Monty Y. Brown v. George C. McKee

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2016-CA-01366-SCT

MONTY Y. BROWN, INDIVIDUALLY AND AS
“MANAGER ONE” OF BROWNE, LLC;
BROWNSVILLE, LLC; AND BROWNE, LLC

v.

GEORGE C. McKEE, INDIVIDUALLY AND AS
“MANAGER” OF BROWNE, LLC AND AS
“MANAGER” OF BROWNSVILLE STATION,
LLC; AND BROWNSVILLE STATION, LLC

DATE OF JUDGMENT: 08/11/2016
TRIAL JUDGE: HON. LARRY E. ROBERTS
TRIAL COURT ATTORNEYS: CHARLES E. WINFIELD
KEN R. ADCOCK
WILBUR O. COLOM
SCOTT WINSTON COLOM
COURT FROM WHICH APPEALED: OKTIBBEHA COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: KEN R. ADCOCK
WILLIAM CHRISTOPHER IVISON
ATTORNEYS FOR APPELLEES: ASHLYN BROWN MATTHEWS
CHARLES E. WINFIELD
NATURE OF THE CASE: CIVIL - TORTS-OTHER THAN PERSONAL
INJURY & PROPERTY DAMAGE
DISPOSITION: AFFIRMED - 05/10/2018
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

EN BANC.

MAXWELL, JUSTICE, FOR THE COURT:

¶1. The trial court granted summary judgment in favor of George C. McKee and

Brownsville Station, LLC, dismissing Monty Y. Brown’s claims against them. Brown
appeals, arguing the judge wrongly granted summary judgment without first allowing

discovery. We disagree. Had summary judgment been granted on the merits—or lack

thereof—of Brown’s case, we would agree Brown should have been afforded an opportunity

to conduct discovery under Mississippi Rule of Civil Procedure 56(f). But the judge did not

grant summary judgment on the merits. He granted it based on the clear running of the

statute of limitations. And, as the trial judge rightly found, none of Brown’s discovery

requests were aimed at establishing his claims were timely. Instead, they were zeroed in on

proving his untimely claims.

¶2. Therefore, the trial judge did not abuse his discretion by denying Brown’s Rule 56(f)

motion for a continuance. We affirm the judgment dismissing Brown’s untimely claims.

Background Facts and Procedural History

I. Brown’s Divestment of Brownsville Station

¶3. Brown and McKee are former business partners. At one time they each owned a fifty-

percent interest in Brownsville Station, which owned and operated an apartment complex

in Starkville, Mississippi. But beginning in 2003, Brown began selling his interest to

McKee. From July 2003 to January 2006, through a series of four agreements, Brown

transferred all his interest units to McKee in exchange for $150,000 and title to the company

2
tractor.1 As part of the final agreement, both parties agreed to a full and final release of any

and all claims against each other.

II. Brown’s Complaint Against McKee and Brownsville Station

¶4. For six years, Brown had no dealings with McKee or Brownsville Station. Then, in

September 2012, Brown received notice from the Secretary of State that McKee had filed

articles of reinstatement for Brownsville Station and its subsidiary, BrownE, LLC.

According to Brown, the September 2012 notice prompted him to tell his boss about his

former business relationship with McKee. And his boss, who was also an attorney, suggested

McKee had engaged in wrongdoing.

¶5. So on April 13, 2013—almost ten years after the first transfer and seven years after

the final transfer—Brown sued McKee and Brownsville Station in the Circuit Court of

Oktibbeha County. Brown’s complaint alleged that McKee had been Brown’s personal

attorney before they became business partners. Brown is a licensed general contractor, who

had built several apartment buildings before going into business with McKee. Based on

Brown’s experience, McKee proposed that he and Brown enter a joint venture to build and

1
The first transfer occurred in July 2003. Brown executed a stock sale transferring
to McKee three of his one hundred interest units in Brownsville Station in exchange for
$4,500. Brown also granted McKee an option to purchase Brown’s remaining ninety-seven
interest units for $145,000 and title to the company tractor. A month later, in August 2003,
the two entered into a second agreement. Brown sold McKee additional interest units in
exchange for $90,421.80 and title to the tractor, as well as other company property.
Following the second agreement, Brown became a 17% interest holder and McKee an 83%
interest holder of Brownsville Station.
A third agreement was executed in December 2003, in which Brown granted McKee
a conditional option to purchase Brown’s 17% interest for $55,078.20. The pair entered
their fourth and final agreement in January 2006. Brown transferred his remaining interest
in the LLC to McKee for $55,078.20.

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operate an upscale apartment complex in Starkville. Brown would be responsible for the

construction side, and McKee would handle the legal and financial aspects.2

¶6. To carry out this venture, McKee formed a limited liability company, BrownE, which

McKee and Brown owned and controlled fifty/fifty. When the initial phase of the apartment

complex was almost complete, however, the City of Starkville adopted an ordinance

prohibiting development of new, unplatted apartments. According to Brown, this ordinance

“had the effect of stopping further growth” of Brown and McKee’s project. It also was the

impetus for McKee’s plot to get rid of Brown, whose construction services were no longer

needed.

¶7. Brown’s complaint alleged that McKee formed Brownsville Station, which became

the sole owner of BrownE. Though Brown owned a fifty-percent interest in Brownsville

Station, he asserted McKee formed the new LLC “solely to provide a vehicle to take secret

or uniformed [sic] advantage of [Brown] by enabling [McKee], among other things, to

change provisions of Brownsville LLC’s Operating Agreement without [Brown’s] informed

consent.” Brown further alleged that, during the 2003-2006 transactions, McKee hid

important financial information and documentation about Brownsville Station and its true

value, violating the fiduciary duties McKee owed as both Brown’s attorney and fellow LLC

member. Brown claimed McKee’s action led to Brown’s financial detriment. Brown had

trusted McKee to provide all relevant information about the company. Instead, McKee

fraudulently induced Brown to sell his interests below market value.

