R. W. Whitaker v. Limeco Corporation

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2009-CA-00351-SCT

R. W. WHITAKER AND MONTY FLETCHER

v.

LIMECO CORPORATION AND WILLIAM KIDD

DATE OF JUDGMENT: 01/30/2009
TRIAL JUDGE: HON. JAMES LAMAR ROBERTS, JR.
COURT FROM WHICH APPEALED: LEE COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: MICHAEL N. WATTS
R. BRADLEY BEST
ATTORNEYS FOR APPELLEES: MARGARET SAMS GRATZ
L. F. SAMS, JR.
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: AFFIRMED IN PART; REVERSED IN
PART, AND REMANDED - 04/08/2010
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

BEFORE CARLSON, P.J., LAMAR AND CHANDLER, JJ.

CARLSON, PRESIDING JUSTICE, FOR THE COURT:

¶1. Failing in their efforts to collect more than $850,000 purportedly owed to them as a

result of the trial court’s dismissal of their claims against Limeco Corporation and William

Kidd, R. W. Whitaker and Monty Fletcher appeal to us for relief. Although we find that the

trial court correctly dismissed some of the claims asserted by Whitaker and Fletcher, we

likewise find error on the part of the trial court in dismissing in their entirety all claims

asserted by Whitaker and Fletcher against Limeco and Kidd. Thus, the Lee County Circuit
Court’s judgment of dismissal is affirmed in part, reversed in part, and remanded for further

proceedings consistent with this opinion.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶2. Some of the facts in today’s case are gleaned from our opinion in a related case,

Fletcher v. Limeco Corporation, 996 So. 2d 773 (Miss. 2008). William Kidd served as

managing director of Limeco Corporation. Beginning in 2001, negotiations began between

Kidd/Limeco, the Defendants/Appellees,1 and R. W. Whitaker and Monty Fletcher,2 the

Plaintiffs/Appellants, in connection with what later became a failed effort to purchase a

hockey team in Tupelo. The Plaintiffs maintain that in the course of these 2001 negotiations,

Kidd misrepresented to them that Limeco was a corporation with substantial assets. The

Plaintiffs further allege that, as a result of Kidd’s misrepresentations, they were fraudulently

induced by Kidd to lend Limeco $750,000. According to the Plaintiffs, these loans were

made based on Kidd’s misrepresentations to the Plaintiffs that, to the extent Kidd could not

pay back the loans, Limeco had sufficient assets to repay the loans in full. The Plaintiffs

claim Kidd concealed the fact that Limeco had no assets, and in doing so, shared with the

Plaintiffs certain financial records and books which showed the corporation to be a solvent

corporation possessing sufficient assets to repay the loans. See Fletcher, 996 So. 2d at 774.

1
Except when necessary to refer to William Kidd or Limeco Corporation,
individually, they will be referred to collectively as the Defendants.
2
Except when necessary to refer to R. W. Whitaker or Monty Fletcher, individually,
they will be referred to collectively as the Plaintiffs.

2
¶3. The Plaintiffs further allege that, on or about February 19, 2002, Kidd induced

Whitaker to take out an additional $100,000 loan from Peoples Bank & Trust Company in

Tupelo, and, in turn, to lend Kidd the full amount of this loan, which came due on April 19,

2002. This loan was extended by Whitaker in the form of a continuing guaranty with the

understanding that the Defendants would be responsible to the bank for any and all

indebtedness of Whitaker to the bank for an amount up to $100,000.

¶4. On July 1, 2002, the parties entered into what they referred to as promissory notes

(referred to as the “Fletcher note” and the “Whitaker note”) to memorialize the terms of the

loan agreements they had made in early 2002. Both Fletcher and Whitaker, in an effort to

secure what they thought were promissory notes, were granted a continuing lien on Limeco’s

monies, securities, and/or other property for the entire amount of the promissory notes (each

in the amount of $375,000).

¶5. On December 11, 2003, Whitaker and Fletcher filed separate complaints against

Limeco and Kidd.3 The Plaintiffs alleged that they had lent Kidd more than $850,000 that

had never been repaid. Both complaints alleged claims of breach of promissory notes.

