Case: 20-60310 Document: 00515671792 Page: 1 Date Filed: 12/14/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
December 14, 2020
No. 20-60310
Lyle W. Cayce
Clerk
Cascade Capital Group, L.L.C.,
Plaintiff—Appellant,
versus
Livingston Holdings, L.L.C.; Chestnut Developers,
L.L.C.; David Landrum; Michael L. Sharpe, also known
as Mike Sharpe,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 3:17-CV-952
Before Jolly, Stewart, and Oldham, Circuit Judges.
Per Curiam:*
Plaintiff-Appellant Cascade Capital Group, L.L.C. (“Cascade”)
brought suit against Defendants-Appellees Livingston Holdings, L.L.C.,
Chestnut Developers, L.L.C., David Landrum, and Michael Sharpe
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 20-60310 Document: 00515671792 Page: 2 Date Filed: 12/14/2020
No. 20-60310
(“Borrowers”) due to their default on a Promissory Note and subsequent
Forbearance Agreement. Following a bench trial, the district court
determined that Borrowers breached the parties’ enforceable contract, but
that Cascade had also breached its fiduciary duty to Livingston, Chestnut,
and Sharpe (“Livingston/Chestnut/Sharpe”). Cascade filed a motion to
alter or amend the judgment, which the district court denied. Cascade
appeals the district court’s final judgment. We AFFIRM.
I. Facts & Procedural History
In 2008, Borrowers began a project to re-develop the “Old Town” of
Livingston, Mississippi. In 2011, Borrowers secured a loan from BankPlus to
fund part of the project. Chestnut, who had acquired the land, provided
BankPlus with a promissory note in the amount of $978,287.17, secured by a
Deed of Trust. Livingston later sought help recapitalizing the project. In July
2012, it engaged the consulting services of Cascade, whose sole member is
Mark Calvert.
When Borrowers faced default on their BankPlus loan, Calvert offered
them a new loan, with a principal and interest total of $951,147, despite the
conflict of interest posed by Calvert serving as both a lender and a financial
advisor. Borrowers executed the Promissory Note, which was set to mature
in March 2016. In April 2016, Borrowers executed a Forbearance Agreement.
The Agreement required a $750,000 payment in December 2016, and
purported to release Calvert and Cascade from any claims Borrowers may
have against them. The Agreement was amended in July of 2016 to extend
deadlines for other payments. Borrowers failed to make the December
payment, placing them in default. Cascade filed a lawsuit in December 2017,
seeking appointment of a receiver to take possession of Borrowers’ property,
and a joint and several judgment for the principal and interest due, as well as
attorney’s fees and collection costs.
2
Case: 20-60310 Document: 00515671792 Page: 3 Date Filed: 12/14/2020
No. 20-60310
All Borrowers except for Landrum filed counterclaims against
Cascade. In February 2019, the court granted Cascade judgment on the
pleadings as to Landrum. The same day, the court granted in part and denied
in part Cascade’s motion for summary judgment. The court determined that
Borrowers had breached their contract, but that there was a genuine issue of
fact as to whether Cascade had breached its fiduciary duty. The court, in so
concluding, rejected four arguments made by Cascade: (1) that the
counterclaims were time-barred, (2) that Borrowers had waived their ability
to make these claims by signing the exculpation clause, (3) that Borrowers
waived their claims when signing the Forbearance Agreement, and (4) that
Borrowers were estopped from repudiating the contracts, as they had
benefited from them.
In its final judgment, the court determined that Cascade owed a
fiduciary duty to Livingston/Chestnut/Sharpe and had breached it. The
court stated that the most “egregious” breach was when Calvert took
unsecured debt (including his unpaid professional fees) and collateralized it.
This further encumbered the land that previously only secured the BankPlus
loan, to Calvert’s benefit and his clients’ detriment. The court voided the
collateralization in order to put the parties in the position they would have
occupied but for the breach, and found Livingston/Chestnut/Sharpe jointly
and severally liable for $424,329.55, which was the original payoff balance on
the BankPlus note. The court further determined that the land now only
secured that sum.
Cascade now appeals, arguing that Livingston/Chestnut/Sharpe’s
claims were time-barred and, in the alternative, that they had waived said
claims.