2
According to Brown’s complaint, McKee had orally promised “to take care of”
Brown as far as legal matters went.

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¶8. Brown’s eight-count complaint3 sought a constructive trust over fifty percent of

Brownsville Station and the disgorgement of any fees and revenue Brown would have

received had he remained a fifty-percent owner.

III. McKee’s and Brownsville Station’s Response

¶9. On July 15, 2013, through separate responses, both defendants denied the allegations

in Brown’s complaint. Both also moved to transfer the complaint to chancery court and to

dismiss the action based on the statute of limitations. On April 24, 2014, while the motions

to transfer and dismiss were still pending, the defendants filed a joint motion for summary

judgment, asserting the same statute-of-limitations argument. They also pointed to the full

and final release from the January 2006 final agreement, as well as the testimony of attorney

Dolton McAlpin.

¶10. At this point, the only discovery not opposed by the defendants was Brown’s

deposition of McAlpin.4 According to McAlpin’s sworn affidavit and deposition, Brown had

sought out and received McAlpin’s independent legal advice about the January 2006 final

agreement, which Brown signed and notarized in McAlpin’s office. In McAlpin’s view,

McKee had done nothing to improperly influence the advice McAlpin gave. Nor did McKee

ask McAlpin to conceal any information. According to McAlpin, there had been no reason

3
Brown’s complaint lists his causes of action as “undue influence,” “breach of
fiduciary agreement by attorney,” “breach of fiduciary duty as manager,” “breach of
fiduciary duty: trust and confidence,” “negligent misrepresentation,” “fraudulent
misrepresentation,” “breach of implied covenant of good faith and fair dealing,” “fraud:
deceit and concealment,” and “accounting: constructive trust.”
4
McKee and Brownsville moved to quash all other discovery requests as intrusive
and needless, given that, as a matter of law, Brown’s claims were untimely.

5
to believe the circumstances surrounding the transfer were anything but fully discoverable

by Brown.

IV. Brown’s Rule 56(f) Motion to Postpone

¶11. Brown opposed the motion for summary judgment with his own motion. He requested

the summary-judgment ruling be postponed under Mississippi Rule of Civil Procedure 56(f).

According to Brown, this rule entitled him to the discovery he had requested through pending

motions to compel before the trial court ruled on the summary-judgment motion.

Specifically, Brown wanted to see documents related to the value of Brownsville Station at

the time Brown transferred his interest and to depose McKee on the circumstances

surrounding the transfer.5

¶12. Brown also argued the statute of limitations had been tolled for three reasons:

(1) because McKee had acted as Brown’s attorney, it was reasonable for Brown not to

discover McKee’s wrongful actions; (2) McKee had fraudulently concealed Brown’s cause

5
Brown claimed he needed the following documents related to Brownsville Station’s
value at the time of the transfer: (1) loan documents for Brownsville Station; (2) bank
account statements for Brownsville Station; (3) financial statements for Brownsville Station;
(4) appraisals of the property of Brownsville Station; and (5) operating agreements for
BrownE and Brownsville Station.
He also wanted to depose McKee on the following issues: (1) McKee’s representation
of Brown; (2) the operating agreement for BrownE and Brownsville Station; (3) the decision
to form Brownsville Station; (4) the July 6, 2003 Stock Sale and Option Contract; (5) the
August 7, 2003 Share Sale and Tractor Contract; (6) the December 2003 contract between
Brown and McKee; (7) January 2006 sale and release; (8) the hiring of Dolton McAlpin; (9)
why McKee withheld important financial documents for Brownsville Station from Brown
prior to Brown selling his shares; (10) what legal representation, if any, McKee believed
Brown had at the different sales of his shares; and (11) the reasons for each purchase of
Brown’s shares.

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of action; and (3) McKee was equitably estopped from asserting the statute of limitations as

a defense.

V. Trial Court’s Judgment

¶13. After denying the pending motion to transfer, the trial judge denied Brown’s motion

to postpone and granted the defendants’ motion for summary judgment. The judge agreed

with McKee and Brownsville Station that Brown had filed his action at least four years too

late. Brown’s claims accrued, and thus the three-year statute of limitations began to run, by

January 2006—the time of his alleged injury. And none of Brown’s tolling arguments

applied. Specifically, the trial judge found the “discovery rule” did not apply, because

Brown’s alleged injury was not latent. Instead, the true value of the company was

discoverable at the time of the transfer. And Mississippi Code Section 15-1-67’s fraudulent-

concealment provision was inapplicable because Brown could not demonstrate McKee

engaged in some affirmative act to prevent Brown from discovering his claims. Finally, the

extraordinary remedy of equitable estoppel did not apply because Brown could point to no

action or misrepresentation by McKee to justify tolling the statute of limitations.

¶14. The trial judge also found Brown had failed to demonstrate additional discovery was

warranted, because the discovery Brown sought “would not answer the necessary predicate

question of when Brown’s claim accrued, whether he had a latent injury, and when he knew

or should have known of his claims.” Instead, the information Brown sought “would only

advance a potential finding regarding the extent of Brown’s alleged damages.” And

“discovery related to the degree of harm . . . is of no consequence to the defendants’ motion.”

7
Moreover, the trial court noted Brown should have in his possession the information

necessary to prove when he reasonably discovered his injury and thus did not need discovery

from McKee. Because summary judgment had been granted and Brown’s Rule 56(f) motion

had been denied, the trial court dismissed Brown’s pending motions to compel as moot.

¶15. After the trial court entered its final judgment, Brown appealed.6

Discussion

¶16. “Rule 56(b) permits a defendant to move for summary judgment ‘at any time.’”

