City of Tupelo, Mississippi v. Terry Y. McMillin

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2014-CA-01378-SCT

CITY OF TUPELO, MISSISSIPPI

v.

TERRY Y. McMILLIN, M.D. AND LESLIE SUSAN
McMILLIN

DATE OF JUDGMENT: 08/28/2014
TRIAL JUDGE: HON. JAMES SETH ANDREW POUNDS
COURT FROM WHICH APPEALED: LEE COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: MARTHA BOST STEGALL
JOHN S. HILL
ATTORNEYS FOR APPELLEES: BRADLEY TRUETT GOLMON
STACEY WOODRUFF GOLMON
NATURE OF THE CASE: CIVIL - TORTS-OTHER THAN PERSONAL
INJURY & PROPERTY DAMAGE
DISPOSITION: ON DIRECT APPEAL: REVERSED AND
RENDERED. ON CROSS-APPEAL:
AFFIRMED - 04/14/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

EN BANC.

COLEMAN, JUSTICE, FOR THE COURT:

¶1. The present case is a Mississippi Tort Claims Act (MTCA) case riddled with

confusion and miscommunication surrounding a residential building permit. In 2006, Dr.

Terry Y. McMillin and his wife, Leslie Susan McMillin, purchased a new home in Tupelo,

Mississippi. Displeased with contractor Jamie Ewing’s failure to respond to their repair

requests, plus their discovery of a document – a blue card – noting a failed home inspection
and listing the name of a different contractor as the contractor responsible for their home’s

construction, the McMillins began the process of unraveling just who was responsible for

building their new home. Ultimately, the case stems from an error by the City of Tupelo’s

Permit Manager Marilyn Vail in handling the withdrawal of one licensed contractor and

mistakenly substituting the name of another licensed contractor, when in actuality, a licensed

contractor was not working on the home. The circuit court held a bench trial and awarded

$9,319.23 in damages to repair the home and $105,894.39 in legal fees related to another

case involving the construction but denied the McMillins’ request for attorneys’ fees in the

instant case. The City appealed, and the McMillins cross-appealed. We conclude that the

circuit court erred in finding that the City was not immune from liability; therefore, we

reverse the circuit court’s judgment and render judgment in favor of the City on the basis that

it is immune from liability.

FACTUAL AND PROCEDURAL HISTORY

¶2. A business partnership existed between Joey Guyton and Ewing, with the purpose of

the partnership being construction of residential homes. As the licensed contractor in the

partnership, Guyton oversaw Ewing’s construction activities for the partnership. On July 5,

2005, the City of Tupelo (City) issued Guyton, as the licensed contractor for the partnership,

a permit to build a residence at 4848 Market Street in Tupelo, Mississippi. The partnership

held other permits for other residential projects as well. Nine months after the City issued

the permit, the partnership dissolved, and Guyton provided the City with a letter on April 4,

2006, requesting that he be released from the permits issued to him under the partnership’s

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name. The City’s Permit Manager Marilyn Vail requested Guyton provide something more

formal than the letter, and on April 11, 2006, Guyton submitted a notarized letter to Vail

asking to be released from specific permits, including the residence’s permit.1

¶3. However, in the time between Guyton’s two letters, the City received a notarized letter

signed by Lawrence Deas, a licensed contractor, and Ewing. The letter, in its entirety quoted

herein, advised the City that “Deas has been hired by Harvester’s Square Developers, LLC,

to temporarily oversee construction of all residences under construction until such time as

another licensed contractor is found to take over said jobs.” The letter did not specifically

list the permits that Deas would be overseeing.

¶4. Taking all three letters together, Vail mistakenly thought that Deas was now

overseeing all of the permits listed in Guyton’s second letter. As a result, Vail issued a

replacement blue card for the residence listing Deas as the licensed contractor. Ewing

continued construction on the residence, essentially without a licensed contractor overseeing

his work.

¶5. The permit issue came to light only after the McMillins purchased the residence on

August 24, 2006. Following the purchase of the home, the McMillins created a punch list

for the residence of items that Ewing was to repair or correct; however, according to the

McMillins, Ewing would not respond to the McMillins’ punch list. Also after purchasing

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More specifically, the letter said: “I am withdrawing the use of my general
contractor’s license for the building permits listed below. I release the listed permits for the
Harvester’s Square developer to use another licensed general contractor to finish the
projects.” The letter then listed the residence, another address, and nine lots/addresses
associated with the Harvester’s Square development.

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the residence, the McMillins discovered the replacement blue card Vail had prepared that

listed Deas, not Ewing as they thought, as the licensed contractor on the residence. The

replacement blue card also showed that the residence had failed an inspection just days prior

to the McMillins’ purchase of the residence. According to the McMillins, they were unaware

that the residence had failed an inspection when they closed.

¶6. Frustrated by Ewing’s failure to address their punch list, the McMillins contacted the

State Board of Contractors to complain about Ewing, and they discovered that Ewing had not

been licensed during the construction. Even more frustrated now, the McMillins sent a letter

to Ewing, as the person responsible for construction; Deas, as the licensed contractor on the

replacement blue card; and Guyton, as the original licensed contractor. The letter demanded

that Ewing return the purchase price to them. Guyton responded with a letter explaining that

the original partnership with Ewing had dissolved, and he provided the McMillins with a

copy of the notarized letter he had sent to Vail releasing the permits.

¶7. Deas and the McMillins engaged in a heated phone conversation about the letter,

leading to Deas sending the McMillins a letter denying his involvement with the residence

and blaming a clerical error at the permit office for listing his name on the replacement blue

card. Deas encouraged the McMillins to confirm the error with the permit office; however,

Dr. McMillin testified that Vail would not answer his questions about Deas’s involvement

when he asked her.2

2
Vail denied that Dr. McMillin had asked her any questions about Deas’s
involvement.

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¶8. Then, in December 2006, the McMillins sued Ewing for breach of contract and fraud,

and they added claims for breach of fiduciary duty against two banks, all in the Lee County

Chancery Court. Subsequently, the McMillins voluntarily dismissed the banks, but the action

against Ewing is still pending. Several months after filing the chancery court action, the

McMillins served a Notice of Claim on the City contending that Vail negligently handled the

permit issue, and her negligence resulted in the residence being constructed by an unlicensed

contractor. The McMillins did not pursue an action against the City further until much later.