Whitaker also alleged that he had been induced to lend Kidd an additional $100,000 and had

allowed Kidd to enter into a continuing guaranty when the loan came due; thus, Whitaker’s

3
Actually, the first complaint filed was that of T-REX 2000, Inc., against Brett Kidd
and Jamie Kidd for alleged breach of a stock-purchase agreement. This suit was the
byproduct of 2001 contract negotiations for the purchase of a hockey team in Tupelo, the T-
Rex 2000 team. It later was consolidated with subsequent causes of action. Fletcher, 996 So.
2d at 774-75. T-REX 2000, Inc., Brett Kidd, and Jamie Kidd are not parties before this Court
in the current appeal.

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complaint included both a breach-of-promissory-note claim and breach-of-continuing-

guaranty claim. The Lee County Circuit Court dismissed both complaints due to defective

service. The cases were consolidated, and the dismissal for lack of proper service was

affirmed by this Court on appeal. Fletcher, 996 So. 2d at 781.

¶6. However, on September 18, 2007, during the early stages of the Fletcher appeal,4 the

Plaintiffs filed a complaint against Kidd and Limeco in the Lee County Chancery Court,

alleging breach of promissory notes, breach of continuing guaranty, fraud, and fraudulent

transfer of assets.5 Due to the alleged fraud, the Plaintiffs sought to pierce the corporate veil

in order to include as defendants not only Limeco, but William Kidd, individually. The trial

court ultimately found the suit to be time-barred. The breach-of-promissory-note claims were

dismissed due to the trial court’s determination that the notes did not meet the statutory

requirements to be considered instruments of negotiability; thus, according to the trial court,

the claims were subject to a three-year breach-of-contract statute of limitations, as opposed

to the six-year statute of limitations for a breach-of-promissory-note cause of action. The

fraud claims were found to be time-barred because, according to the trial court, the Plaintiffs

first had knowledge of the fraud in 2003 when they filed the original suit. As a result,

4
The Supreme Court Clerk’s docket in the Fletcher appeal reveals, inter alia, that a
notice of appeal was filed on July 20, 2007, and that on September 27, 2007, the trial court
record was filed and a briefing schedule notice was issued.
5
In addition to fraud in the inducement of the loan agreements, the Plaintiffs also
alleged that Kidd caused Limeco’s assets to be fraudulently transferred to his own personal
entities and entities owned by Kidd’s family members.

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according to the trial court, the three-year statute of limitations for fraud would have run in

2006. The trial court rejected the Plaintiffs’ argument that the factual basis for their fraud

claims had been fraudulently concealed from them by Kidd until March 2007. The trial court

found that, because the Plaintiffs had failed to establish a basis for a claim of fraud, there

was no justification for piercing the corporate veil and holding Kidd responsible for

Limeco’s failure to repay the $850,000.

¶7. The Defendants, Limeco and Kidd, filed separate answers and defenses to the

complaint. Subsequently, the Defendants filed a motion to dismiss and a motion to stay

discovery, to which the Plaintiffs responded. Finally, by mutual agreement, the parties

agreed to transfer this case to the Circuit Court of Lee County on February 4, 2008.

¶8. Following an August 12, 2008, hearing on the Defendants’ motion to dismiss, Judge

James L. Roberts, Jr., presiding, the trial court entered an order on January 30, 2009,

dismissing the complaint on the grounds that the statute of limitations had expired for the

breach-of-promissory-note claim, the breach-of-continuing-guaranty claim, and the fraud

claim. The trial court rejected the argument made by the Plaintiffs that Kidd fraudulently had

concealed the facts supporting their fraud claim. The trial court found the statute of

limitations for fraud began running on December 11, 2003, when the Plaintiffs had filed their

original claim; thus, according to the trial court, all claims were time-barred as of December

2006. The trial court concluded that, because their fraud claims were time-barred, the

Plaintiffs were precluded from bringing a cause of action against Kidd in an individual

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capacity because, in order to pierce the corporate veil, the Plaintiffs were required to have

a viable fraud claim. From the trial court’s judgment of dismissal, the Plaintiffs timely

appealed to this Court.