Roberts v. Boots Smith Oilfield Servs., LLC, 200 So. 3d 1022, 1026 (Miss. 2016) (quoting

Miss. R. Civ. P. 56(b)). Under Rule 56(c), “The judgment sought shall be rendered forthwith

if the pleadings, depositions, answers to interrogatories and admissions on file, together with

the affidavits, if any, show that there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” Relevant to this case, summary

judgment shall be granted if no genuine issue of material fact exists concerning the question

of the running of the statute of limitations. Smith v. Sanders, 485 So. 2d 1051, 1053 (Miss.

1986). And we review the grant of summary judgment de novo. Prescott v. Leaf River

Forest Prods., Inc., 740 So. 2d 301, 308 (Miss. 1999).

¶17. “But if a summary-judgment motion is filed before discovery is complete, the trial

court may postpone ruling on the motion to permit depositions to be taken and other

discovery to be had.” Roberts, 200 So. 3d 1022, 1026 (citing Miss. R. Civ. P. 56(f); Owens

6
The order granting summary judgment and denying discovery did not dispose of the
defendant’s counterclaims. But pursuant to Mississippi Rule of Civil Procedure 54(b), the
trial court certified the judgment as final, paving the way for Brown to file an appeal.

8
v. Thomae, 759 So. 2d 1117, 1120 (Miss. 1999)). We review the denial of a Rule 56(f)

motion to continue for abuse of discretion. Prescott, 740 So. 2d at 307.

¶18. With this standard in mind, after de novo review, we agree there are no genuine issues

of material fact concerning the running of the statute of limitations. Brown’s claims are

indisputably time-barred. Moreover, the trial court did not abuse its discretion when it denied

Brown’s motion for postponement to conduct discovery, as none of Brown’s discovery

requests were aimed at proving his untimely claims were not barred.

I. Brown’s claims accrued by January 2006.

¶19. Both sides agree Section 15-1-49’s three-year statute of limitation applies to Brown’s

claims. Miss. Code Ann. § 15-1-49(1) (Rev. 2012). Brown sued McKee and the LLC they

jointly owned, Brownsville Station, for actions McKee allegedly took from 1997 to 2006,

which culminated in Brown selling the remainder of his interest in the apartment complex

to McKee in January 2006. So Brown’s cause of action against McKee accrued in January

2006, when “it [came] into existence as an enforceable claim.” Anderson v. LaVere, 136 So.

3d 404, 411 (Miss. 2014). Under Section 15-1-49(1), Brown had to file suit within three

years from the completion of the sale “and not after.” But Brown did not file his complaint

until April 2013—years after Section 15-1-49’s time bar. Thus, clearly, McKee and

Brownsville Station are entitled to summary judgment.

¶20. Brown seeks refuge in Section 15-1-49(2)’s tolling provision. But this provision

applies only to actions “involv[ing] latent injury or disease.” Miss. Code Ann. § 15-1-49(2)

(Rev. 2012). Here, Brown’s alleged injury—underselling his interest in the company—was

9
not latent. The true value of the apartment complex at the time of sale was reasonably

discoverable—especially to someone like Brown, who according to his own pleading had

experience building apartments in Starkville. That Brown chose to trust McKee and not

question the numbers, documents, or McKee’s motives does not make this information

“inherently undiscoverable.”7

¶21. Moreover, Section 15-1-49(2) delays a claim from accruing only until “the plaintiff

has discovered, or by reasonable diligence should have discovered, the injury.” (Emphasis

added.) And, here, reasonable diligence should have led to the discovery of Brown’s alleged

injuries well before April 2010—three years before he filed his complaint. But, by his own

admission, Brown did not exercise reasonable diligence. Instead, he did nothing for six

years.

¶22. Sending this issue back for discovery under Rule 56(f) will not lead to a different

result. Why would Brown need discovery from McKee to show when he (Brown) reasonably

learned of his injury? What efforts Brown took to discover his claims is information within

Brown’s knowledge—and not in McKee’s and Brownsville Station’s exclusive possession.

See Prescott, 740 So. 2d at 308 (requiring “the party invoking Rule 56(f) . . . [to] show what

steps have been taken to obtain access to the information allegedly within the exclusive

possession of the other party”). Because Brown produced no such information but instead

asserted the opposite—that he did nothing for six years—the trial judge correctly found there

7
Donald v. Amoco Prod. Co., 735 So. 2d 161, 168 (Miss. 1999).

10
was no genuine issue of material fact that Brown’s claims accrued in January 2006, when

Brown signed the final agreement.

II. Discovery would not enable Brown to establish a fraudulent-
concealment claim.

¶23. Importantly, all of Brown’s claims accrued by January 2006—including those based

on McKee’s alleged fraud. “A fraud claim ‘accrues upon the completion of the sale induced

by such false representation, or upon the consummation of the fraud.’” Sanderson Farms

Inc. v. Ballard, 917 So. 2d 783, 789 (Miss. 2005) (quoting Dunn v. Dent, 169 Miss. 547,

153 So. 798 (1934)). And, here, the sale McKee’s fraud allegedly induced was completed

by January 2006. So this is when McKee’s fraud was consummated and the three-year clock

started to run.

¶24. Brown asserts he is saved from this time-bar because of “fraudulent concealment.”

But fraudulent concealment is a statutory tolling provision8 that requires “the party

purporting that there was fraudulent concealment” to show two things—“(1) some

affirmative act or conduct was done and prevented discovery of a claim, and (2) and due

diligence was performed on their part to discover it.” Channel v. Loyacono, 954 So. 2d 415,

423 (Miss. 2007) (quoting Stephens v. Equitable Life Assurance Soc’y of U.S., 850 So. 2d

78, 84 (Miss. 2003)). And Brown has shown neither.

8
Under Section 15-1-67, “If a person liable to any personal action shall fraudulently
conceal the cause of action from the knowledge of the person entitled thereto, the cause of
action shall be deemed to have first accrued at, and not before, the time at which such fraud
shall be, or with reasonable diligence might have been, first known or discovered.” Miss.
Code Ann. § 15-1-67 (Rev. 2012).