¶9. In January 2007, and unrelated to the chancery court action, Vail placed a memo in

the residence’s permit file. The memo, titled “Transfer of Contractor Responsibility,”

acknowledged the partnership’s dissolution and explained that Ewing had six months from

the dissolution to obtain his contractor’s license before he would be in violation of the law.

Further, according to the memo, Deas “agreed to take responsibility for [Ewing’s] projects

until [Ewing] could obtain his license.” Ewing did pass the residential contractor’s test in

September 2006, and the State Board of Contractors issued Ewing’s license on October 27,

2006. The memo explained that Vail had transferred all previous permits to Ewing’s

responsibility.

¶10. More than two years after initiating an action in the chancery court, the McMillins

joined Deas as a defendant in the lawsuit in December 2008. Joining Deas appeared to be

based on Vail’s memo explaining that Deas had agreed to take responsibility for Ewing’s

projects. Less than one month after joining Deas as a defendant, the McMillins received an

affidavit from Ewing confirming that Deas was not involved in the residence’s construction.

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In March 2010, Vail provided the McMillins with an affidavit explaining how she mistakenly

came to believe that Deas was involved in the residence’s construction. Deas then requested

the McMillins voluntarily dismiss him from the chancery court action based on Ewing’s and

Vail’s affidavits; however, the McMillins would not agree to dismiss him from the action and

instead added more claims against him. Deas filed his answer in the chancery court action,

and he also filed a counterclaim against the McMillins for damages based on slander. Deas

remained a defendant in the chancery court action for another twenty months until the

chancery court granted summary judgment in his favor because the McMillins had failed to

prove Deas’s connection to the residence. When granting summary judgment, the chancery

court specifically noted that Deas’s name was associated with the residence only as a result

of a clerical mistake.

¶11. The present case began on March 17, 2011, when the McMillins submitted a second

Notice of Claim to the City, again based on Vail’s negligent handling of the permits and

permit file. The Lee County Circuit Court held a bench trial, and it heard two days of

testimony and evidence. The McMillins and the City submitted separate, proposed findings

of fact and conclusions of law at the trial court’s request, and the trial court ultimately

adopted an overwhelming majority of the McMillins’ proposed findings. The circuit court

found that Vail had a duty to:

(1) ensure that a licensed contract[or] was working on the [residence] for the
entirety of the construction; (2) on the withdrawal of the Guyton license, stop
construction; (3) prevent construction from resuming until such time as a
licensed contractor agreed to be responsible for the construction; (4) properly
process the Guyton withdrawal; (5) stop construction when the [original]

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 permit expired; and (6) refrain from placing in the file misleading untruthful
papers.

The circuit court explained that Vail’s actions or inactions in maintaining the permit file were

deemed arbitrary and capricious; thus, the City could not be immune from liability. Further,

as a result of Vail’s error, the City negligently and wrongfully allowed construction on the

residence by an unlicensed contractor. The circuit court awarded the McMillins $9,319.23

in damages for repairs to the residence and more than $105,000 in legal fees incurred by the

McMillins while pursuing the chancery court action against Deas. The McMillins did not

receive any attorneys’ fees in connection with the present suit against the City. Also, the

circuit court did not award the McMillins the damages they requested related to the down

payment, all mortgage payments made, and other costs associated with maintaining the

residence while on the market.

¶12. The City appealed the circuit court’s decision, and it raises the following issues for

appellate review:

I. Did [the McMillins] present evidence sufficient to support a verdict
awarding $9,319.23 for repair work?

II. Even if there had been proof of repairs for defective construction
occurring after April 11, 2006, would Tupelo be immune from liability
under [Mississippi] Code [Section] 11-46-9(1)(h)?

III. Was there any proof that Vail violated [Mississippi] Code [Section] 73-
59-17?

IV. Did Vail’s actions or inaction after [the McMillins’] purchase of the
residence breach a duty owed [the McMillins] from which [the City] is
not immune and that proximately caused them to incur attorney[s’] fees
in litigation with Deas?

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 V. Even if an action or inaction by Vail after [the McMillins’] purchase of
the residence breached a duty that proximately caused [the McMillins]
to sue Deas, did the trial court err in awarding attorney[s’] fees totaling
$105,894.39?

VI. Notwithstanding all of the foregoing, is this action barred by applicable
statutes of limitation?

¶13. Also aggrieved, the McMillins filed a cross-appeal on the issue of attorneys’ fees, and

they present the following issues for appellate review:

I. [The McMillins] are entitled to attorney[s’] fees in the current case due
to the gross negligence of [the City/Vail] found in the punitive damages
statute.

II. [The McMillins] are entitled to attorney[s’] fees in the current case due
to [the City’s/Vail’s] denial of liability in [the McMillins’] request for
admissions.

III. [The McMillins] are entitled to attorney[s’] fees in the current case as
these fees are the natural consequence of the actions and omissions of
[the City/Vail] and they should be assessed with them under Veasley
and Essinger case law.

IV. [The McMillins] are entitled to post[-]judgment interest at a rate to be
set by the [trial] court.

For the purposes of clarity and brevity, we will combine and rearrange issues where

necessary.

STANDARD OF REVIEW

¶14. “Immunity is a question of law[,]” which receives de novo review, and is the basis for

our review of the dispositive issue in today’s case. However, the “findings of fact by a

circuit court judge, sitting without a jury, will not be reversed on appeal where they are

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supported by substantial, credible, and reasonable evidence.” City of Laurel v. Williams, 21

So. 3d 1170, 1174 (¶15) (citations omitted).

DISCUSSION

I. The City’s Appeal

¶15. The City contends that it is immune from liability pursuant to Mississippi Code

Section 11-46-9(1)(h). Additionally, the City argues that the McMillins presented no proof

that Vail violated Mississippi Code Section 73-59-17. We agree.

¶16. The circuit court cited Mississippi Code Section 73-59-17 (Rev. 2012) to provide the

“statutory duty” the City has to “ensure that all builders of residential property within the

[c]ity limits be licensed.” Section 73-59-17 (emphasis added) provides:

The building official, or other authority charged with the duty of issuing
building or similar permits, of any municipality or county, shall refuse to issue
a permit for any undertaking which would classify the applicant as a
residential builder or remodeler under this chapter unless the applicant has
furnished evidence that he is either licensed as required by this chapter or
exempt from the requirements of this chapter. The building official, or other
authority charged with the duty of issuing building or similar permits, shall
also report to the board the name and address of any person who, in his
opinion, has violated this chapter by accepting, or contracting to accomplish,
work which would classify the person as a residential builder or remodeler
under this chapter without a license or acknowledgement [sic].