DISCUSSION

¶9. The Plaintiffs raise the following issues in today’s appeal: (1) whether the trial court

erred in dismissing the breach-of-promissory-notes claims based on a finding that the

promissory notes were not negotiable instruments under Mississippi Code Section 75-3-104

(Rev. 2002), and thus not subject to the six-year statute of limitations; (2) whether the trial

court erred in dismissing the fraud and breach-of-continuing-guaranty claims based on its

finding that the Plaintiffs did not allege any facts that would toll the three-year statute of

limitations; and (3) whether the trial court erred in ruling that Limeco had no corporate

liability, and as a result, ruling that the Plaintiffs could not pierce Limeco’s corporate veil.

¶10. When considering issues of law, such as statutes of limitations, this Court employs

a de novo review. Andrus v. Ellis, 887 So. 2d 175, 179 (Miss. 2004). When reviewing a

trial court's grant or denial of a motion to dismiss or a motion for summary judgment, this

Court likewise applies a de novo standard of review. Burleson v. Lathem. 968 So. 2d 930,

932 (Miss. 2007) (citing Scaggs v. GPCH-GP, Inc., 931 So. 2d 1274, 1275 (Miss. 2006);

Park on Lakeland Drive, Inc. v. Spence, 941 So. 2d 203, 206 (Miss. 2006); McLendon v.

State, 945 So. 2d 372, 382 (Miss. 2006); Monsanto Co. v. Hall, 912 So. 2d 134, 136 (Miss.

2005)). “‘When considering a motion to dismiss, the allegations in the complaint must be

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taken as true and the motion should not be granted unless it appears beyond doubt that the

plaintiff will be unable to prove any set of facts in support of his claim.’” Id. (quoting

Scaggs, 931 So. 2d at 1275).

I. WHETHER THE TRIAL COURT ERRED IN HOLDING THAT
THE PROMISSORY NOTES WERE NOT NEGOTIABLE
INSTRUMENTS AND THUS NOT SUBJECT TO THE SIX-
YEAR STATUTE OF LIMITATIONS.

¶11. The Plaintiffs argue that the notes entered into by Kidd, each in the amount of

$375,000, met all of the statutory requirements for negotiable instruments pursuant to

Mississippi Code Section 75-3-104 (Rev. 2002); thus, the complaint was timely filed within

the six-year statute of limitations pursuant to Section 75-3-118(b).

¶12. The trial court dismissed the Plaintiffs’ complaint on the basis that neither of the

promissory notes, each in the amount of $375,000, was a negotiable instrument under

Section 75-3-104 because neither of the notes contained the required “words of

negotiability.” As a result, the trial court found that the notes were not subject to the six-year

statute of limitations applicable to negotiable instruments under Section 75-3-118(b).

Instead, according to the trial court, the notes were subject to the three-year statute of

limitations for breach-of-contract claims. Conversely, Kidd argues that the trial court

correctly interpreted the provisions of Section 75-3-104.

¶13. Section 75-3-104(a) defines a negotiable instrument as follows:

Except as provided in subsections (c) and (d), “negotiable instrument” means
an unconditional promise or order to pay a fixed amount of money, with or
without interest or other charges described in the promise or order, if it:

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 (1) Is payable to bearer or to order at the time it is issued or first comes into
possession of a holder;

(2) Is payable on demand or at a definite time; and

(3) Does not state any other undertaking or instruction by the person
promising or ordering payment to do any act in addition to the payment of
money, but the promise or order may contain (i) an undertaking or power to
give, maintain, or protect collateral to secure payment, (ii) an authorization or
power to the holder to confess judgment or realize on or dispose of collateral,
or (iii) a waiver of the benefit of any law intended for the advantage or
protection of an obligor.

Miss. Code Ann. § 75-3-104(a) (Rev. 2002).

¶14. The statutory definition of “payable to order” is found in Section 75-3-109(b), which

states:

A promise or order that is not payable to bearer is payable to order if it is
payable (i) to the order of an identified person or (ii) to an identified person
or order. A promise or order that is payable to order is payable to the identified
person.

Miss. Code Ann. § 75-3-109(b) (Rev. 2002).

