual obligation because it is cancelable
by the District. In addition, while the District’s agreements with the National
Park Service and Natural Resources Conservation Service generally require
the continued use of the District’s other parks for outdoor recreational
8
In Note 6 accompanying the schedule, Tann, Brown & Russ explained that it had
calculated the perpetual park operating costs using the Gordon Growth Method. The Gordon
Growth Method is formula used to calculate the future value of businesses and other assets
based on the assumption that future revenues, expenses, and other costs will continue to
grow at a constant rate. All expert accountants in this case agreed that the Gordon Growth
Method was an appropriate method for calculating the District’s perpetual park operating
costs.
9
purposes, these agreements do not require a specific amount of expenditures
at the parks. Furthermore, the District’s agreements with the National Park
Service, Natural Resources Conservation Service, and U.S. Corps of Engineers
allow the District to charge park user fees to offset the park operating costs.
Consequently, the amount of the District’s net cost to operate the parks is
within the District’s control and is not a contractual obligation in accordance
with Section 51-15-118 of the Mississippi Code.
¶20. After explaining its reasoning for excluding the perpetual park operating costs, the
Tan, Brown & Russ audit then provided the following conclusion and calculation:
If the perpetual park operating costs of $146,524,357 were excluded from the
schedule, Lamar County’s portion of the Pat Harrison Waterway District’s
bonds, contractual obligations, and other indebtedness and liabilities as of
September 6, 2011, would be decreased by $18,648,448, and Lamar County’s
portion of the Pat Harrison Waterway District’s bonds, contractual obligations,
and other indebtedness and liabilities as of September 6, 2011, in accordance
with Section 51-15-118 of the Mississippi Code would be $337,088.
¶21. While Tann, Brown & Russ excluded the perpetual park operating costs as contractual
obligations in the schedule, it did consider other future contractual obligations, including the
District’s project grant commitments described in Note 4, and the District’s operating lease
and service contract obligations described in Note 5. Note 4 explained that:
The District awards grants each year for various projects in its member
counties. Grant awards generally cover 50% of the eligible project costs up to
a maximum grant amount of $25,000. These grant commitments are payable
after each project’s completion based upon documentation of the costs
incurred by the grant recipient.
¶22. Note 5 explained that “[t]he District has entered into certain equipment operating
leases and service contracts with non-cancelable terms.” Both of these future contractual
obligations were included in the schedule of contractual obligations.
2. Accounting Standards
10
¶23. The Tann, Brown & Russ audit did not declare the specific accounting standards it
used, stating only that it “conducted [the] audit of the schedule in accordance with auditing
standards generally accepted in the United States of America.” Relevant to this case are two
generally recognized accounting standards, either or both of which provide guidance as to
what should and should not be classified as contractual obligations.
¶24. The Financial Accounting Standards provide guidance on analyzing and preparing
financial statements for businesses and nonprofits. Under these generalized standards,
liabilities are defined as “probable future sacrifices of economic benefits arising from present
obligations of a particular entity to transfer assets or provide services to other entities in the
future as a result of past transactions or events.”
¶25. By contrast, the Governmental Accounting Standards—the District’s CPA used these
standards when it performed the District’s 2011 audit—provide guidance on analyzing and
preparing the financial statements of state and local governments. These standards provide
that,“[f]or an obligation to be a liability, it should be a present obligation,” meaning “[t]he
event that created the liability has taken place.” This is distinguishable “from a commitment
that may become a liability in the future when the event giving rise to the liability occurs.
The government may be able to withdraw from or avoid the commitment until a future event
giving rise to the liability occurs.”
C. Trial on the Independent Audit
¶26. Predictably, the District took issue with the Tann, Brown & Russ report, primarily the
exclusion of perpetual park operating and maintenance costs from the schedule of contractual
obligations. In January 2013, the District filed objections to the independent auditor’s report,
11
objecting “to the auditor’s adverse opinion,” and requesting that “the [c]ourt strike that
opinion and rely solely on the auditor’s schedule and render judgment that the amount Lamar
County owes” upon withdrawal “is $18,985,536.” The District argued that Tann, Brown &
Russ’s refusal to characterize perpetual park operating costs as contractual obligations was
a “legal opinion.”
¶27. Lamar County then filed responsive pleadings and the District filed a rebuttal,
including a rebuttal auditor report. In May 2013, the State of Mississippi intervened, filing
a motion for leave to file an amicus curiae brief. Lamar County then filed a response to the
District’s rebuttal and the State’s amicus brief.
¶28. On August 19 and 20, 2013, the trial court held a hearing on the District’s objections.
The District called four witnesses: Scott Hodges (the Tann, Brown & Russ auditor who
performed the independent audit), Hiram Boone (executive director of the District), George
Decoux (comptroller of the District), and Jim Koerber (the District’s rebuttal auditor). In
response, Lamar County called John Adler (the County’s own expert accountant).
1. Testimony of Scott Hodges
¶29. Hodges explained that “[t]he contracts existed, but the contracts did not require all of
those expenditures. The contracts only required continued use of the parks for recreational
purposes.” Hodges further explained that the historical costs the District used to calculate
the perpetual operating costs “were not required by those contracts. Those costs were
incurred, but they were not required by the contracts.” And Hodges noted that “[i]t’s
availability of use, not a spending of money that the [District’s] contract[s] require[ ].”
Hodges elaborated on the point:
12
If [the perpetual park operating costs are] within their control, it’s not an
obligation. An obligation is something that . . . an outside force is obligating
you to do[,] not within your control. It’s not your decision. You’re obligated
by contract to do it. So by definition, if it’s within their control, it’s not an
obligation.
¶30. Hodges further explained, “[i]f an entity has a contractual obligation, it should be
disclosed in the annual financial statements.” The perpetual park operating costs were never
included in the District’s financial statements before Lamar County’s withdrawal.