11
¶25. Brown has not alleged—let alone tried to prove—McKee took any affirmative act

after Brown cashed out in January 2006 to prevent Brown from discovering his claim.

Instead, Brown merely asserts that McKee had control over all the documents. But Brown

“cannot satisfy the ‘affirmative act’ requirement with mere allegations that the other party

had complete control of the information.” Trustmark Nat’l Bank v. Meador, 81 So. 3d

1112, 1119 (Miss. 2012).

¶26. Citing Van Zandt v. Van Zandt, 227 Miss. 528, 86 So. 2d 466 (1956), the dissent

suggests that the affirmative-act requirement may be satisfied by McKee’s mere silence,

because, as a fellow LLC member and manager, McKee owed Brown fiduciary duties. But

here we do not have the same facts. The type of silence that equated to fraudulent

concealment in Van Zandt—the concealed sale of cotenants’ land and the failure to turn over

the pro rata share of the proceeds—is not present here. Brown’s sale to McKee was by no

means concealed from Brown, who was a party to the sale and accepted his agreed-upon

proceeds for the interest transfer.

¶27. Moreover, this Court has held that “an act cannot be both an act of fraud in the

inducement and an act of fraudulent concealment.” Whitaker v. Limeco Corp., 32 So. 3d

429, 438 (Miss. 2010) (holding that “showing false financial records could not serve to have

both fraudulently induced the Plaintiffs and fraudulently concealed from the Plaintiffs the

underlying fraud claim”).9 And the act of omission both Brown and the dissent assert was

9
In Whitaker, it was the parties’ “subsequent dealing after the . . . fraudulent
inducement” that entitled the plaintiffs to move forward with their fraudulent-concealment
claim. Id. (emphasis added). In so holding, this Court distinguished Whitaker from the
untimely fraud claim in Dunn v. Dent, 169 Miss. 574, 153 So. 798 (1934). “Unlike Dunn,

12
fraudulent concealment is McKee’s alleged act of fraud in the inducement of Brown to sell

his interest below its value.

¶28. This is the fatal flaw with Brown’s discovery request. By his own admission, Brown

is not seeking discovery to prove what happened after he transferred his interest in January

2006. He is seeking discovery on what happened before—as proof he was fraudulently

induced into the transfer. As the trial judge rightly noted, “discovery of this type . . . is of no

consequence” to the issue of whether Brown’s claim was fraudulently concealed.

¶29. A party asserting Rule 56(f) as a means to postpone a summary-judgment ruling “must

present specific facts why he cannot oppose the motion and must specifically demonstrate

‘how postponement of a ruling on the motion will enable him, by discovery or other means,

to rebut the movant’s showing of the absence of a genuine issue of fact.’” Prescott, 740 So.

2d at 308 (citations omitted). Brown cannot do this, because his discovery requests are not

aimed at showing a genuine issue of fact on whether McKee, through subsequent dealings

with Brown, fraudulently concealed Brown’s cause of action. Whitaker, 32 So. 3d at 438.

¶30. But even assuming, as the dissent asserts, McKee’s mere silence as an LLC member

is sufficient to establish an affirmative act of concealment, Brown still has to show due

diligence. Channel, 954 So. 2d at 423. And certainly discovery would not aid Brown in

establishing this second requirement of fraudulent concealment. Again, Brown does not need

discovery from McKee to show what efforts he (Brown) took to discover McKee’s alleged

the Plaintiffs’ complaint in today’s case alleged subsequent dealings and communication
between the parties, such that a jury determination as to whether the Plaintiffs used due
diligence in discovering their fraud claim is necessary.” Whitaker, 32 So. 3d at 437-38
(emphasis added).

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fraud. See Prescott, 740 So. 2d at 308 (noting Rule 56(f) is especially designed to protect

a party who “claims the necessary information rests within the possession of the party

seeking summary judgment”). By his own uncontradicted assertion, Brown did nothing for

six years, until a 2012 letter from the Secretary of State’s office prompted him to talk to his

boss, an attorney, about what happened between 2003 and 2006.

¶31. Brown would have borne the burden at trial to prove that fraudulent concealment

delayed his claim from accruing. See Channel, 954 So. 2d at 423. So at the summary-

judgment stage, Brown bore the burden to produce evidence establishing a triable claim for

fraudulent concealment. See Karpinsky v. Am. Nat’l Ins. Co., 109 So. 3d 84, 88-89 (Miss.

2013). Because none of Brown’s discovery requests would help him meet this burden of

production, the trial court did not abuse its discretion when it denied Brown’s Rule 56(f)

motion for postponement and dismissed Brown’s pending motions to compel as moot.

III. Nor would discovery enable Brown to prove equitable estoppel.

¶32. Finally, Brown argues for equitable estoppel. But Brown’s equitable-estoppel claim

does not save him from summary judgment either.

¶33. “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 (Miss. 2011) (quoting Simmons Housing, Inc. v. Shelton, 36

So. 3d 1283, 1287 (Miss. 2010)). It is “an extraordinary remedy . . . that should be applied

14
with caution.” Id. And to apply it to a statute of limitations, “[i]nequitable or fraudulent

conduct must be established[.]” Id. (quoting Trosclair v. Miss. Dep’t of Transp., 757 So.

2d 178, 181 (Miss. 2000)).

¶34. As already discussed, Brown has pointed to no fraudulent conduct or

misrepresentation by McKee that would justify applying the extraordinary remedy of

preventing McKee and Brownsville from asserting the running of the statute of limitations.