¶15. What the Plaintiffs identify as the “Whitaker note” reads as follows: “On demand, for

value received, I promise to pay to R.W. Whitaker . . . the sum of Three Hundred, Seventy-

five Thousand Dollars ($375,000).” The written agreement identified as the “Fletcher note”

contains identical language. The Plaintiffs argue that this meets the statutory definition of

“payable to order” and urge this Court to interpret Section 75-3-109(b) as defining “payable

to order” as follows: payable “to the order of an identified payee,” payable to an identified

payee, or payable “to order.” In support of their argument, the Plaintiffs cite the canon of

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statutory construction that statutes written in the disjunctive set forth separate and distinct

alternatives. See In re Branan, 419 So. 2d 145, 146 (Miss. 1982) (“The use of the

disjunctive ‘or’ denotes a choice between alternatives.”).

¶16. However, interpreting Section 75-3-109(b)(ii) as defining “payable to order” as

payable to an identified payee or payable to order is contrary to how the majority of

jurisdictions interpret the Uniform Commercial Code’s statutory requirements for negotiable

instruments. In order to meet the requirements of a negotiable instrument:

[A] paper or instrument generally must be payable to order or to bearer at the
time it is issued or comes into the possession of a holder. This means that
notes payable simply to a specific payee, and not to the order of the payee or
to the payee or order, are not negotiable.

11 Am. Jur. 2d Bills and Notes § 37 (2009) (footnotes omitted). Thus, the words “payable

to the order of” or payable “to [identified payee] or order” must appear within the instrument

in order to qualify it as a negotiable instrument, and since the promissory notes in today’s

case do not contain this language, they cannot be deemed to be negotiable instruments.

¶17. Arguing that the agreements met the statutory definition of negotiable instruments,

the Plaintiffs contend that the six-year statute of limitations for negotiable instruments under

Section 75-3-118 applies in this case and that the statute of limitations would not have

expired until July 1, 2008, six years after the Whitaker and Fletcher notes were signed.

However, having already found no error on the part of the trial court in declining to find that

either of the notes met the statutory requirements for negotiable instruments, we find no error

on the part of the trial court in applying the three-year statute of limitations pursuant to

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Section 15-1-49. See Miss. Code Ann. § 15-1-49 (Rev. 2003). Accordingly, there was no

error on the part of the trial court in dismissing the breach-of-promissory-notes claim as

time-barred.

II. WHETHER THE TRIAL COURT ERRED IN DISMISSING THE
FRAUD AND BREACH-OF-CONTINUING-GUARANTY
CLAIMS.

¶18. Negotiations between these parties began in 2001. The Plaintiffs’ complaint states that

in early 2002, based on the fraudulent inducement by Kidd, they each lent Kidd/Limeco

$375,000. On or about February 19, 2002, Kidd allegedly induced Whitaker to borrow from

The Peoples Bank & Trust Company in Tupelo $100,000 for the benefit of Kidd, who in turn

misrepresented to the Plaintiffs that, to the extent he could not personally repay the loans,

Limeco had sufficient assets to satisfy the loan agreements. According to the Plaintiffs, Kidd

concealed the fact that Limeco did not have sufficient assets to repay the loans by showing

them false documentation in the form of financial books depicting Limeco as a corporation

with substantial assets. On April 19, 2002, the bank loan came due and was extended with

the understanding that Kidd would execute a continuing guaranty in which Kidd guaranteed

that any and all indebtedness of Whitaker to the Bank would be paid by Kidd/Limeco for an

amount up to $100,000 – a continuing guaranty which both Kidd and Limeco subsequently

failed to honor. On July 1, 2002, Kidd entered into a promissory note with both Plaintiffs,

with each note memorializing the agreement between Kidd and the Plaintiffs to repay each

of them $375,000 with an interest rate of seven percent per year.

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¶19. The trial court found that “the Plaintiffs have failed to allege any affirmative acts on

the part of the Defendants designed to conceal the Plaintiffs’ causes of action. The facts

alleged relate only to the original act of fraud by the Defendants.” As to when the three-year

statute of limitations commenced running for the fraud claim, the trial court opined:

[T]he Plaintiffs’ complaint fails to state precisely when Kidd and Limeco
Corporation committed these acts. However, it is certain that the Plaintiffs had
knowledge of their claim for fraud at the very latest on December 11, 2003,
when they filed their original complaint. As the present suit was filed in
September, 2007, the Plaintiffs’ causes of action for fraud are clearly barred
by the three-year statute of limitations.

Accordingly, the trial court granted Kidd’s Motion to Dismiss based upon the Plaintiffs’

failure to state a claim upon which relief could be granted pursuant to Mississippi Rule of

Civil Procedure 12(b)(6).