¶31. Finally, in explaining Tann, Brown & Russ’s role in the process, Hodges testified:
“[o]ur job was to determine if it was in accordance with the statute. And so, that’s what we
did, is determine that [the perpetual park operating costs] that [the District] included was not
in accordance with the statute.” Hodges reiterated that the main focus of the audit was to
calculate what Lamar County owed under Section 51-15-118, which was paramount in his
mind to either Financial Accounting Standards Board or Governmental Accounting
Standards Board standards.
2. Testimony of Hiram Boone
¶32. Hiram Boone, the executive director of the District, testified about the District’s value
to the state and its obligations. Boone emphasized that the District did more than manage
parks and that the District’s responsibilities included periodically inspecting dams and other
flood-control structures. Boone said these obligations required continued support from the
counties in the District. Boone also noted that the water parks throughout the District spurred
regional economic growth and development.
¶33. However, during cross-examination, Boone conceded that the District’s obligations
under the contracts were quite amorphous:
13
Q. None of the contracts that Pat Harrison Waterway District has with the
federal government tells the Pat Harrison Waterway District how it has
to operate the facilities, does it?
A. Yes. We have certain responsibilities to the LCWF to operate those
structures.
Q. All it [says] you have to do is use them for outdoor public recreation,
correct?
A. That is part of it. When they were built, it was intended for flood
control, erosion control, flood protection downstream as a water supply.
They could be used for drinking water, industrial or irrigation purposes.
So those structures are operated for multiple use besides recreation.
Recreation is one of the side benefits.
Q. I understand that. But with respect to the contracts that the LWCF
applied to.
A. Yeah.
Q. All they say is you need to operate them as outdoor public recreation
. . . [f]acilities, correct?
A. Yes.
Q. Okay. They don’t tell you how much money you have to spend on
them, do they?
A. No. But they—when you say properly maintained, it takes whatever it
does.
¶34. Further, Lamar County cross-examined Boone about the District’s low park entrance
rates compared to other Mississippi state parks. For example, the District charged $30 per
person for an annual individual entrance pass to its parks, whereas the State of Mississippi
charged $42 for the same pass. The District also greatly undercut the State when it came to
annual boat-launch passes: $102 at a state park compared to just $65 at the District’s water
parks.
3. Testimony of George DeCoux
¶35. George DeCoux, the District’s comptroller, testified that the Tann, Brown & Russ
auditors had never asked him if the District could increase park user fees to balance its
budget and perpetually maintain its parks. During cross-examination, DeCoux also
14
confirmed that “on most things other than camping and cabins,” the District’s park user fees
were less than State park user fees.
4. Testimony of Jim Koerber
¶36. Finally, the District called Jim Koerber, the District’s own certified public accountant
and expert. Koerber had “no problems” with the numbers in Tann, Brown & Russ’s audit,
but he disagreed with Tann, Brown & Russ’s exclusion of perpetual park operating costs as
contractual obligations, because he believed that decision was a legal conclusion outside the
purview of a Certified Public Accountant. He testified that “[t]here [wa]s no accounting
basis to exclude those contractual obligations.”
¶37. Koerber also testified that he primarily relied on Financial Accounting Standards
concepts to classify the perpetual park operating costs as contractual obligations, and that he
looked to Governmental Accounting Board standards when he classified perpetual park
operating costs as contractual obligations, finding that those standards also justified his
classification. However, Koerber conceded that there was no real difference between the two
standards.
¶38. On cross-examination, the District challenged Koerber’s stance on including the
perpetual park operating costs as future contractual obligations:
Q. My question was, if you went to the Pat Harrison Waterway District on
September 6, 2011 and asked for contracts that had these numbers that
would be owed, due and payable at some point in the future, there is no
contract that contains those numbers.
A. Oh. That’s correct . . . .
Q. I’m just trying to establish that unlike with contractual obligations and
the figures that are there, there are no supporting contracts you could
go lay your hands [on] and say [“]here are the amounts that are due and
payable under those contracts.[”]
15
A. No, sir, it would not be specified in the contracts . . . [,][b]ut I do want
to be clear [ ] that . . . there would be a cost to operate those contracts.
¶39. After Koerber testified, the District rested.
5. Testimony of John Adler
¶40. Lamar County then called John Adler, the County’s own CPA and expert, who
testified that Tann, Brown & Russ conducted the audit in accordance with generally accepted
professional auditing standards and accounting principles. Alder unequivocally stated that
Governmental Accounting Standards Board principles should be used in determining whether
the perpetual park operating costs were contractual obligations.
¶41. Alder disagreed with Koerber and agreed with Tann, Brown & Russ’s exclusion of
the perpetual park operating costs as contractual obligations, because “there [wa]s no
contractual obligation that they spend money.”
D. Trial Court’s Ruling Excluding Perpetual Park
Operating Costs from the Schedule of Contractual
Obligations
¶42. When the hearing concluded, Judge McGehee took the matter under advisement and
later issued his ruling, adopting the Tann, Brown & Russ audit’s schedule of liabilities.
Judge McGehee found that Lamar County withdrew from the district on September 6, 2011,
and that an independent auditor had determined that Lamar County’s portion of “contractual
obligations . . . that [we]re outstanding on the date of [the] [C]ounty’s withdrawal” was
$337,088.