So why would he need discovery from McKee to prove what McKee said or did to induce

Brown not to pursue a cause of action—especially since Brown’s own uncontradicted

assertion is that he had zero conversation or interaction with McKee following the January

2006 Final Agreement? Thus, as with Brown’s discovery-rule and fraudulent-concealment

claims, Brown cannot specifically demonstrate how a Rule 56(f) postponement would enable

him by discovery to establish his equitable-estoppel claim. See Prescott, 740 So. 2d at 308.

Conclusion

¶35. Given the nature of Brown’s allegations, it is tempting to allow him to pursue his

untimely claims through discovery. But “the fact that a barred claim is a just one or has the

sanction of a moral obligation does not exempt it from the limitation period.” Smith v.

Sneed, 638 So. 2d 1252, 1263 (Miss. 1994). Mississippi’s limitations statutes “apply with

full force to all claims and courts cannot refuse to give the statute effect merely because it

seems to operate harshly in a given case.” Id. Instead, we must abide by the “legislative

prerogative” to establish time boundaries.

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¶36. Here, defendants McKee and Brownsville Station met their burden to prove all of

Brown’s claims fell outside the legislatively established time boundary. And Brown failed

to specifically demonstrate how postponing the grant of summary judgment would enable

him through discovery to rebut this undisputed fact. Therefore, we affirm the trial judge’s

grant of summary judgment in favor of McKee and Brownsville Station based on Section 15-

1-49(1)’s time bar.

¶37. AFFIRMED.

WALLER, C.J., RANDOLPH, P.J., COLEMAN, BEAM AND CHAMBERLIN,
JJ., CONCUR. KITCHENS, P.J., DISSENTS WITH SEPARATE WRITTEN
OPINION JOINED BY KING AND ISHEE, JJ.

KITCHENS, PRESIDING JUSTICE, DISSENTING:

¶38. The majority affirms the trial court’s judgment that Brown was not entitled to

discovery on his claims that the statute of limitations was tolled under the discovery rule or

the doctrines of equitable tolling and fraudulent concealment. But, because Brown alleges

that he was defrauded by a person who had a duty to disclose material information but

omitted to do so, I would find that he has stated claims sufficient to warrant discovery.

Therefore, I would hold that the trial court’s grant of summary judgment was premature. The

case should be reversed and remanded.

A. Facts

¶39. Brown filed his complaint on April 23, 2013. He alleged that McKee was an attorney

who had provided legal services to him in various matters for more than a decade. He alleged

that McKee had approached Brown, who was a general contractor, and presented to him a

16
proposal that they jointly acquire real estate and develop and operate an apartment complex.

After Brown had agreed, McKee prepared the certificate of formation for BrownE, LLC, in

which Brown and McKee each owned a fifty percent economic and governing interest.

Brown alleged that McKee was a manager of BrownE, LLC.

¶40. According to the complaint, after construction of the apartment complex was

underway, the City of Starkville enacted an ordinance that prohibited the development of new

apartments and consequently prevented further growth of the business. Brown alleged that

this change in the law meant that his skills no longer were required, prompting McKee to

seek to divest Brown of his interest in BrownE, LLC. He alleged that, to this end, McKee

convinced Brown that a second, successor, limited liability company was necessary, leading

to the formation of Brownsville Station, LLC, in 2000. Brown alleged that McKee was the

manager of Brownsville Station, LLC.

¶41. The crux of Brown’s claims was his allegation that, after the formation of Brownsville

Station, LLC, McKee persuaded him to enter into a series of option contracts, detailed in the

majority opinion, whereby McKee purchased Brown’s entire interest for $150,000, an

amount far less than half the appraised value of the LLC. Brown contended that McKee

fraudulently had concealed the true value from him. Brown alleged that he first had

discovered his business partner’s deception in 2012 when Brownsville Station, LLC, filed

with the Secretary of State articles of reinstatement that named Brown as the manager and

registered agent for the company. At that point, Brown sought the advice of an attorney, who

advised that he obtain legal representation.

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¶42. McKee moved to dismiss Brown’s complaint on the ground that it had been filed

outside the three-year statute of limitations.10 McKee also asserted that Brown had signed a

“Conveyance, Full and Final Release and Hold Harmless Agreement” by which he

voluntarily had relinquished any causes of action against McKee concerning the conveyance

of his shares, and that Brown had entered into this agreement after consultation with

independent counsel of his own choosing, Dolton McAlpin.

¶43. Following the motion to dismiss, Brown vigorously sought discovery, which McKee

vigorously resisted. McKee sought protective orders, asserting that, because the action was

untimely, he faced an undue burden in responding to Brown’s discovery requests. On April

14, 2014, McKee filed a motion for summary judgment in which he pled the statute of

limitations. Brown filed a response, arguing that genuine issues of material fact existed

concerning the statute of limitations due to the discovery rule, as well as the doctrines of

equitable estoppel and fraudulent concealment. He further alleged that, due to the fiduciary

relationship, he could not have discovered McKee’s misconduct until he had happened to

consult an attorney in 2012. He asked that, because of the lack of discovery, the trial court

enter a Rule 56(f) order continuing the summary judgment issue and also requiring that the

defendants cooperate in discovery.

¶44. Brown submitted his deposition and later, a supplemental affidavit averring that

McKee had denied him access to documents in McKee’s sole possession that were related

to the value of Brownsville Station, LLC, including refinancing of the $2.25 million

10
See Miss. Code Ann. § 15-1-49(1) (Rev. 2012).

18
mortgage signed solely by McKee, emails, letters, appraisals, loan documents, and closing

statements. Brown claimed that he had not known of the existence of an appraisal showing

the true value of the company property until shortly before he filed his lawsuit. He contended

that McKee was the only person in possession of the documents and he had been unable to

obtain them from the lender, which no longer was in business. Brown also submitted the full

deposition of the attorney, Dolton McAlpin. McAlpin did not recall having spoken to Brown

without McKee’s being present. He testified that he reviewed the terms of the agreement

with Brown for about thirty or forty minutes, but gave Brown no advice about the amount

he was receiving for his interest or whether it was a “good deal” for him.