¶20. “[F]raudulent concealment of a cause of action tolls its statute of limitations.”

Channel v. Loyacono, 954 So. 2d 415, 423 (Miss. 2007) (quoting Robinson v. Cobb, 763

So. 2d 883, 887 (Miss. 2000); Myers v. Guardian Life Ins. Co. of America, Inc., 5 F. Supp.

2d 423, 431 (N.D. Miss. 1998)). The fraudulent concealment doctrine “applies to any cause

of action.” Robinson, 763 So. 2d at 887 (quoting Myers, 5 F. Supp. 2d at 431).

¶21. Mississippi Code Section 15-1-67 governs the tolling of statutes of limitations due

to fraudulent concealment:

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.

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Miss. Code Ann. § 15-1-67 (Rev. 2003). The proper test is “whether a reasonable person

similarly situated would have discovered potential claims.”Andrus, 887 So. 2d at 180 (citing

Am. Bankers’ Ins. Co. of Fla. v. Wells, 819 So. 2d 1196, 1201 (Miss. 2001)).

¶22. In alleging fraudulent concealment of a claim, a plaintiff must show: “(1) some

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

diligence was performed on their part to discover it.” Channel, 954 So. 2d at 423 (quoting

Stephens v. Equitable Life Assurance Soc. of U.S., 850 So. 2d 78, 84 (Miss. 2003)). The

affirmative act must be designed to prevent discovery of the claim. Id. (citing Robinson v.

Cobb, 763 So. 2d 883, 887 (Miss. 2000). Both are questions of fact, not law, and should be

left to a jury for determination. Robinson, 763 So. 2d at 888-89.

¶23. The Defendants argue that the trial court was correct in its ruling inasmuch as the

Plaintiffs assert the same facts to support both the fraud claim and the fraudulent-

concealment claim, namely that Kidd produced false books showing Limeco to be solvent.

According to the Defendants, the Plaintiffs failed to assert any subsequent affirmative act of

concealment. The Defendants cite Andrus v. Ellis, 887 So. 2d 175, 181 (Miss. 2004), for

the premise that a plaintiff must prove “some subsequent affirmative act by the defendant

which was designed to prevent and which did prevent discovery of the claim.” Id. (citing

Stephens, 850 So. 2d at 83-84).

¶24. The facts at hand, however, are easily distinguished from those found in Andrus,

which involved various plaintiffs who entered into loan agreements with Commercial Credit

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Corporation. Andrus, 887 So. 2d at 176-78. The plaintiffs in Andrus filed suit against eight

individual defendants, all employees of Commercial Credit, claiming that the defendants

fraudulently induced them to purchase credit-insurance policies in connection with their

loans. Id. at 176. The plaintiffs claimed that they either were not aware that they had

purchased credit insurance, or they were aware, but thought the insurance was required in

order to take out the loan. Id. This Court rejected the plaintiffs’ fraudulent-representation

argument on the basis that the testimony reflected a general misunderstanding of the terms

of their loans, not specific, affirmative acts of concealment. Id. at 181. Moreover, all

plaintiffs were put on notice of the terms of the loans when they received copies of the loan

documents. Id.

¶25. As to the first prong of fraudulent concealment, an affirmative act to prevent

discovery of a claim, see Channel, 954 So. 2d at 423, we find that the Plaintiffs have made

a sufficient showing of affirmative acts by Kidd to conceal the Plaintiffs’ fraud claim to

warrant a jury determination. Kidd made fraudulent misrepresentations regarding Limeco’s

assets in the course of negotiations between the parties as early as 2001. These negotiations

culminated in three separate loan agreements, wherein the Defendants received more than

$850,000. Kidd presented the Plaintiffs with financial records depicting Limeco as a solvent

corporation. According to the Plaintiffs, in February 2002, Kidd induced Whitaker to take

out a loan in the amount of $100,000, again with the understanding that Kidd and Limeco

had sufficient assets to repay this loan. In April 2002, Kidd executed a continuing guaranty

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with the understanding that Kidd would be responsible for any and all indebtedness to the

Bank up to $100,000. In July 2002, Kidd memorialized the two $375,000 loans with two

written contracts (called “promissory notes” by the Plaintiffs), drafted and executed with the

understanding that Kidd and Limeco had substantial assets to repay the loans.