¶43. Judge McGehee also found “that under the provisions of Section 51-15-118, Lamar
County [wa]s not responsible or liable for perpetual park operating costs,” and “that
16
perpetual park operating costs are not provided for in Section 51-15-118.” The trial court
supported its finding with the following reasons:
(a) Section 51-15-118 does not specify perpetual operating costs as an
obligation;
(b) Section 51-15-118 provides that the county is responsible for those
“that are outstanding on the date of such county’s withdrawal from the
District,” and there were no such perpetual operating costs outstanding
on September 6, 2011;
(c) Section 51-15-118 provides that the determination shall be by an
independent audit and that has been done and accomplished in
accordance with the statute and by agreement of the parties;
(d) Section 51-15-118 provides that the determination should be made by
a certified public accountant. The legislature, by this provision,
indicated its clear intent that accounting standards would be applied in
making the determination. The applicable accounting standards in this
case are promulgated by the Governmental Accounting Standards
Board (“GASB”). GASB standards, which were introduced . . . during
the hearing, do not support a finding that the perpetual park operating
costs fall within the specified obligations of the withdrawing county;
(e) [T]he District’s own financial records, its own prior audits, do not
include the claimed perpetual park operating costs as a liability of the
District;
(f) [T]he contracts that the District has with the federal government . . . do
not require the level of activity that the District has assumed and there
is no obligation upon the District consistent with the position it takes
and thus there is no contractual obligation, liability[,] or indebtedness
relative thereto which can be imposed, in proportionate part, upon the
withdrawing county;
(g) [T]he contracts that the District contend give rise to its claim for
perpetual park operating costs do not constitute contractual obligations
or liabilities under GASB standards which, under the statutory scheme
as specified in Section 51-15-118, must control;
17
(h) [E]ven if GASB does not control, the District’s position is not
supported by any evidence other than its own claim which is clearly
contradicted by its own records;
(i) [A]s a footnote, the [c]ourt cannot conceive that the legislature intended
that a withdrawing county would be responsible for operating costs in
perpetuity because: (a) it would be contrary to the whole concept of
withdrawing—why withdraw? (b) it specifically stated that the
measuring date is the date of withdrawal.
¶44. After Judge McGehee issued his thorough and well-reasoned ruling, the District
appealed to this Court.
ANALYSIS
¶45. The District raises two interrelated issues on appeal, first, whether the District’s
contracts with the federal government—requiring perpetual park operations and
maintenance—constitute contractual obligations under Section 51-15-118. Its second issue
concerns whether, in order to withdraw, Lamar County must pay $18,985,536, as it claims;
or $337,088, as found by the chancellor.
¶46. The State as amicus curiae argues that both the purpose and broad language in Section
51-15-118 require Lamar County to pay its portion of perpetual obligations under the federal
contracts.
¶47. When we review a trial court’s interpretation of a statute—which is a question of
law—we conduct a de novo review.9 And while we give deference to a state agency’s
interpretation of a governing statute—like the District’s argument that its duties under the
9
Tellus Operating Grp., LLC v. Tex. Petroleum Inv. Co., 105 So. 3d 274, 278 (Miss.
2012) (citing Laurel Ford Lincoln-Mercury, Inc. v. Blakeney, 81 So. 3d 1123, 1125 (Miss.
2012)) (“Questions of law, such as statutory interpretation, are subject to a de novo standard
of review.”).
18
federal contracts are contractual obligations under Section 51-15-118—we will not defer
when that interpretation “is so plainly erroneous or so inconsistent with either the underlying
regulation or statute as to be arbitrary, capricious, or contrary to the unambiguous language
or best reading of a statute.” 10
¶48. Before we engage in statutory interpretation, we look to the statute to determine
whether interpretation is necessary, that is, whether the language is plain, unambiguous, and
in need of no interpretation.11 If so, we need go no further.12
I. The District’s duties to operate and maintain its water parks and
other improvements are not contractual obligations under Section
51-15-118.
¶49. We begin by noting Section 51-15-118’s express provision that the board of
supervisors of any county in the District “may elect to withdraw.” 13 And when a county
elects to withdraw, it “shall be responsible for paying its portion of any district bonds,
contractual obligations, and any other indebtedness and liabilities of the district that are
outstanding on the date of such county’s withdrawal from the district.” 14 And this amount
10
Miss. State & School Emps.’ Life & Health Plan v. KCC, Inc., 108 So. 3d 932,
939 (Miss. 2013) (citing Diamond Grove Ctr., LLC v. Miss. State Dep’t of Health, 98 So.
3d 1068, 1071 (Miss. 2012)).
11
Miss. Methodist Hosp. & Rehab. Ctr., Inc. v. Miss. Div. of Medicaid, 21 So. 3d
600, 607 (Miss. 2009) (citing In re Guardianship of Duckett, 991 So. 2d 1165, 1181 (Miss.
2008)) (“This Court will not engage in statutory interpretation if a statute is plain and
unambiguous.”).
12
Miss. Methodist Hosp. & Rehab. Ctr., Inc., 21 So. 3d at 607.
13
Miss. Code Ann. § 51-15-118.
14
Id.
19
“shall be determined through an independent audit conducted by a certified public
accountant.” 15
¶50. We think the term “contractual obligations . . . that are outstanding” as used in the
statute is plain and unambiguous. Contractual obligations that may, or may not, arise in the
future are not—in any sense of the word—“outstanding” obligations; they are contingent
obligations that may, or may not, become outstanding in the future. They certainly are not
outstanding on the date of the county’s withdrawal from the district. Any interpretation to
the contrary would not, as the dissent posits, be a “liberal” interpretation, but rather a stark
departure from, and rejection of, the requirements of the statutory language.
¶51. The withdrawing county is required to pay for no more than the contractual
obligations that are “outstanding,” that is, that are definitely owed, as of the date of its
withdrawal. Our view is further buttressed by the fact that the term “contractual obligations”
is sandwiched between “district bonds” and “other indebtedness and liabilities,” both of
which clearly speak to sums that are certain and outstanding.
¶52. The District would have us find that “contractual obligations . . . that are outstanding”
include future obligations. We find nothing in the statute that obligates a county, after
withdrawal, to pay the District’s future maintenance and operational obligations that have
not been incurred and are not outstanding on the date of withdrawal. Nor do we find
anything in Lamar County’s contracts that obligates it to do so. Those future costs have not
been incurred, nor are they “outstanding,” and their amount is highly speculative.
15
Id.