¶45. Before any rulings on the pending motions, all the judges of the Sixteenth Circuit

Court District recused themselves, and on June 28, 2016, this Court appointed a special

judge. The special judge set all pending motions for hearing on July 8, 2016. However, the

special judge never ruled on McKee’s motion to dismiss. Instead, he denied Brown’s motions

to compel discovery and for a continuance, granted McKee’s motions for a protective order,

and granted summary judgment to McKee on the ground that there was no genuine issue of

material fact that the statute of limitations barred Brown’s claims.

B. The trial court abused its discretion by denying Brown’s motion for a
continuance for additional discovery and granting summary judgment to
McKee.

¶46. The record in this case reflects an almost complete lack of discovery prior to the grant

of summary judgment. According to the Mississippi Rules of Civil Procedure, “[p]arties may

obtain discovery regarding any matter, not privileged, which is relevant to the issues raised

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by the claims or defenses of any party.” M.R.C.P. 26(b)(1). “It is not a ground for objection

that the information sought will be inadmissible at the trial if the information sought appears

reasonably calculated to lead to the discovery of admissible evidence.” Id. However, the trial

court may grant a protective order limiting discovery if “justice requires to protect a party or

person from annoyance, embarrassment, oppression, or undue burden or expense.” M.R.C.P.

26(d). Importantly, “[e]rroneous denial of discovery is ordinarily prejudicial in the absence

of circumstances showing it is harmless.” Dawkins v. Redd Pest Control Co., 607 So. 2d

1232, 1236 (Miss. 1992) (quoting Weahkee v. Norton, 621 F.2d 1080, 1083 (10th Cir.

1980)).

¶47. This Court has discussed the criteria for granting a continuance to permit additional

discovery in defense of a motion for summary judgment under Rule 56(f), which provides:

Should it appear from the affidavits of a party opposing the motion that he
cannot for reasons stated present by affidavit facts essential to justify his
opposition, the court may refuse the application for judgment or may order a
continuance to permit affidavits to be obtained or depositions to be taken or
discovery to be had or may make such order as is just.

M.R.C.P. 56(f). A party requesting a continuance under Rule 56(f) to obtain additional

discovery “must present specific facts why he cannot oppose the motion and must

specifically demonstrate ‘how postponement of a ruling on the motion will enable him, by

discovery or other means, to rebut the movant’s showing of the absence of a genuine issue

of fact.’” Stanley v. Scott Petroleum Corp., 184 So. 3d 940, 942 (Miss. 2016) (quoting

Prescott v. Leaf River Forest Prods., Inc., 740 So. 2d 301, 308 (Miss. 1999)). The party

requesting a continuance also must show the steps taken to obtain the necessary information.

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Stanley, 184 So. 3d at 942. The Court has held that, in presenting these requisite facts, the

party requesting a continuance need not submit written requests or affidavits to obtain relief

under Rule 56(f). Id.

¶48. Rule 56(f) “protects against improvident or premature grants of summary judgment

and is to be applied liberally.” Id. The trial court should grant the motion for a continuance

if the party has made the requisite showing, has been diligent, and has acted in good faith.

Id. Of particular relevance to this case, this Court specifically has disapproved of “the

practice of parties[’] resisting discovery on the one hand and moving for summary judgment

on the other.” Smith v. H.C. Bailey Companies, 477 So. 2d 224, 234 (Miss. 1985).

¶49. In his Rule 56(f) motion, Brown requested discovery of loan documents, bank account

statements, and financial statements for Brownsville Station, LLC. Additionally, he requested

appraisals of property owned by BrownE, LLC, and Brownsville Station, LLC, and the

operating agreements of the two companies. He argued that these documents would show the

value of the property and the roles and responsibilities that McKee and Brown had with

respect to the operation of the companies. He also requested the opportunity to depose

McKee, which deposition, he argued, would address matters including whether McKee had

withheld the financial documents from Brown. Brown argued that this information was

relevant to the statute of limitations issue.

¶50. The record reflects that, not only did Brown specify in his Rule 56(f) motion what

discovery could show, he was diligent in pursuing the requested discovery by timely

propounding discovery requests, filing motions to compel, and requesting hearings on the

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motions. The trial court erred by finding that discovery would not have aided Brown. The

trial court had no basis for its finding that Brown possessed the documents he requested and

which Brown alleged were not in his possession. Because this was a fact finding on a

genuinely disputed issue, it was inappropriate on summary judgment. The essence of

Brown’s claims was that McKee, a fiduciary, had concealed the documents from him and his

requests for discovery of the documents and the deposition of McKee reasonably were

calculated to lead to the discovery of evidence relevant to the discovery rule, fraudulent

concealment, and equitable estoppel, notwithstanding the trial court’s conclusion that such

information pertained only to damages.

¶51. Ordinarily, if a party’s claims survive a motion to dismiss, discovery proceeds before

that party faces a motion for summary judgment. This case is in a unique procedural posture

because the trial court never ruled on McKee’s motion to dismiss. Instead, the trial court

proceeded to rule on the motion for summary judgment, concluding that, because Brown

could not prove that any tolling provision applied to the statute of limitations, no discovery

was necessary. I would find that, because Brown stated claims that the statute of limitations

was tolled, he was entitled to discovery so he could attempt to meet his burden to prove that

genuine issues of material fact existed on such claims. I turn now to a review of the

requirements for the discovery rule, equitable estoppel, and fraudulent concealment, then to

a discussion of their application to this case.

¶52. Under the discovery rule, “[i]n actions for which no other period of limitation is

prescribed and which involve latent injury or disease, the cause of action does not accrue

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until the plaintiff has discovered, or by reasonable diligence should have discovered, the

injury.” Miss. Code Ann. § 15-1-49(2) (Rev. 2012). The Court has said that:

[T]he statute of limitations commences upon discovery of an injury, and
discovery is an issue of fact to be decided by a jury when there is a genuine
dispute. Therefore, the critical question with which we are confronted is
whether, in a summary judgment context, we can identify as a matter of law,
the point at which [the plaintiff] knew or should have known or should have
made an inquiry, based on the information available to him.