3
Case: 20-60310 Document: 00515671792 Page: 4 Date Filed: 12/14/2020
No. 20-60310
II. Standard of Review
In considering a final judgment from trial without a jury under Federal
Rule of Civil Procedure 52, we review the district court’s findings of fact for
clear error, and we review conclusions of law de novo. Chandler v. City of
Dallas, 958 F.2d 85, 89 (5th Cir. 1992) (per curiam).
III. Discussion
(A) Statute of Limitations
Cascade argues that any breach of fiduciary duty occurred with the
execution of the Promissory Note in 2014, and therefore
Livingston/Chestnut/Sharpe’s counterclaims fall outside of Mississippi’s
three-year statute of limitations. Miss. Code Ann. § 15–1–49. Cascade
argues that the district court thus improperly applied equitable tolling, citing
numerous cases for the proposition that equitable tolling is unavailable in
circumstances like these. We disagree.
The district court did not apply equitable tolling in this case, instead
determining that Cascade’s wrongdoing continued beyond the execution of
the Note in 2014, and that therefore the counterclaim was filed within the
statute of limitations. Under Stevens v. Lake, “continuing or repeated injuries
can give rise to liability even if they persist beyond the limitations period for
the initial injury.” 615 So.2d 1177, 1183 (Miss. 1993) (citing Hendrix v. City of
Yazoo City, 911 F.2d 1102, 1103 (5th Cir. 1990)). Stevens is clear that while
the principle does not apply “where harm reverberates from a single, one-
time act,” it is applicable “in situations where the defendant commits
repeated acts of wrongful conduct.” Id. The court stated that they did not
find the date of the Note’s execution to be the date of the last instance of
tortious conduct, stating that “Calvert repeatedly breached his fiduciary duty
. . . the formation of the Note was just the first noted instance.”
4
Case: 20-60310 Document: 00515671792 Page: 5 Date Filed: 12/14/2020
No. 20-60310
Cascade contends that because there is a common causal origin of the
breach (the execution of the Note), every wrongful action since reverberated
from that origin. Cascade characterizes Calvert’s subsequent actions
following the Note’s execution as a continuing harm, not repeated acts of
wrongful conduct. This is inaccurate. The district court noted repeated,
discrete acts in which Calvert breached his fiduciary duty, including an
example in 2017 where Calvert instructed a bank to refuse to release the
property unless Calvert was paid in full, causing Livingston’s negotiations
with a prospective buyer to fall through. Actions like this cannot be described
as merely a reverberating harm from an initial act of wrongdoing, but instead
reflect “repeated acts of wrongful conduct.” Stevens, 615 So.2d at 1183. 1
The district court did not err in concluding that
Livingston/Chestnut/Sharpe’s counterclaims were not time-barred.
(B) Waiver or Forfeiture
Cascade argues that Livingston/Chestnut/Sharpe’s execution of the
Forbearance Agreement and subsequent Amendment waived their
counterclaims. In support of this proposition, it cites to Holland v. Peoples
Bank & Trust Co., 3 So.3d 94 (Miss. 2008). Holland held that a plaintiff’s
renewal of a defaulted note constituted waiver of all claims against the bank,
1
Cascade also argues that the district court improperly applied the “continuous
representation rule.” It cites to a case where the court rejected a rule that the statute of
limitations begins to run on the last day of representation by a lawyer, rather than when the
malpractice occurred. Channel v. Loyacono, 954 So.2d 415, 420–21 (Miss. 2007). This case
is wholly inapplicable, because in that case there was no evidence showing the lawyers
committed any negligent or fraudulent acts after the malpractice in question. Id. at 420.
The district court did not determine that the statute of limitations began running on the
last day of representation by Cascade, but rather stated that there were ongoing, repeated
acts of breach that occurred within the three years before Livingston/Chestnut/Sharpe
brought counterclaims.
5
Case: 20-60310 Document: 00515671792 Page: 6 Date Filed: 12/14/2020
No. 20-60310
including claims for breach of fiduciary duty. Id. at 103. However, the
fiduciary duty in Holland was allegedly created by an escrow agreement that
was part of the plaintiff and defendant’s ongoing creditor/debtor
relationship, and it is therefore distinguishable. Id. at 97. As the district court
correctly points out, “[t]his fiduciary relationship derives from the separate
consulting services agreement, which was not ‘remedied’ or otherwise
contractually by the Agreement[.]”We agree that there is no basis for holding
that execution of a Forbearance Agreement can waive claims for breach of
fiduciary duty unrelated to the debtor/creditor relationship.