20
¶53. It seems obvious to us—but not so obvious to the dissent—that the statute requires us
to examine the contracts to determine whether the District’s contracts constitute outstanding
contractual obligations. The Legislature easily could have made a withdrawing county
obligated for all contractual obligations, including those that are contingent on future events.
But it did not. Instead, the Legislature employed a precise modifier to the phrase
“contractual obligations.” Rather than make the withdrawing county liable for all contractual
obligations, the statute limits that liability to contractual obligations that are “outstanding.”
¶54. As the contracts show, the duty to share in future maintenance and operational costs
rests on those counties that remain within the District when the costs are incurred. The
District’s future operations and maintenance costs were not presently due and owing when
Lamar County withdrew and the District has discretion in how these duties and obligations
will be fulfilled in the future.
¶55. As the federal contracts plainly provide—and as the independent auditor noted—there
is no requirement that the District spend certain amounts every year maintaining the parks.
Nor is there anything inhibiting the District from increasing its entrance fees or outsourcing
its operation and maintenance responsibilities to third parties in the future to offset these
costs.
¶56. Moreover, many of the District’s federal contracts do not require maintenance and
operation of the structures beyond their estimated life expectancy. Many of the
structures—by the District’s own numbers—are at or nearing obsolescence. When these
structures are retired, the District need only keep its properties open for public outdoor
recreational use to remain in compliance with its contractual duties. So, these contractual
21
obligations are not chargeable to Lamar County, as the future sums were not outstanding
when Lamar County withdrew.
¶57. The meaning of “contractual obligations . . . that are outstanding” in the statute also
excludes the District’s future lease payments to the Army Corps of Engineers. The lease is
terminable by the District at any time with thirty days’ written notice. The lease agreement
provides the District the option to renew the lease every month until 2018. So a month-to-
month lease, with the option to renew for a definite period of time, must be excluded as a
“contractual obligation . . . then outstanding” under the statute because future lease payments
were not definitely required after September 2011.16 The District was free to cancel its lease
any time after Lamar County withdrew by giving thirty days’ written notice.
¶58. We also disagree with the District’s characterization of Tann, Brown & Russ’s audit
as providing a legal opinion as to the meaning of the term “contractual obligations . . . that
are outstanding” in the withdrawal statute. It is true that the Mississippi judiciary has the
exclusive authority to interpret the statutes of this state.17 But Tann, Brown & Russ’s
exclusion of the perpetual operations and maintenance costs from “contractual obligations
. . . that are outstanding” under Section 51-15-118 was an accounting decision required by
16
See Wilson v. Wood, 84 Miss. 728, 36 So. 609, 609 (1904) (citing Usher v. Moss,
50 Miss. 208 (1874)) (“Where the letting is ‘by the month,’ to continue for an indefinite
period, according to the wishes of the contracting parties, the tenancy can only be terminated
at the end of the monthly term then pending, upon notice duly given. This is the evident
intent of the law.”).
17
Miss. Ins. Guar. Ass’n v. Cole ex rel. Dillon, 954 So. 2d 407, 412 (Miss. 2007)
(citing Miss. Dep’t of Transp. v. Allred, 928 So. 2d 152, 156 (Miss. 2006)) (“It is our duty
to interpret the statutes enacted by the Legislature, and to neither broaden nor restrict the
legislative act.”).
22
the statute. Indeed, the statute requires in plain and unambiguous language that the amount
a county owes “shall be determined through an independent audit conducted by a certified
public accountant.” 18 And while it is true that differing opinions were submitted to the
chancellor, the credibility and evidentiary value of expert opinions is a matter left squarely
with the fact-finder.19
¶59. The District argues that if we follow a Texas Court of Appeals decision, we will
classify the District’s duties to perpetually operate and maintain its parks and structures as
contractual obligations.20 Given the clear, unambiguous meaning of the statute’s phrase
“outstanding contractual obligations,” we need not resort to another state’s law. But even
were we to do so, we think the Texas case supports, rather than contradicts, our decision
today.
¶60. In City of Pflugerville, the City already had withdrawn from Capital Metro (a regional
transit authority) and was contesting whether certain multiyear contracts were legally binding
and enforceable.21 The City argued that Capital Metro’s multiyear contracts were not “not
legally binding contractual obligations” because the contracts contained clauses providing
18
Miss. Code Ann. § 51-15-118.
19
See Univ. Med. Ctr. v. Martin, 994 So. 2d 740, 748 (Miss. 2008) (citing Scott
Addison Constr., Inc. v. Lauderdale Cnty. Sch. Sys., 789 So. 2d 771, 773 (Miss. 2001))
(“Regardless of what this Court might have decided had it been sitting as the fact[-]finder,
the trial court’s findings must not be disturbed merely for adopting the testimony of one
party’s expert while disregarding that of the other party’s experts.”).
20
City of Pflugerville v. Capital Metro. Transp. Auth., 123 S.W.3d 106 (Tex. Ct.
App. 2003).
21
Id. at 108.
23
that future “‘funding by Capital Metro is subject to appropriation of funds in the annual
budget.’” 22 The City further agreed that “contracts with such language [wer]e illusory or
merely provide[d] Capital Metro the option to perform.” 23 Capital Metro countered that such
clauses were required in all governmental contracts and that such clauses appeared in
virtually all of Capital Metro’s contracts.24
¶61. The Texas court rejected the City’s argument and found that the contracts were indeed
enforceable.25 Key to the court’s ruling was its finding that the “subject-to-appropriation”
clauses “neither g[ave] Capital Metro the unbridled discretion to perform nor render[ed] the
contracts illusory.” 26 After finding that the contracts were legally binding, the court then
considered whether multiyear contracts fell within the ambit of “contractual obligations”
under the broad and comprehensive Texas withdrawal statute.27 The Texas court found that
22
Id.
23
Id. at 108-110.
24
Id. at 110.
25
Id.
26
Id. (emphasis added).