The circuit court found that the City’s action or inaction, through Vail, was arbitrary and

capricious when it allowed Ewing, who Vail knew was not licensed and did not have a valid

permit, to continue work on the residence.

¶17. We cannot determine how Section 73-59-17 creates a duty which the City violated.

The statute requires that the person responsible for issuing permits “shall refuse to issue a

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permit” unless the applicant is licensed. When the permit for the residence was first issued,

the applicant Guyton was licensed; therefore, the City properly issued the license under the

statute. We cannot find authority, nor has any been provided to us, otherwise explaining

what should happen when a valid permit already has been issued, but the licensed applicant

pulls his license for the permit. We do not read the statute to cover such a situation.

Therefore, we cannot discern a statutory basis to support any duty to the McMillins that Vail

and the City did not satisfy.

¶18. Furthermore, we hold that the circuit court erred in finding that City was not immune

because it acted arbitrarily and capriciously. “Immunity is a question of law[,]” which

receives de novo review. City of Laurel v. Williams, 21 So. 3d 1170, 1174 (¶15) (citations

omitted). At issue in the present case is Section 11-46-9(1)(h), which provides:

A governmental entity and its employees acting within the course and scope
of their employment or duties shall not be liable for any claim:

Arising out of the issuance, denial, suspense or revocation of, or the
failure or refusal to issue, deny, suspend or revoke any . . . permit . . .
where the governmental entity or its employee is authorized by law to
determine whether or not such authorization should be issued, denied,
suspended or revoked unless such issuance, denial, suspension or
revocation, or failure or refusal thereof, is of a malicious or arbitrary
and capricious nature[.]

¶19. According to the circuit court, the City was entitled to “qualified sovereign immunity

by Section 11-46-9(1)(h).” However, the City’s actions of “allowing Ewing to continue to

perform work on the [residence] when they knew that he was not licensed and without a valid

[p]ermit rises to the level of arbitrary and capricious.” Further, Vail did not notify the Board

of Contractors to report Ewing. The circuit court also found that Vail had admitted that

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Guyton had withdrawn the only valid license, and that Deas never had agreed to take

responsibility for the residence’s construction. There is no more explanation of how the

City’s actions were arbitrary and capricious.

¶20. The Court has addressed the terms “arbitrary and capricious” in connection with

Section 11-46-9(1)(h) in Lowe v. Lowndes County Building Inspection Department, 760

So. 2d 711, 714 (¶12) (Miss. 2000) (quoting Mississippi Department of Environmental

Quality v. Weems, 653 So. 2d 266 (Miss. 1995)):

An administrative act is arbitrary and capricious if the agency “entirely failed
to consider an important aspect of the problem, or offered an explanation for
its decision that runs counter to the evidence before the agency or is so
implausible that it could not be ascribed to a difference in view or the product
of any agency expertise.” In addition, the failure of an agency to abide by its
rules is per se arbitrary and capricious as is the failure of an administrative
body to conform to prior procedure without adequate explanation for the
change.

As the circuit court pointed out, Vail’s inclusion of Deas’s name on the replacement blue

card was a mistake. The chancery court also recognized that the City’s inclusion of Deas was

the result of a clerical mistake. Vail’s inclusion of Deas’s name was a genuine mistake that

does not rise to the level of arbitrary and capricious behavior. As several witnesses testified,

the City does not have a policy or procedure for the situation of having a licensed contractor

release his permits and withdraw his license. Therefore, Vail was faced with an unusual

situation for which she had no precedent to follow. We now know that Vail should have read

the letter from Guyton and the letter from Deas and Ewing more closely to realize the letters

did not cover the same properties, but we cannot see how making such a mistake is

considered arbitrary and capricious.

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¶21. The circuit court erred also in finding that the City knew Ewing was not licensed and

did not have a valid permit while construction was ongoing, when the evidence is that at no

point until well after construction was completed did it come to light that there was not a

licensed contractor on the residence. In Lowe, the Court reversed the circuit court’s finding

of immunity under Section 11-46-9(1)(h) and subsequent dismissal based on the fact that the

plaintiff’s allegations, which must be taken as true in considering a motion to dismiss, that

the Lowndes County Building Inspection Department knew Donna Kay Lynn was not a

licensed contractor but still issued a permit. Lowe, 760 So. 2d at 714 (¶¶8-17). The present

case is distinguishable because the undisputed proof is that Vail, though aware that Ewing

was unlicensed, did not know that the permit lacked a licensed contractor at any time until

after the construction was completed, since she thought Deas took over responsibility for the

permit. Further, Vail did not report Ewing to the Board of Contractors because, in her mind,

Ewing’s construction projects were being overseen by a licensed contractor, and then Ewing

became licensed, so there was no need to report Ewing. The bases for the circuit court’s

finding that the City was not immune because it acted arbitrarily and capriciously are not

based solidly in the evidence presented at trial.

¶22. Therefore, we hold that the City was immune from liability, and the circuit court erred

in finding otherwise.

II. Statute of Limitations

¶23. The City also claims that the MTCA’s one-year statute of limitations bars the

McMillins’ complaint. We agree. The McMillins filed their initial Notice of Claim in

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August 2007; they did not file suit. Their second Notice of Claim was filed on March 17,

2011, with suit then filed on October 13, 2011. Mississippi Code Section 11-46-11(3)(a)

provides, in pertinent part, that:

All actions brought under this chapter shall be commenced within one (1) year
next after the date of the tortious, wrongful or otherwise actionable conduct on
which the liability phase of the action is based, and not after, except that filing
a notice of claim within the required one-year period will toll the statute of
limitations for ninety-five (95) days from the date the chief executive officer
of the state entity or the chief executive officer or other statutorily designated
official of a political subdivision receives the notice of claim.