Weathers v. Metro. Life Ins. Co., 14 So. 3d 688, 692 (Miss. 2009).

¶53. For equitable estoppel to toll the statute of limitations, “the plaintiff must show by a

preponderance of evidence that ‘(1) it was induced by the conduct of [the defendant] not to

file its complaint sooner, (2) resulting in its claim[’s] being barred by the [applicable]

limitations, and (3) [the defendant] knew or had reason to know that such consequences

would follow.’” Townes v. Rusty Ellis Builder, Inc., 98 So. 3d 1046, 1055 (Miss. 2012)

(quoting Harrison Enters., Inc. d/b/a Paulding Cable Co. v. Trilogy Commc’ns, Inc., 818

So. 2d 1088, 1095 (Miss. 2002)). “Inequitable or fraudulent conduct must be established to

apply the doctrine of equitable estoppel to a statute of limitations.” Ray v. Keith, 859 So. 2d

995, 997 (Miss. 2003). The issue of equitable estoppel “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.” Townes, 98 So. 3d at 1055.

¶54. Regarding the doctrine of fraudulent concealment, Mississippi Code Section 15-1-67

provides the following:

If a person liable to any personal action shall fraudulently conceal the cause of
action from the knowledge of the person entitled thereto, the cause of action
shall be deemed to have first accrued at, and not before, the time at which such

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 fraud shall be, or with reasonable diligence might have been, first known or
discovered.

Miss. Code Ann. § 15-1-67 (Rev. 2012). The general rule is that the doctrine of fraudulent

concealment will toll the statute of limitations of any cause of action if the plaintiff shows

“that (1) some affirmative act or conduct was done and prevented discovery of a claim, and

(2) due diligence was performed on [his] part to discover it.” Stephens v. Equitable Life

Assurance Soc’y of the U.S., 850 So. 2d 78, 84 (Miss. 2003). Both elements present fact

questions for determination by a jury. Whitaker v. Limeco Corp., 32 So. 3d 429, 436 (Miss.

2010). But “[w]here a fiduciary relationship exists, silence may be fraud.” Grand Legacy,

LLP v. Gant, 66 So. 3d 137, 145 (Miss. 2011). “The ‘silence must relate to a material fact

or matter known to the party and as to which it is his legal duty to communicate to the other

contracting party.’” Id.

¶55. Contrary to the majority’s decision, proof of an affirmative act of concealment is not

required when the defendant had fiduciary duties toward the plaintiff requiring disclosure of

material information. In Van Zandt v. Van Zandt, 227 Miss. 528, 534, 86 So. 2d 466, 468

(1956), several cotenants owned a large parcel of real property in Simpson County. Several

of the cotenants sued another of the cotenants, Dr. Homer Van Zandt, alleging that Dr. Van

Zandt had used his power of attorney to sell timber from the land, had failed to disclose the

transaction to his fellow cotenants, and had converted all funds received from the sale to his

own use. Id. Dr. Van Zandt asserted that the action was barred by the statute of limitations.

Id. at 535, 86 So. 2d at 468. The chancellor found that fraudulent concealment had tolled the

statute of limitations and entered a judgment for the cotenants in the amount of their pro rata

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share of the sale proceeds with interest. Id. Dr. Van Zandt appealed, arguing that the statute

of limitations had barred the action. Id. at 536, 86 So. 2d at 469.

¶56. This Court rejected Dr. Van Zandt’s argument. Id. at 539, 86 So. 2d at 470. This Court

held that Dr. Van Zandt was in a fiduciary relationship with his fellow cotenants, but he had

failed to disclose the sale or make an accounting to them. Id. at 538, 86 So. 2d at 470. We

held that this conduct amounted to “a concealed fraud” and said that “[w]e recognize the

general rule that in the absence of a fiduciary relationship some affirmative act of

concealment is necessary to establish a concealed fraud, but this is not the case before us”

because the cotenants were in a fiduciary relationship. Id. at 538-39, 86 So. 2d at 470. This

Court adjudicated that, under the prevailing rule, a person in a fiduciary relationship is under

a duty to reveal the facts to the other party, and his “silence when he ought to speak” amounts

to a fraudulent concealment. Id. at 539, 86 So. 2d at 470. The Court explained that:

It is the prevailing rule that, as between persons sustaining a fiduciary or trust
or other confidential relationship toward each other, the person occupying the
relation of fiduciary or of confidence is under a duty to reveal the facts to the
plaintiff (the other party), and that his silence when he ought to speak, or his
failure to disclose what he ought to disclose, is as much a fraud at law as an
actual affirmative false representation or act; and that mere silence on his part
as to a cause of action, the facts giving rise to which it was his duty to disclose,
amounts to a fraudulent concealment within the rule under consideration.

Id. at 539, 86 So. 2d at 470 (citing L.S. Teller, Annotation, What Constitutes Concealment

Which Will Prevent Running of Statute of Limitations, 173 A.L.R. 576, 588 (1948)). Van

Zandt also cited Buckner v. Calcote, 28 Miss. 432 (1855), the case which initially

established this principle in Mississippi law. Id. at 539, 86 So. 2d at 470. Citing Section 742

of the Mississippi Code of 1942, an earlier iteration of Section 15-1-67, the Court held that

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“it follows from what has been said that the action of the [cotentants] is not barred by any

statute of limitation or laches . . . .” Id. at 539, 86 So. 2d at 470. More recently, it has been

recognized that in Mississippi “an omission may be considered an affirmative act in cases

where there exists an affirmative duty of disclosure.” Hare v. City Fin. Co., 269 F. Supp. 2d

766, 770 (S.D. Miss. 2003).