27
Id. at 111. Texas Transportation Code Section 451.611(b), the relevant statutory
provision, provided:
(b) An authority’s outstanding obligations under Subsection (A)(1)(A) is
the sum of:
(1) the obligations of the authority authorized in the budget
of, and contracted for by, the authority;
(2) outstanding contractual obligations for capital or other
expenditures, including expenditures for a subsequent
year, the payment of which is not made or provided for
24
“[i]n the context of the statute, the phrase ‘contractual obligations’ is reasonably interpreted
to mean any obligation undertaken by a transit authority in the form of a contract.” 28 So
“[t]he phrase ‘contractual obligations’ . . . includes obligations undertaken by a transit
authority arising under multi-year contracts that are subject to appropriation of funds in the
budget of a transit authority.” 29
¶62. First, we note that the contracts at issue in Pflugerville and the District’s contracts are
vastly different. While Capital Metro’s contracts gave it little discretion in how it performed,
the District’s contracts provided limitless discretion. The LWCF and Soil Conservation
contracts simply require that the water parks and structures be properly operated and
maintained and remain open to public use. And the lease agreement with the Army is
terminable at any time. We, like the Texas court, are unwilling to find the District’s contracts
from the proceeds of notes, bonds, or other obligations;
(3) payments due or to become due in a subsequent year on
notes, bonds, or other securities or obligations for debt
issued by the authority;
(4) the amount required by the authority to be reserved for
all years to comply with financial covenants made with
lenders, note or bond holders, or other creditors or
contractors; and
(5) the amount necessary for the full and timely payment of
the obligations of the authority, to avoid a default or
impairment of those obligations, including contingent
liabilities.
City of Pflugerville, 123 S.W.3d at 111 (citing Tex. Transp. Code Ann. § 451.611(b) (West
1999)).
28
City of Pflugerville, 123 S.W.3d at 111.
29
Id. at 113.
25
unenforceable, but we note the wide discretion the District’s contracts provide in performing
the operations and maintenance obligations.
¶63. Second, the future contracts that Pflugerville wanted excluded are the same type of
future contracts that Tann, Brown & Russ classified as contractual obligations in its
independent audit. Tann, Brown & Russ included in the schedule of contractual obligations
the District’s future project grant commitments and some operating lease and service contract
obligations. These definite contracts, like Capital Metro’s contracts, leave little discretion
in how performance is rendered and are currently outstanding.
¶64. Finally, and most importantly, we note a glaring difference in the Texas withdrawal
statute and Section 51-15-118. Our statute speaks in terms of contractual obligations that are
“outstanding” when a county withdraws. The broad Texas statute includes as contractual
obligations “capital or other expenditures” for future years and any other amount needed to
prevent the transit authority from defaulting on its obligations. The Texas withdrawal statute
does not limit “contractual obligations” to outstanding obligations due on the date of
withdrawal.
¶65. We make the same observation Judge McGehee astutely made in his ruling: if a
withdrawing county must pay to perpetually operate and maintain the District’s water parks
and other structures, why would the Legislature have created a withdrawal statute in the first
place? 30
30
See Miss. Bar v. Pierce, 84 So. 3d 21, 24 n.11 (Miss. 2011) (Dickinson, J.,
dissenting) (likening the Mississippi Bar’s rule prohibiting members from resigning to the
fictional Hotel California, which allowed guests to check out at any time but would never
let them leave).
26
¶66. In short, the term “contractual obligations . . . that are outstanding” under Section 51-
15-118 do not encompass future obligations that are not outstanding, including the District’s
perpetual maintenance and operation duties. We find that Lamar County is not responsible
for paying these perpetual costs before it may exercise its right to withdraw. And because
the meaning of “contractual obligations . . . that are outstanding” is plain and unambiguous
under our statute, no further interpretation is needed.31
¶67. We must reject the dissent’s suggestion that the statute is ambiguous, and that Section
51-15-101 mandates his interpretation. The dissent’s logic essentially boils down to this:
Because (1) the ambiguous statute must be construed to support the District’s purposes,
which are to continue to maintain and operate the waterway, and (2) the District’s viability
depends on financial support of the counties, it necessarily follows that the withdrawal statute
must be interpreted to keep counties in the District by imposing the highest hurdles to
withdrawal. This logic is based on the flawed assumption that the District’s viability, its
ability to fulfill its purpose, will be weakened if a county withdraws.
¶68. First, under the contracts in place, the dissent cannot say that Lamar County’s
withdrawal will deprive the District of resources. The financial burden for operating the
District, ultimately, is upon the State of Mississippi. So, if the remaining counties are unable
or unwilling to continue those obligations in the future, the State has the responsibility for
compliance with its contracts. And, as discussed above, the District exercises expansive
31
See, e.g., Diamond Grove Ctr., LLC, 98 So. 3d at 1072 (citing Miss. Methodist
Hosp. & Rehab. Ctr., Inc., 21 So. 3d at 607) (“[W]hen a statute is plain and unambiguous,
and conveys a clear and definite meaning, there is no occasion to resort to rules of statutory
interpretation.”).
27
authority to opt out of maintaining many facilities after they reach their life expectancy,
which many already have done, obviating many of the costs in question.
¶69. So Lamar County’s withdrawal will not threaten the District’s purposes, it will simply
shift the burden of paying to achieve those purposes to the other counties and/or the State of
Mississippi. The dissent partially acknowledges as much by saying: “Should today’s result
lead to a mass exodus, woe to the last county standing that would alone bear the contractual
obligations the majority holds do not exist.” The dissent fails to point out that the “last
county standing” has the option to opt out and shift the burden to the State of Mississippi,
which entered the contracts with the federal government to begin with. Rather than
accomplishing Section 51-15-101’s dictate that the statutes be construed to best serve the
District’s purposes, the dissent’s interpretation imposes its view as to who should bear those
costs.
II. The chancellor did not err when he found that Lamar County owed
$337,088 under Section 51-15-118.