¶24. When presented with the argument at trial, the circuit court found that the statute of

limitations had run, that the City did not waive the statute of limitations defense, but that the

City was equitably estopped from raising the statute of limitations defense “due to the actions

of the City employees, specifically Ms. Vail[,]” that caused the McMillins such difficulty in

ascertaining who was the residence’s contractor. “Concerning the application of equitable

estoppel, ‘[the] issue becomes a question for the trier of fact when there is evidence to

support a finding that the plaintiff reasonably relied on the actions of the defendant to his

detriment.’” Trosclair v. Miss. Dep’t of Transp., 757 So. 2d 178, 181 (¶13) (Miss. 2000)

(quoting Miss. Dep’t of Pub. Safety v. Stringer, 748 So. 2d 662, 668 (¶29) (Miss. 1999)

(Banks, J., dissenting)).

¶25. “With the replacement of strict compliance with that of substantial compliance, the

Court opened the door for the application of equitable estoppel in cases arising under the

[MTCA,]” and depending on the facts of the case, equitable estoppel may be applied to the

notice of claim provision and the MTCA’s statute of limitations provision. Trosclair, 757

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So. 2d at 181 (¶10). “Equitable estoppel is generally defined as ‘the principle by which a

party is precluded from denying any material fact, induced by his words or conduct upon

which a person relied, whereby the person changed his position in such a way that injury

would be suffered if such denial or contrary assertion was allowed.’” Kimball Glassco

Residential Ctr., Inc. v. Shanks, 64 So. 3d 941, 947 (¶19) (Miss. 2011) (quoting Simmons

Housing, Inc. v. Shelton, 36 So. 3d 1283, 1287 (¶15) (Miss. 2010)). Equitable estoppel is

an extraordinary remedy and should be applied with caution. Id.

¶26. For the doctrine of equitable estoppel to apply to a statute of limitations, “[i]nequitable

or fraudulent conduct must be established[.]” Shanks, 64 So. 3d at 947 (¶19) (quoting

Trosclair, 757 So. 2d at 181 (¶11)). In Townes v. Rusty Ellis Builder, Inc., 98 So. 3d 1046,

1055 (¶26) (Miss. 2012), the Court explained that it would not “prevent a time bar where

good-faith settlement negotiations are the only evidence submitted by the plaintiff. Rather,

the plaintiff must present proof of inequitable conduct by the defendants.” Further, “the

plaintiff must show by a preponderance of the evidence that ‘(1) it was induced by the

conduct of the defendant not to file its complaint sooner, (2) resulting in [the plaintiff’s]

claim being barred by the applicable limitations, and (3) [the defendant] knew or had reason

to know that such consequences would follow.” Id. (citations omitted). Vail’s listing of

Deas as the residence’s licensed contractor and her subsequent actions, including the memos

placed in the permit file, were the result of a mistaken belief. There is no proof in the record,

much less proof by a preponderance of the evidence, that the City or Vail “knew or had

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reason to know” that its actions or inactions would result in the McMillins’ claims or suits

being barred by a statute of limitations.

¶27. We hold that the circuit court correctly found that the City did not waive its statute of

limitations defense and that the statute of limitations had, in fact, run. Even though there is

testimony that the McMillins delayed filing their suit based on Vail’s 2007 memo, there is

no dispute that the McMillins knew confusion surrounded the permit, as evidenced by their

first Notice of Claim, which was timely. The McMillins elected not to proceed on that

Notice of Claim, and that was their decision. Moreover, the circuit court erred in applying

the doctrine of equitable estoppel. Thus, the McMillins’ claims were barred by the statute of

limitations.

III. Damages Awarded to the McMillins Based on Deas Lawsuit

¶28. Because the City was immune from liability and the statute of limitations barred the

McMillins’ case, the circuit court erred in awarding the McMillins more than $105,000 in

damages for the legal fees associated with the McMillins’ suit against Deas based on their

“reasonable reliance upon the contents of the Permit File and communication with the City

of Tupelo resulting in the pursuit of Deas.” We reverse the circuit court’s award of all

damages in the present case, including the attorneys’ fees.

IV. The McMillins’ Cross-Appeal

¶29. The McMillins’ cross-appeal centers on their request for attorneys’ fees in the present

case, which the circuit court denied as having “no authority in statute or case law[.]” Based

on the application of the statue of limitations and the City’s immunity from liability, it

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follows that analysis of the McMillins’ cross-appeal is unnecessary. The judgment of the

circuit court on the McMillins’ cross-appeal is affirmed.

CONCLUSION

¶30. The present case involves a clerical mistake and numerous subsequent

miscommunications that snowballed into what is now before us. Ultimately, the McMillins’

claims were barred by the statute of limitations and the City is immune from liability.

Therefore, the circuit court erred in finding that the City was not immune and allowing the

case to proceed. The resulting damages awarded to the McMillins also were in error based

on the statute of limitations and the City’s immunity. Finally, the circuit court correctly

found that the McMillins’ claim for legal fees in the present case is without merit for the

same reasons as stated above.

¶31. ON DIRECT APPEAL: REVERSED AND RENDERED. ON CROSS-
APPEAL: AFFIRMED.

WALLER, C.J., DICKINSON, P.J., AND BEAM, J., CONCUR. RANDOLPH,
P.J., LAMAR AND MAXWELL, JJ., CONCUR IN PART AND IN RESULT
WITHOUT SEPARATE WRITTEN OPINION. KITCHENS, J., DISSENTS WITH
SEPARATE WRITTEN OPINION JOINED BY KING, J.

KITCHENS, JUSTICE, DISSENTING:

¶32. Because I believe this Court’s deferential standard of review requires us to affirm the

the circuit court’s findings on liability, I respectfully dissent. I would affirm the circuit

court’s ruling that the City was equitably estopped from raising the statute of limitations

defense due to Vail’s intentionally misleading actions. I also would affirm the circuit court’s

finding that the City was not immune from liability under the Mississippi Tort Claims Act

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for the McMillins’ claims for repairs to their home (the Residence) and for the legal fees

incurred in their lawsuit against Lawrence Deas. However, because the circuit court awarded

the McMillins legal fees beyond what they incurred in their lawsuit against Deas, I would

reverse that damages award and remand for the circuit court to award damages in an amount

limited to the legal fees the McMillins incurred in their lawsuit against Deas.

A. Facts

¶33. Since the facts of this case are complicated, I provide the following timeline:

July 5, 2005 A building permit for the Residence was issued to Joey Guyton with
Precision Properties. Guyton was a licensed contractor, but his business
partner, Jamie Ewing, was not licensed. Ewing and Guyton worked on
construction of the Residence.