¶57. Brown’s primary claim is that, during a time when he and McKee were fiduciaries,

each to the other, McKee concealed an appraisal of company-owned property and then

bought out Brown’s interest for far less than the property’s appraised value, in violation of

his fiduciary duties to Brown. While both parties make much of whether McKee was

Brown’s attorney during the subject transactions, it is clear that Brown has stated a claim that

McKee, apart from McKee’s status as a lawyer, had fiduciary duties toward him as a function

of McKee’s role as a managing member of the LLCs. In the complaint, Brown alleged

specifically that McKee had fiduciary duties toward him as manager of BrownE, LLC, and

Brownsville Station, LLC, and that his acts and omissions had breached the duties of care,

loyalty, and fair dealing and violated the relationship of trust and confidence. Indeed,

“[d]irectors and officers in a closely held corporation st[and] in a fiduciary relationship with

the corporation and its members.” Brothers v. Winstead, 129 So. 3d 906, 924 (Miss. 2014)

(citing Fought v. Morris, 543 So. 2d 167, 171 (Miss. 1989)). This rationale applies to limited

liability companies “with equal force.” Id.

¶58. Regarding the discovery rule, McKee argued and the trial court found that, because

Brown had access to all relevant documents and financial records, he cannot show the injury

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was latent. The majority relies on this reasoning. However, not only does Brown dispute

McKee’s contention that he had access to the relevant documents during the transactions at

issue, he alleges that McKee, in violation of his duty of disclosure, concealed these

documents from him and actively misled him about the value of his interest. Brown was

entitled to discovery to attempt to uncover facts with which to rebut McKee’s allegation that

the discovery rule does not apply. Further, Brown was entitled to discovery on the issue of

equitable estoppel to attempt to show that McKee’s conduct induced him not to file his

complaint sooner and that McKee knew or had reason to know that legal action by Brown

eventually could be found to be time barred due to such inducement.

¶59. Concerning fraudulent concealment, discovery could lead to evidence that McKee,

through his silence or otherwise, concealed relevant documents from Brown despite Brown’s

exercise of the amount of diligence that was due, considering the fiduciary relationship. If

so, Brown could use that evidence to show that the statute of limitations was tolled due to

fraudulent concealment. “Whether a plaintiff acted diligently in discovering fraud is

generally a jury question.” Townes, 98 So. 3d at 1056. Van Zandt clearly held that a

fiduciary’s silence when he ought to speak can constitute fraudulent concealment that tolls

the statute of limitations. The majority disputes Van Zandt’s application to this case because

it finds that, unlike the sale of timber in Van Zandt, in which both the sale and the proceeds

from the sale were concealed from the cotenants, “Brown’s sale to McKee was by no means

concealed from Brown, who was a party to the sale and accepted his agreed-upon proceeds

for the interest transfer.” Maj. Op. at ¶ 26. But Brown’s claim is not that McKee concealed

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the sale from him. Rather, it is Brown’s position that, when McKee purchased Brown’s

interest, McKee concealed from Brown material facts pertinent to the sale, particularly, the

value of company property, in violation of his fiduciary duty to disclose such material facts

to his fellow LLC member, Brown, before buying him out for far less than the true value of

Brown’s interest. There is no logical or legitimate reason to distinguish the fraudulent

omissions in Van Zandt from the fraudulent omissions alleged in this case.

¶60. The majority relies on Whitaker v. Limeco, 32 So. 3d 429, 438 (Miss. 2010), to find

that Brown has not stated a claim sufficient to toll the statute of limitations. Whitaker

involved fraud claims, filed outside the statute of limitations, based upon misrepresentation

of the value of corporate assets by the corporation’s managing director. Id. at 431-32.

Whitaker recognized that “[t]he proper test” of fraudulent concealment “is whether a

reasonable person similarly situated would have discovered potential claims.” Id. at 436.

Critically, because no fiduciary relationship was implicated in Whitaker, the plaintiffs were

required to prove an affirmative act of concealment. Id. at 436. In the Court’s discussion of

what is required to show an affirmative act of concealment, we rightly said that “an act

cannot be both an act of fraud in the inducement and an act of fraudulent concealment.” Id.

at 438. The Court found that the plaintiffs’ claims survived because they had alleged

subsequent dealings and communication between the parties that amounted to fraudulent

concealment of the earlier acts of fraudulent inducement. Id. at 437.

¶61. While Whitaker is applicable to cases in which an affirmative act of concealment is

required, it is inapposite to this case, in which Brown has articulated a claim that McKee

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failed to disclose material facts that he was under a fiduciary duty to disclose. Under Van

Zandt, a fiduciary’s silence when he ought to speak can amount to fraudulent concealment

that tolls the statute of limitations. Van Zandt, 227 Miss. at 539, 86 So. 2d at 470. Therefore,

Brown was entitled to discovery on the issue of whether a reasonable person in Brown’s

situation, entitled to rely, as he was, on McKee’s fulfillment of his duty to disclose material

facts, would have discovered his claims in the exercise of due diligence.

C. Conclusion

¶62. I would agree with the majority’s disposition of this case if Brown’s claims had

involved arm’s-length transactions. But because McKee owed Brown a fiduciary duty of

disclosure, Brown’s allegation that the statute of limitations was tolled because McKee

withheld material facts demands that Brown be allowed the opportunity to discover evidence

to prove his tolling arguments. Certainly, Brown’s statute of limitations arguments ultimately

may prove to be without merit, and summary judgment thus may become appropriate. But

discovery must take place before such a determination can be made. Due to the lack of

discovery on the issue of the running of the statute of limitations, the trial court’s grant of

summary judgment was premature. I would reverse the grant of summary judgment and

remand for further proceedings.

KING AND ISHEE, JJ., JOIN THIS OPINION.

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