Cascade also argues that the Forbearance Agreement’s exculpatory
clause waives counterclaims for breach of fiduciary duty. The clause provides
that Borrowers:
release, acquit and forever discharge [Cascade], its predecessors in
interest and all [Cascade’s] past and present officers, directors,
attorneys, affiliates, employees and agents, of and from any and all
claims, demands, liabilities, indebtedness, breaches of contract,
breaches of duty, or of any relationship, acts, omissions, misfeasance,
malfeasance, causes of action, defenses, offsets, debts, sums of
money, accounts, compensation, contracts, controversies, promises,
damages, costs, losses and expenses, of every type, kind, nature,
description or character, whether known or unknown, suspected or
unsuspected, liquidated or unliquidated, each as though fully set forth
herein at length (each, a “Released Claim” and collectively, the
“Released Claims”), that Borrowers now have or may acquire.
Cascade argues that the district court incorrectly determined that
Livingston/Chestnut/Sharpe’s signing of this indemnification agreement
did not waive their counterclaims for breach of fiduciary duty. It notes that in
Smith Barney, Inc. v. Henry, the Mississippi Supreme Court determined that
the phrase “[a]ny controversy arising out of or relating to” referenced a
claimed breach of fiduciary duty. 775 So.2d 722, 726 (Miss. 2001). Cascade
also relies on Russell v. Performance Toyota, Inc., 826 So.2d 719, 723 (Miss.
6
Case: 20-60310 Document: 00515671792 Page: 7 Date Filed: 12/14/2020
No. 20-60310
2002) (concluding that arbitration clause language referring to “any
controversy or claim arising out of or relating to the vehicle which is the
subject of the contract” included claims for breach of fiduciary duty in those
circumstances). We agree with the district court that this exculpatory clause
failed to waive Livingston/Chestnut/Sharpe’s counterclaims.
Both cases cited by Cascade are inapplicable, as they discuss the
applicability of arbitration agreements, not the viability of exculpation
clauses. This is a meaningful distinction, because “[t]he law does not look
with favor on contracts intended to exculpate a party from the liability of his
or her own negligence . . . .” Turnbough v. Ladner, 754 So.2d 467, 469 (Miss.
1999). While they are sometimes enforceable, “such agreements are subject
to close judicial scrutiny and are not upheld unless the intention of the parties
is expressed in clear and unmistakable language.” Id. Further, “[t]he
wording of an exculpatory agreement should express as clearly and precisely
as possible the extent to which a party intends to be absolved from liability.”
Id. (emphasis in original).
Here, the exculpatory clause fails because it does not clearly explain
the extent to which Cascade intends to be absolved from liability. The clause
and the Forbearance Agreement generally do not acknowledge the consulting
relationship between Cascade and Borrowers. Its disclaimer of liability for
“breaches of duty” did not specify breaches of fiduciary duty, which may
have alerted Borrowers that the clause was intended to cover potential claims
Borrowers may have with respect to other aspects of their relationship with
Cascade. Borrowers could reasonably have read this clause as only applying
to claims relating to lending, as the Forbearance Agreement related only to
Borrowers’ creditor/debtor relationship with Cascade. It lacks the requisite
specificity expected from a successful disclaimer of liability, and therefore is
not an effective waiver of Livingston/Chestnut/Sharpe’s counterclaims.
7
Case: 20-60310 Document: 00515671792 Page: 8 Date Filed: 12/14/2020
No. 20-60310
Finally, Cascade argues that Borrowers forfeited their counterclaim
by failing to exercise their rights at the earliest practicable opportunity.
However, Cascade did not make this argument in lower court briefing.
Cascade argued to the district court a theory of “quasi-estoppel,” where one
is prohibited from gaining a benefit under a contract and then avoiding the
contract’s obligations. This new argument is distinct because while
Cascade’s quasi-estoppel argument concerns obligations of a contract, this
new theory involves rights against a fiduciary. Our court will generally not
consider issues raised for the first time on appeal. See Martco Ltd. P’ship v.
Wellons, Inc., 588 F.3d 864, 877 (5th Cir. 2009).
The district court did not err in its determination that
Livingston/Chestnut/Sharpe’s counterclaims were not waived or forfeited.
IV. Conclusion
For the foregoing reasons, we AFFIRM the district court’s final
judgment.
8