July 5, 2005 A “blue card” was issued for the Residence listing Guyton as the
licensed contractor. Trial testimony established that a blue card is a
document that contains information about a building project and is kept
at the job site for reference by building inspectors.

Apr. 4, 2006 Guyton gave a handwritten note to the City’s permit office manager,
Marilyn Vail, stating, “I am withdrawing all permits attached to my
contractor’s license . . . . All permits are attached to this letter and
effective April 4, 2006 at 12:00 p.m.” Vail requested that Guyton
provide the City a formal notice of his withdrawal of the permits.

Apr. 5, 2006 Lawrence Deas3 and Jamie Ewing sent a letter to Vail stating,
“Lawrence Deas has been hired by Harvester’s Square Developers,
LLC, to temporarily oversee construction of all residencies under
construction until such time as another licensed contractor is found to
take over said jobs.” Both Deas and Ewing signed this letter. This letter
never was placed in the permit file for the Residence.

Apr. 11, 2006 Guyton provided Vail formal notice of the withdrawal of his
contractor’s license from the building permits. His letter stated “I am

3
Trial testimony established that Deas is an attorney and a licensed general
contractor.

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 withdrawing the use of my general contractor’s permit for the building
permits listed below. I release the listed permits for the Harvester’s
Square developer to use another licensed general contractor to finish
the projects.” The letter listed eleven addresses, including nine
addresses in the Harvester’s Square development, and two other
addresses, including that of the Residence.

Apr. 11, 2006 Vail issued a replacement blue card listing Deas as the licensed
contractor associated with the building permit for the Residence. Vail
testified that she mistakenly had interpreted the letters of April 4, 2006,
April 5, 2006, and April 11, 2006, to mean that, when Guyton released
the building permit for the Residence, Deas was going to take over the
permit. In reality, the April 5, 2006, letter from Deas and Ewing
indicated that Deas temporarily was taking over the Harvester’s Square
permits, not the permit for the Residence, which was not part of the
Harvester’s Square development.

Aug. 18, 2006 The Residence failed the final inspection, due to several building code
violations and other problems.

Aug. 24, 2006 The McMillins purchased the Residence from Ewing.

Aug. 26, 2006 The McMillins discovered the replacement blue card and the final
inspection report in a kitchen drawer at the Residence. They requested
that Ewing remediate the problems with the Residence, but Ewing was
unresponsive despite the McMillins’ repeated requests that he correct
the problems.

Oct. 9, 2006 A home inspector inspected the Residence and identified numerous
items in need of maintenance and repair, including several building
code violations.

Oct. 2006 The McMillins contacted the Mississippi Board of Contractors and
were notified that Ewing was not licensed.

Oct. 21, 2006 The McMillins sent a letter to Ewing, Deas, and Guyton, and copied the
City. The McMillins stated that they had notified the City that Ewing
was unlicensed. They also requested a return of the purchase price of
the Residence due to the numerous problems that Ewing had failed to
correct.

18
Oct. 26, 2006 In a letter to the McMillins, Guyton claimed that his business
partnership with Ewing had dissolved in April 2006, releasing Guyton
from liability for the Residence.

Oct. 30, 2006 In a telephone conversation with Terry McMillin, Deas denied any
involvement with the Residence.

Oct. 30, 2006 Deas sent a letter to the McMillins stating, “I am not and have never
been involved in the construction of your home. The inclusion of my
name on any records in the Building Department of the City of Tupelo
was the result of a clerical error. It is my understanding you have
already been made aware of this fact, but Marilyn Vail or another
employee of the Building Department can provide confirmation.” Deas
sent a copy of this letter to the City of Tupelo, and it was placed in the
permit file for the Residence.

Nov. 20, 2016 Terry McMillin went to the permit office and talked to Vail. He
testified that, when he asked Vail whether Deas had been involved in
the construction of the Residence, Vail did not answer and told him to
look at the permit file. Vail denied that Terry McMillin had asked her
about Deas. Terry McMillin testified that, when he went upstairs to see
the permit file, the clerk refused to let him see it.

Dec. 7, 2006 The McMillins sued Ewing for breach of contract and fraud in the
Chancery Court of Lee County.

Jan. 10, 2007 Vail put a memo in the permit file that provided the following
narrative: “Approximately one year ago, Joey Guyton and Jamie Ewing
dissolved their partnership. Joey held the license for their business.
Under state law, Jamie had 6 months to obtain a license before he
would be in violation of the law for not having a contractor’s license.4
In the mean time, Jamie’s attorney, Lawrence Dees [sic], agreed to take
responsibility for his projects until Jamie could obtain his license. Jamie
did obtain his state and local license in September 2006. I transferred
all the previous permits to his responsibility.” Vail testified that she
placed a copy of this memo in the permit files of the Residence and all
the other properties listed in Guyton’s April 11, 2006, letter, and that
the purpose of the memo was to provide information as to what had
occurred.

4
At the trial, it was established that Vail’s belief that Ewing had a six-month grace
period in which to become licensed was erroneous.

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Aug. 23, 2007 The McMillins served a notice of claim on the City based on Vail’s
negligence in allowing construction to continue under Ewing, an
unlicensed contractor.

Dec. 2007 The McMillins issued a subpoena for the City’s records, and for the
first time they received the permit file. The April 5, 2006, letter was not
in any of the subpoenaed records. Terry testified that they decided not
to initiate litigation against the City because the permit file, including
Vail’s January 2007 memo, showed that Deas had succeeded Guyton
as the licensed contractor for the Residence.

Dec. 2008 The McMillins joined Deas in their chancery court suit. Terry McMillin
testified that they joined Deas in reliance on Vail’s January 2007
memo.

Jan. 6, 2009 Ewing submitted an affidavit saying Deas had not been involved in
constructing the Residence.

Mar. 18, 2010 Deas asked to be voluntarily dismissed from the McMillins’ suit and
attached an affidavit from Vail. Vail’s affidavit explained that she
erroneously had listed Deas as the licensed contractor on the building
permit for the Residence. Vail stated that, if she had realized that the
Residence had no licensed contractor when Guyton withdrew,
“construction would have stopped until a licensed contractor was in
place.” Deas also attached his April 5, 2006, letter in which he assumed
responsibility for Guyton’s Harvester’s Square permits. The McMillins,
unsure what was true, elected not to dismiss Deas from the suit.