¶70. Having found that the District’s perpetual park operating costs are not properly
classified as contractual obligations under the statute, we next address whether the chancellor
erred in finding that Lamar County owed $337,088 to withdraw. We give deference to a
chancellor’s factual findings when supported by substantial evidence, and we will not
overturn those findings on appeal “unless the Court can say with reasonable certainly that the
chancellor abused his discretion, was manifestly wrong, clearly erroneous[,] or applied an
28
erroneous legal standard.” 32 In a bench trial, the trial judge has the “sole authority” to
determine the credibility of witnesses and evaluate their testimony.33
¶71. Since Judge McGehee applied the correct legal standard, we cannot say from the
evidence presented that his finding that Lamar County owed $337,088 to withdraw under
Section 51-15-118 was not supported by substantial evidence and was an abuse of discretion,
manifestly wrong, or clearly erroneous.
¶72. As we noted in great detail above, we fully agree that the District’s operation and
maintenance obligations under the LWCF, Soil Conservation, and State Heritage contracts
were properly excluded as contractual obligations. We also agree that the District’s lease
agreement with the Army Corps of Engineers was properly excluded as a contractual
obligation because the District was not required to continue the lease agreement after Lamar
County’s withdrawal, and any future lease payments were not presently due and owing on
the date Lamar County withdrew.
¶73. So we affirm the chancellor’s finding that Lamar County owes $337,088 under the
withdrawal statute.
CONCLUSION
¶74. The judgment of the chancery court is affirmed. The District’s duties to perpetually
operate and maintain its parks under its federal contracts are not “contractual obligations .
. . that are outstanding” under Section 51-15-118. And Lamar County’s obligation to
32
Estate of Crowell v. Estate of Trotter, 151 So. 3d 194, 198 (Miss. 2014) (quoting
Barton v. Barton, 790 So. 2d 169, 175 (Miss. 2001)).
33
Univ. of Miss. Med. Ctr. v. Pounders, 970 So. 2d 141, 146 (Miss. 2007) (citing
Pride Oil Co. v. Tommy Brooks Oil Co., 761 So. 2d 187, 193 (Miss. 2000)).
29
complete its September 6, 2011, withdrawal from the Pat Harrison Waterway District is
$337,088.
¶75. AFFIRMED.
WALLER, C.J., RANDOLPH, P.J., LAMAR AND KING, JJ., CONCUR.
COLEMAN, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY
KITCHENS, CHANDLER AND PIERCE, JJ.
COLEMAN, JUSTICE, DISSENTING:
¶76. I dissent because, in my opinion, the majority’s holding ignores a directive from the
Legislature – which it has every right to enact and every right to expect the courts of the state
to follow – that mandates that the act creating the Pat Harrison Waterway District be liberally
construed to effect the purposes for which it was passed, including the preservation of the
District. See 5K Farms, Inc. v. Miss. Dep’t of Revenue, 94 So. 3d 221, 227 (¶ 21) (Miss.
2012) (“[T]he courts are without the right to substitute their judgment for that of the
Legislature as to the wisdom and policy of the act and must enforce it, unless it appears
beyond all reasonable doubt to violate the Constitution.”) (quoting Pathfinder Coach Div.
of Superior Coach Corp. v. Cottrell, 216 Miss. 358, 362, 62 So. 2d 383, 385 (1953)). As
more fully discussed below, the Legislature directed in the clearest possible terms that the
creation of the Pat Harrison Waterway District was “necessary and essential” to the general
welfare of the entire state. Miss. Code Ann. § 51-15-101 (Rev. 2003) (emphasis added).
¶77. When faced with such clear language from that branch of government whose
prerogative is to set public policy for the state, I believe the Court should realize that the
Legislature severely limited, if not rendered nonexistent, the Court’s power to interject its
own opinion regarding what interpretation of the statute in question constitutes better public
30
policy. Dialysis Solutions, LLC v. Miss. State Dep’t of Health, 96 So. 3d 713, 716 (¶ 7)
(Miss. 2012); Miss. Const. art. 1, § 2 (no member or group of members of one branch of
government may exercise powers belonging to another branch); see also Nat’l Fed’n of Indep.
Bus. v. Sebelius,132 S. Ct. 2566 (2012) (Justices and judges “possess neither the expertise nor
the prerogative to make policy judgments.”).
¶78. The majority’s opinion commits two fatal errors. First, the majority engrafts upon the
statute its own meaning by concluding that the meaning of “contractual obligations . . . that
are outstanding” is “contractual obligations . . . owed as of the date of its withdrawal.” (Maj.
Op. 51) (emphasis added). It then equates “owed” – and therefore the word outstanding –
as an amount previously incurred, and not speculative. In essence, the majority concludes
Lamar County is obligated to pay only on contractual obligations that it previously incurred,
rather than obligations that are outstanding. In light of the Section 51-15-101 mandate
regarding the necessity of the District and the manner in which the act must be interpreted,
I question whether such a result can jibe with the controlling statutes. It is certainly a result
that lends ease to the departure of any county from the district and greatly increases the
chance that the district would cease to exist due to withdrawal of all member counties.
¶79. Second, the majority declared Section 51-15-118 to be plain and unambiguous –
having a clear and definite meaning. Therefore, they “need go no further,” yet they do. (Maj.
Op. ¶ 48). When a statute is plain and unambiguous, the Court has stated that “the
Legislature shall be deemed to have intended to mean what they have plainly expressed, and,
consequently, no room is left for construction in the application of such a law.” Conway, 173
So. 2d at 415 (emphasis added) (citing Wilson v. Yazoo & M.V.R. Co., 6 So. 2d 313 (1942)).
31
Thus, the majority’s opinion need not ruminate at such length upon distinguishing our statute
from a Texas statute, considering the subject matter of the statute (i.e., the contracts), and
considering the purposes and objectives of the statute. The majority engages in a pseudo-
statutory interpretation, by picking and choosing the interpretations that allow it to reach its
policy-driven conclusion.