Nov. 2011 The Chancery Court of Lee County granted summary judgment to Deas
on the ground that his listing as the licensed contractor was the result
of a clerical mistake.

Mar. 17, 2011 The McMillins submitted their second notice of claim against the City.

Oct. 13, 2011 The McMillins filed the instant complaint against the City in the Circuit
Court of Lee County.

B. Standard of Review

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¶34. The circuit court judge is the finder of fact in a lawsuit brought under the Mississippi

Tort Claims Act. Miss. Code Ann. § 11-46-13(1) (Rev. 2012). This Court affords a trial

judge sitting without a jury the same deference as a chancellor. City of Jackson v. Sandifer,

107 So. 3d 978, 983 (Miss. 2013). If the circuit court’s fact findings are supported by

substantial, credible, and reasonable evidence, then this Court must affirm. City of Jackson

v. Lewis, 153 So. 3d 689, 693 (Miss. 2014). We will not disturb the circuit court’s

conclusions unless they were manifestly wrong, clearly erroneous, or resulted from the

application of the wrong legal standard. Id. The circuit court has the sole authority to

determine the credibility of witnesses. City of Jackson v. Lipsey, 834 So. 2d 687, 691 (Miss.

2003). Additionally, the circuit court, as the fact finder, is entrusted with resolving conflicts

in the evidence. Borne v. Estate of Carraway, 118 So. 3d 571, 581 (Miss. 2013).

C. Analysis

1. Equitable estoppel

¶35. Under the Mississippi Tort Claims Act, a claimant must commence an action “within

one (1) year after the date of the tortious, wrongful or otherwise actionable conduct on which

the liability phase of the action is based.” Miss. Code Ann. § 11-46-11(3)(a) (Rev. 2012).

Statutory tolling periods extend the time the plaintiff has to commence an action. Id.

¶36. The alleged actionable conduct that formed the basis of the McMillins’ circuit court

lawsuit against the City occurred in 2006 and 2007. The McMillins filed their first notice of

claim against the City in August 2007. Terry McMillin testified that the plaintiffs received

the permit file for the Residence in December 2007. The permit file did not contain Deas’s

21
letter of April 5, 2006, but it did contain Vail’s January 2007 memo stating that Deas had

succeeded Guyton as the licensed contractor for the Residence. Terry McMillin testified that,

because the permit file showed that Deas had taken over as the licensed contractor for the

Residence, no misconduct by the City was apparent, so the McMillins decided not to sue the

City. Terry McMillin testified that, in March 2010, during the litigation against Deas, he

received Vail’s affidavit stating that she mistakenly had listed Deas as the licensed contractor

for the Residence. At that time, Terry McMillin also received Deas’s letter dated April 5,

2006. Based on this new information, on March 17, 2011, the McMillins filed a second

notice of claim against the City, and they filed suit against the City on October 13, 2011.

¶37. The circuit court found that the McMillins’ lawsuit against the City was time barred,

but that the City was equitably estopped from raising the time bar as a defense due to

intentionally misleading conduct by Vail. The circuit court made two fact findings regarding

Vail’s conduct that are central to this case. First, the circuit court found that Vail’s

substitution of Deas as the licensed contractor after Guyton’s withdrawal was a clerical

mistake caused by Vail’s misreading the letters from Guyton, Ewing, and Deas. Second, the

circuit court found that Vail had placed the January 2007 memo in the permit file in an effort

to “cover up her purportedly ‘honest mistake.’”

¶38. To prevail on a claim of equitable estoppel, a plaintiff must prove by a preponderance

of the evidence that “(1) it was induced by the conduct of [the defendant] not to file its

complaint sooner, (2) resulting in its claim being barred by the [applicable] limitations, and

(3) [the defendant] knew or had reason to know that such consequences would follow.”

22
Townes v. Rusty Ellis Builder, Inc., 98 So. 3d 1046, 1055 (Miss. 2012). Also, the

defendant’s conduct must have been inequitable. Miss. Dep’t of Public Safety v. Stringer,

748 So. 2d 662, 665 (Miss. 1999).

¶39. I would hold that the circuit court’s finding that the elements of equitable estoppel

were met was supported by substantial evidence and was not manifestly wrong or clearly

erroneous. The circuit court’s finding that the permit file showed that Deas had succeeded

Guyton as the licensed contractor for the Residence was substantially supported by contents

of the permit file. Although the permit file contained an October 30, 2006, letter from Deas

denying any involvement with the Residence, all representations by the City contained in the

permit file, including Vail’s January 2007 memo, were to the effect that Deas had succeeded

Guyton as the licensed contractor. The circuit court was entitled to rely on Terry McMillin’s

testimony that the permit file, which showed that a licensed contractor was in place at all

times, had induced the McMillins not to sue the City. Terry McMillin’s testimony in this

regard was corroborated by the fact that the McMillins did not sue the City until they had

received Vail’s affidavit, in which Vail admitted that she mistakenly had listed Deas as the

contractor. Further, the circuit court was entitled to weigh Vail’s credibility and to find that

her placement of the January 2007 memo in the file was not innocent, but rather was an

intentional effort to conceal her mistake.5 And it is elementary that Vail, as a public official,

reasonably should have known that placing misinformation in the permit file, a public record,

5
The majority simply ignores the circuit court’s finding that Vail engaged in
intentionally misleading conduct, holding that Vail only made a clerical mistake that cannot,
as a matter of law, form a basis for equitable estoppel. In so doing, the majority invades the
fact finding function of the circuit court.

23
could cause litigation to be delayed or otherwise affected. Certainly, placing intentionally

misleading information identifying the responsible licensed contractor in a permit file can

be considered inequitable conduct. Applying this Court’s deferential standard of review, I

would affirm the circuit court’s finding that the City was equitably estopped from raising the

statute of limitations as a defense to the McMillins’ lawsuit.

2. Liability under the Mississippi Tort Claims Act

¶40. The City claimed immunity under Mississippi Code Section 11-46-9(1)(h), which

provides:

(1) A governmental entity and its employees acting within the course and
scope of their employment or duties shall not be liable for any claim:

...

(h) Arising out of the issuance, denial, suspension or revocation of, or the
failure or refusal to issue, deny, suspend or revoke any privilege, ticket, pass,
permit, license, certificate, approval, order or similar authorization where the
governmental entity or its employee is authorized by law to determine whether
or not such authorization should be issued, denied, suspended or revoked
unless such issuance, denial, suspension or revocation, or failure or refusal
thereof, is of a malicious or arbitrary and capricious nature;

Miss. Code Ann. § 11-46-9(1)(h) (Rev. 2012).

¶41. The circuit court found that Vail had acted arbitrarily and capriciously because her

mistake in listing Deas as the contractor for the Residence had violated her duty as the permit

clerk to ensure that builders of residential property in the City are licensed. The circuit court

found that the City, acting through the permit office, had duties to:

(1) ensure that a licensed contract[or] was working on the Home for the
entirety of the construction; (2) on the withdrawal of the Guyton license, stop
construction; (3) prevent construction from resuming until such time as a

24
 licensed contractor agreed to be responsible for the construction; (4) properly
process the Guyton withdrawal; (5) stop construction when the Permit expired;
and (6) refrain from placing in the file misleading untruthful papers.

¶42. The majority finds that the circuit court erred in finding that the City had these duties.

In so finding, the majority relies on Mississippi Code Section 73-59-17, which provides:

The building official, or other authority charged with the duty of issuing
building or similar permits, of any municipality or county, shall refuse to issue
a permit for any undertaking which would classify the applicant as a residential
builder or remodeler under this chapter unless the applicant has furnished
evidence that he is either licensed as required by this chapter or exempt from
the requirements of this chapter. The building official, or other authority
charged with the duty of issuing building or similar permits, shall also report
to the board the name and address of any person who, in his opinion, has
violated this chapter by accepting, or contracting to accomplish, work which
would classify the person as a residential builder or remodeler under this
chapter without a license or acknowledgment.

Miss. Code Ann. § 73-59-17 (Rev. 2012). The majority finds that, because Guyton was

licensed when the City issued the permit, the City violated no duty under this statute. Even

assuming that Section 73-59-17 imposed no duties on the City beyond refraining from issuing

a building permit to an unlicensed contractor, the record in this case shows that a city

ordinance imposed additional duties upon the permit office.

¶43. In her affidavit, Vail testified about Guyton’s presentation of the handwritten note on

April 4, 2006, stating that he was withdrawing all permits attached to his contractor’s license.

She stated:

I told Mr. Guyton that I needed the statement notarized and that he needed to
state he released the permits so that construction could continue under the
same permits once a licensed contractor took over. Otherwise, construction on
the houses under construction pursuant to the various building permits in his
name would have to stop and could not begin again until a new building
permit was issued. This is a requirement of Tupelo’s Development Code.

25
(Emphasis added.) Vail rendered further testimony about the code requirement at the trial.

She acknowledged that the city ordinance requiring that the City stop construction upon the

withdrawal of the licensed contractor associated with the permit was contained in the Tupelo

Development Code that had been in place until November 1, 2013. She explained that,

according to this city ordinance, a licensed contractor who quits must release the permit so

construction can continue under a new licensed contractor, or construction must stop and

cannot begin anew until a new permit is issued. In Vail’s affidavit, she stated that, if she had

realized that the Residence was without a licensed contractor during its construction,

“construction would have been stopped until a licensed contractor was in place.” David

Wammack, the City’s chief building inspector, also testified about the ordinance, stating that

“one of the requirements of the City of Tupelo Code of Ordinance is that there be a licensed

contractor on the project . . . .”

¶44. The city ordinance provided a basis for the circuit court’s finding that the City had a

duty to ensure that a licensed contractor was working on the Residence and, when Guyton

withdrew, to stop construction unless Guyton released the permit to another licensed

contractor. The circuit court found that Vail had breached that duty by listing Deas

erroneously as the successor contractor on the Residence, and that this action was arbitrary

and capricious. The majority finds that Vail did not act arbitrarily and capriciously because

her listing of Deas was a clerical mistake that cannot rise to the level of arbitrary and

capricious action as a matter of law. I disagree. As the majority recognizes, “the failure of

an agency to abide by its rules is per se arbitrary and capricious as is the failure of an

26
administrative body to conform to prior procedure without adequate explanation for the

change.” Lowe v. Lowndes Cty. Bldg. Inspection Dep’t, 760 So. 2d 711, 714 (Miss. 2000)

(quoting Miss. Dep’t of Envtl. Quality v. Weems, 653 So. 2d 266 (Miss. 1995)). The circuit

court held that Vail’s actions were arbitrary and capricious because, in listing Deas as the

contractor for the Residence, she failed to follow the applicable rules. Because the evidence

supported the finding that Vail failed to follow a city ordinance, I would affirm the circuit

court’s finding that Vail’s error in listing Deas as the licensed contractor for the Residence

was arbitrary and capricious.

¶45. I also would affirm the circuit court’s finding that Vail acted arbitrarily and

capriciously by placing the January 2007 memo in the permit file. Although Vail testified

that, when she authored the memo, she legitimately believed that Deas had succeeded Guyton

as the licensed contractor for the Residence, the circuit court was entitled weigh the evidence

and make a determination about Vail’s credibility. Lipsey, 834 So. 2d at 691. The circuit

court’s finding that Vail intentionally had placed false information in the permit file was

supported by substantial evidence. The permit file contained Deas’s October 26, 2006, letter

denying any involvement with the Residence’s construction and stating that the inclusion of

his name in the permit file was the result of a clerical error by the City. Terry McMillin

testified that, on November 20, 2006, he went to the permit office and asked Vail whether

Deas had been involved in the construction, and she responded by directing him to the permit

file, which he was unable to obtain. And missing from the permit file was the April 5, 2006,

letter that was the key to understanding that Deas’s listing as the contractor was erroneous.

27
This evidence strongly supported the circuit court’s credibility determination that Vail’s

intent when she authored the January 2007 memo was to make it appear that a licensed

contractor had been assigned to the construction of the Residence at all times.

¶46. I next address the City’s argument that Vail’s actions were subject to discretionary-

function immunity under Mississippi Code Section 11-46-9(1)(d), which states:

(1) A governmental entity and its employees acting within the course and
scope of their employment or duties shall not be liable for any claim:

...