¶80. I am of the opinion – and the majority’s pseudo-statutory interpretation inherently
supports my opinion – that Section 51-15-118 is not plain and unambiguous. In determining
whether a statute is ambiguous or unambiguous, the Court looks to the words of the statute.
Miss. Dep’t of Revenue v. Miss. Power Co., 144 So. 3d 155, 160 (Miss. 2014). In the instant
case, the parties disagree on the meaning of outstanding as used in the statute. The District
contends outstanding refers to a party’s duties under the life of a contract. The duties may
be duties performed in the past, present, or future; and they may not always be easily
quantified. Lamar County contends outstanding refers to a specific and known – albeit
unpaid – amount of money under a contract. It states that the federal contracts do not
“require the District to expend any specific monetary amount in maintaining and operating
the properties.” It argues that “Lamar County has no obligation to pay speculative future
operating costs of the District.” As a result, Lamar County’s definition of outstanding results
in an easily quantified amount owed, which is consistent with the result below.
¶81. The majority fails to directly address the confusion over the correct interpretation of
outstanding. It first states that “contractual obligations . . . that are outstanding” means
“contractual obligations owed as of the date of [a county’s] withdrawal” and does not apply
to “future maintenance and operational obligations.” (Maj. Op. ¶ 51-52). Thus, it concludes
32
that future obligations are not contractual obligations. It then turns its analysis to the
speculative nature of the future obligations. Even though it claims the statute is
unambiguous, it goes so far as to distinguish the instant case from City of Pflugerville v.
Capital Metropolitan Transportation Authority, 123 S.W.3d 106 (Tex. Ct. App. 2003), by
concluding that the District’s contracts provide “limitless discretion,” unlike the contracts at
issue in Pflugerville. In essence, the majority adopts Lamar County’s argument that the
future obligations must be knowable at the time of departure from the district. However, the
majority takes Lamar County’s argument a step further by concluding that the obligations
imposed by the contracts constitute contractual duties that are rendered a legal nullity by the
district’s discretion in fulfilling the duties.
¶82. Where a statute garners three – or at least two-and-a-half – different possible
interpretations, I think it an unprecedented leap to deem the statute clear, plain, and
unambiguous. I would hold Section 51-15-118 to be ambiguous and subject to thorough
statutory interpretation.
The primary rule of construction is to ascertain the intent of the legislature
from the statute as a whole and from the language used therein. Where the
statute is plain and unambiguous there is no room for construction, but where
it is ambiguous the court, in determining the legislative intent, may look not
only to the language used but also to its historical background, its subject
matter, and the purposes and objects to be accomplished.
Bailey v. Al Mefty, 807 So. 2d 1203, 1206 (Miss. 2001) (quoting Clark v. State ex rel.
Miss. State Med. Ass’n, 381 So. 2d 1046, 1048 (Miss.1980)). Further, the Court has stated
that “legislative intent must be determined from the total language of the act and not from
one section thereof considered apart from the remainder.” Lee v. Alexander, 607 So. 2d 30,
33
36 (Miss. 1992) (citing Pearl River Valley Water Supply Dist. et al. v. Hinds Cnty., et al.,
445 So. 2d 1330 (Miss.1984)); see also Capital One Servs., Inc. v. Page, 942 So. 2d 760,
763 (Miss. 2006) (“The polestar consideration for this Court is legislative intent.”).
¶83. Section 51-15-118 reads:
The withdrawing county shall be responsible for paying its portion of any
district bonds, contractual obligations, and any other indebtedness and
liabilities of the district that are outstanding on the date of such county's
withdrawal from the district. The withdrawing county’s portion of such
liabilities, obligations and indebtedness shall be determined through an
independent audit conducted by a certified public accountant. The board of
supervisors of the withdrawing county shall provide the sum that is required
by this section either by appropriation from any available funds of the county
or by levy. Such board of supervisors may borrow funds as needed to satisfy
the withdrawing county’s portion of the liabilities, obligations and
indebtedness of the district as required herein.
Miss. Code Ann. § 51-15-118 (Rev. 2003). The statute as enacted provides that a
withdrawing county must pay its contractual obligations “that are outstanding on the date of
such county’s withdrawal.” 34 Id. Notably, the statute further allows the county to borrow
from the state “to satisfy the withdrawing county’s portion of the liabilities, obligations and
indebtedness of the district.” Id.
¶84. Beyond Section 51-15-118, the Legislative schema on the District states that it was
created and codified in 1962. Miss. Code Ann. § 51-15-101 (Rev. 2003). The Legislature
also stated the purpose of the District:
It is further determined and declared that the preservation, conservation,
storage, and regulation of the waters of the Pat Harrison Waterway District
overflow waters for domestic, municipal, commercial, industrial, agricultural,
34
The majority concludes, and I agree, that Lamar County’s withdrawal date is
September 6, 2011; however, withdrawal on September 6, 2011, is not complete until it pays
$337,088. (Maj. Op.¶ 74).
34
and manufacturing purposes, for recreational uses, for flood control, timber
development, irrigation, and pollution abatement are, as a matter of public
policy, for the general welfare of the entire people of the state.
The creation of the Pat Harrison Waterway District is determined to be
necessary and essential to the accomplishment of the aforesaid purposes, and
this article operates on a subject in which the state at large is interested. All the
terms and provisions of this article are to be liberally construed to effectuate
the purposes herein set forth, this being a remedial law.
Miss. Code Ann. § 51-15-101 (emphasis added). Reading Section 51-15-118 in conjunction
with Section 51-15-101 makes it clear that Section 51-15-118 should be liberally construed
to preserve the District, which the Legislature labeled as “necessary and essential” to
accomplish matters of public policy in furtherance of the general welfare. Miss. Code Ann.