(d) Based upon the exercise or performance or the failure to exercise or
perform a discretionary function or duty on the part of a governmental entity
or employee thereof, whether or not the discretion be abused; . . . .

Miss. Code Ann. § 11-46-9(1)(d) (Rev. 2012). A ministerial function is one that is

“positively imposed by law.” Little v. Miss. Dep’t of Transp., 129 So. 3d 132, 136 (Miss.

2013) (citing Pratt v. Gulfport–Biloxi Reg’l Airport Auth., 97 So. 3d 68, 72 (Miss. 2012)).

The City had a duty, positively imposed by its ordinance, to ensure that, if a licensed

contractor withdrew, another was substituted or the construction halted until a new permit

was issued. The City had no discretion to disobey this mandate. The City’s duty under the

ordinance was ministerial, not discretionary, and the City was not entitled to discretionary-

function immunity.

¶47. The circuit court also held that the City failed to exercise ordinary care, a finding that

implicates immunity under Mississippi Code Section 11-46-9(1)(b). That section provides:

(1) A governmental entity and its employees acting within the course and
scope of their employment or duties shall not be liable for any claim:

28
 ...

(b) Arising out of any act or omission of an employee of a governmental entity
exercising ordinary care in reliance upon, or in the execution or performance
of, or in the failure to execute or perform, a statute, ordinance or regulation,
whether or not the statute, ordinance or regulation be valid;

Miss. Code Ann. § 11-46-9(1)(b) (Rev. 2012). Under this section, a governmental entity is

“protected from liability while performing or failing to perform a statutory duty so long as

ordinary care is exercised.” Lang v. Bay St. Louis/Waveland Sch. Dist., 764 So. 2d 1234,

1240 (Miss.1999). “The question of whether ordinary care was, in fact, exercised is for the

trial court, sitting without a jury, to decide.” Stewart ex rel. Womack v. City of Jackson, 804

So. 2d 1041, 1048 (Miss. 2002) (quoting Lang, 764 So. 2d at 1240).“The standard of care

applicable in cases of alleged negligent conduct is whether the party charged with negligence

acted as a reasonable and prudent person would have under the same or similar

circumstances.” Donald v. Amoco Prod. Co., 735 So. 2d 161, 175 (Miss. 1999).

¶48. The circuit court found that the City had not acted with ordinary care in the

performance of its duties imposed by law. The circuit court stated:

That the office placed Deas’s name as the contractor of record was, at
first, a mistake. However, when the office was put on notice by Deas that such
a mistake had been made, ordinary care required the Defendant to notify the
people concerned and not subsequently file a paper in plain contradiction of
the truth. The Defendant was also put on notice by letters from Dr. McMillin,
Deas, and calls from [the McMillins’ realtor] Sue Gardner. Even a visit by Dr.
McMillin to their office about why Deas’s name was associated with this
Home did not provide any answers to the Plaintiffs. Instead, Vail magnified
the error by placing the January 2007 Memo in the Plaintiffs[’] Permit File
stating Deas was “taking responsibility” for the Home. Even when asked by
Dr. McMillin directly, Vail refused to answer his questions, compounding the
error. Vail told Dr. McMillin to go look at his Permit File but when he asked
to see his file, another City employee refused to let him see his own file.

29
 The paperwork in the Home’s Permit File certainly shows that questions
were being asked by the Plaintiffs, that the Plaintiffs had hired an attorney and
were contemplating filing suit, and that Sue Gardner and the Plaintiffs were
telling [Vail that] Ewing was not licensed with the Mississippi Board of
Contractors. Defendants still continued to ignore the problem and did not use
ordinary care to address the situation and relieve the confusion. Vail did the
opposite by placing the January 2007 memo in the file. Ordinary care, at the
very least, would require Vail to call, mail a letter or email the Plaintiffs about
issues they were having with their home. This was, at the very least, negligent
misrepresentation.

These fact findings were fully supported by the record. I would find that the circuit court did

not manifestly err in finding that the City failed to exercise ordinary care in the performance

of the duties imposed by the ordinance.

¶49. The circuit court held that, but for Vail’s failure to process Guyton’s withdrawal from

the construction of the Residence properly, construction would have stopped in April 2006.

And, the circuit court held that, if Vail had properly filed the April 5, 2006, letter and

refrained from placing the January 2007 memo in the permit file, acts that falsely implicated

Deas as the licensed contractor, then the McMillins would not have incurred legal fees in

their litigation against Deas. I would find that the circuit court committed no legal error in

making these proximate-cause findings, which were supported by substantial evidence.

¶50. The circuit court awarded the McMillins $9,319.23 as damages for the cost of

repairing the shoddy work that was performed on the Residence after Guyton’s departure on

April 11, 2006. The circuit court also found that the McMillins were entitled to damages in

the amount of the legal fees they had incurred in their suit against Deas. On appeal, the City

complains that the award of $105,894.39 in legal fees was erroneous because it included fees

that the McMillins had incurred in their litigation against Ewing and the two banks. Because

30
the circuit court’s findings do not support the McMillins’ recovery of attorney fees incurred

in their litigation against Ewing and the banks, nor did they claim a right to recover such fees,

I would reverse the award of legal fees and remand for the circuit court to award the

McMillins the amount of legal fees they incurred in litigation against Deas.

¶51. In conclusion, Vail’s clerical mistake in substituting Deas as the licensed contractor

for the Residence on April 11, 2006, was arbitrary and capricious because Vail’s actions

violated a city ordinance. I also would hold that the City is not entitled to discretionary-

function immunity, and I would affirm the chancellor’s fact finding that the City failed to

exercise ordinary care in the performance of duties imposed by a city ordinance. And I

believe the majority errs by reweighing the evidence before the circuit court and finding that

Vail’s misconduct was limited to her clerical mistake. The circuit court found that Vail

intentionally placed a false memorandum in the permit file that caused the McMillins to drop

their action against the City and pursue a chancery court suit against Deas.

¶52. I would affirm the circuit court’s finding that the City was equitably estopped from

raising the statute of limitations defense due to Vail’s misleading conduct. I also would

affirm the circuit court’s finding that the City was not immune from liability under the

Mississippi Tort Claims Act. I would affirm in part and reverse in part and remand for the

circuit court to award the McMillins legal fees in the amount that they incurred in litigation

against Deas.

KING, J., JOINS THIS OPINION.

31