§ 51-15-101, see also Tunica County v. Hampton Co. Nat’l Sur., LLC, 27 So. 3d 1128,
1133 (Miss. 2009) (“It is a general rule that in construing statutes this Court will not only
interpret the words used, but will consider the purpose and policy which the legislature had
in view of enacting the law. The court will then give effect to the intent of the legislature.”).
Rendering an opinion that outstanding refers only to contractual obligations that are
“presently due and owing” does not construe the statute to preserve the necessary and
essential district. Under the majority’s holding, Lamar County will not pay for contractual
obligations that stem from eight contracts entered into by the District prior to September 6,
2011, but Lamar County will continue to reap some benefit from the contracts. To bolster
my interpretation of the statute, I would point out that the contractual obligations at issue do
not cease with Lamar County’s withdrawal. Rather, their yoke survives only to be
shouldered by the remaining members of the district. Should today’s result lead to a mass
35
exodus, woe to the last county standing that would alone bear the contractual obligations the
majority holds do not exist.
¶85. The majority’s rather nonchalant response to my concerns appears in two parts. First,
the majority points out that some of the contractual obligations at issue can be changed by
the district or are ill-defined. In other words, while they exist at the time of the county’s
withdrawal, they cannot be said to be outstanding because they might change. Second, the
majority writes that if all counties withdraw, any remaining contractual obligations (that the
majority holds today do not exist) simply fall back into the lap of the State of Mississippi.
In other words, despite the clear legislative directive that we should interpret the act creating
the Waterway liberally with the goal of effectuating its purposes and clear legislative
language establishing that, as a matter of public policy, the Pat Harrison Waterway District
is necessary and essential, when pressed, the majority writes that the demise of the district
is, in so many words, no big deal.
¶86. The majority has thoroughly summarized the eight contracts at issue under Section
51-15-118. (Maj. Op ¶¶ 4-12) However, examining the contracts does not provide much aid
in determining whether the contracts constitute outstanding contractual obligations. It is
undisputed that the District has perpetual contractual duties under seven of the eight
contracts. The dispute lies in whether or not the contractual duties must be presently due,
specific, and owing to be considered outstanding.
¶87. Turning to case law, to garner a definition of outstanding, the United States Supreme
Court has stated that outstanding contracts may need to be valued, if they have no specific
monetary amount. Polk v. Mut. Reserve Fund Life Ass’n of New York, 207 U.S. 310, 324
36
(1907) (“A very large part of the liabilities of any insurance company is upon outstanding
contracts of insurance, not due and therefore not capable of exact measurement. Such
liabilities can only be estimated or ‘valued.’”). While Polk deals with the issue of insurance
and not federal contracts, the Supreme Court’s determination in Polk makes it clear that
something need not be due nor capable of exact measurement to be considered outstanding.35
Thus, Polk is at odds with the majority’s bold assertion that obligations which are “future
costs [that] have not been incurred and . . . [are] highly speculative” are not outstanding
contractual obligations.
¶88. The District was created to ensure the general welfare of the entire state by controlling
and preserving the surface waters of the state. The Legislature made certain we are to
interpret the statutes to preserve the district. See Miss. Code. Ann. § 51-15-101. Given the
liberal interpretation afforded us by the Legislature and the Supreme Court’s statement in
Polk that outstanding is not required to mean capable of exact measurement nor due, I wholly
disagree with the majority.
¶89. As a final note, the majority states that defining the “contractual obligations . . . that
are outstanding” is “an accounting decision as required by the statute.” (Maj. Op. ¶ 58). It
concedes that differing opinions were submitted to the fact-finder – on the meaning of the
statute. However, it then wraps the meaning of the statute neatly into the blanket of the
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It is worth noting that holding outstanding to include contractual obligations not
presently due nor capable of exact measurement does not foreclose a court from holding
outstanding to refer to contractual obligations due or capable of exact measurement. See
Messiner v. Paulson, 212 Cal. App. 3d 785, 788 (1989) (stating that an outstanding
contractual obligation is the unpaid rent obligation); Broadway Nat’l Bank of Bayonne v.
Parking Auth. of City of Bayonne, 191 A. 2d 169, 171 (N.J. 1963) (“[T]he Parking
Authority had outstanding contractual obligations in the amount of $75,000 .”).
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expert opinions by concluding that the fact-finder’s role was to weigh the “credibility and
evidentiary value” of the expert opinions. I respectfully disagree. The majority seemingly
disregards the well established rule that statutory interpretation is a matter of law. Noone v.
Noone, 127 So. 3d 193, 195 (Miss. 2013). Thus, the role of the auditor is to determine the
value of the contractual obligations that the court deems are outstanding contractual
obligations.
¶90. The question of whether and to what extent the Court humbles itself and chooses to
abide by its role in the constitutional, three-branch framework of our state’s constitution
when it considers matters of public policy – which, in the instant case, the Legislature has
clearly decided for us – implicates the most fundamental and important principle of our
chosen form of government. “Frequently an issue of this sort will come before the Court
clad, so to speak, in sheep’s clothing: the potential of the asserted principle to effect
important change in the equilibrium of power is not immediately evident, and must be
discerned by a careful and perceptive analysis.” Morrison v. Olson, 487 U.S. 654, 699
(1988) (Scalia, J., dissenting). When venturing into the arena of public policy, I believe the
Court must check its ego at the door and pay all deference to the Legislature’s
pronouncements of it, and today I fear we fail to do so. Because the stakes include nothing
less than the continued viability of an entity whose raisons d’etre the Legislature deems to
be necessary and essential to the people of Mississippi – not to mention millions of dollars,
I echo Justice Scalia and note that, in the instant case, the wolf in question “comes as a wolf.”
Morrison, 487 U.S. at 699.
¶91. Accordingly, I respectfully dissent.
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KITCHENS, CHANDLER AND PIERCE, JJ., JOIN THIS OPINION.
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