¶26. Moreover, as to whether there were subsequent acts of concealment, the facts in this

case are distinguishable from the case relied on by the trial court, Dunn v. Dent, 169 Miss.

574, 153 So. 798 (1934). Dunn involved a claim for alleged false representations made in

a warranty deed as to the amount of land conveyed to the appellant. Dunn, 153 So. at 798.

The suit was time-barred because it was not filed within the requisite six-year statute of

limitations. Id. at 799. This Court rejected the appellant’s fraudulent-concealment claim

based on the fact that, once the real estate transaction was complete and the six-year statute

of limitations period began running, the parties had no subsequent communication or

dealings. The Court stated, “[A]fter the delivery of the deed, the appellant had no

communication with the appellees, and it fails to show that they did anything that could be

construed as a concealment of the falsity of the representation as to the amount of land

conveyed, or a concealment of the cause of action.” Id. Unlike Dunn, 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.

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¶27. The trial court aptly stated the law that an act cannot be both an act of fraud in the

inducement and an act of fraudulent concealment. Thus, showing false financial records

could not serve to have both fraudulently induced the Plaintiffs and fraudulently concealed

from the Plaintiffs the underlying fraud claim. Regardless of whether the Plaintiffs were

fraudulently induced to lend the money by the false financial records, the parties had

subsequent dealings after the early 2002 fraudulent inducement, namely, inducing Whitaker

to lend Kidd an additional $100,000 and to enter into the continuing guaranty, and then

entering into the written agreements (referred to by the Plaintiffs as promissory notes) in July

2002. These subsequent agreements and dealings were predicated on the fact that Kidd

continued to incur debt with the understanding that, to the extent he could not repay the

loans, Limeco would repay the debts that he incurred on Limeco’s behalf.

¶28. As to the second prong, due diligence, the Plaintiffs deposed Kidd in March 2007, as

part of the discovery in the original complaint for the breach-of-promissory-notes and

breach-of-continuing-guaranty claims. During his deposition, Kidd admitted to fraudulently

misrepresenting Limeco’s assets. The Plaintiffs argue that the trial court erred in finding that

the statute of limitations on the fraud claim began running in December 2003, when they

filed their original complaint, because they did not learn of the fraud until March 2007,

during the course of Kidd’s deposition testimony. We find this argument compelling in that

as of December 2003, the Plaintiffs had knowledge of the breach – the fact that Limeco had

failed to repay the loans and had failed to honor the continuing guaranty. However, what

15
the Plaintiffs did not know until March 2007 was that Limeco had never possessed the assets

to repay the debt incurred by Kidd, nor did Kidd have any intention to repay the loans. Thus,

we remand for a jury determination as to whether the Plaintiffs used reasonable diligence.

¶29. Because we are considering the propriety of a trial judge’s grant of a motion to

dismiss, the allegations in the Plaintiffs’ complaint must be viewed as true, and

Kidd/Limeco’s motion to dismiss should not have been granted by the trial court unless it

appeared beyond doubt that the Plaintiffs would be unable to prove any set of facts that

supported their claim. See Burleson, 968 So. 2d at 932. Based on our discussion of this

issue thus far, we find the trial court erred in dismissing the fraud claim on the basis that the

Plaintiffs did not state a claim upon which relief could be granted under Mississippi Rule of

Civil Procedure 12(b)(6). In other words, from the record before us, we are not prepared to

state that it appears beyond doubt that the Plaintiffs are unable to prove any set of facts in

support of their claim that Kidd committed subsequent, affirmative acts to prevent the

Plaintiffs from discovering they were fraudulently induced to enter into the loan agreements.

Accordingly, we reverse and remand this issue to the trial court for proceedings consistent

with this opinion.

¶30. The Plaintiffs also raise as part of this issue whether the trial court erred in dismissing

the breach-of-continuing-guaranty claim. Because the Plaintiffs were aware of the breach

of the continuing guaranty as early as 2002 and at the latest in December 2003, when they

originally filed suit, the trial court did not commit error in dismissing this claim as being

16
time-barred by the three-year limitations period provided in Mississippi Code Section 15-1-

49 (Rev. 2002).

III WHETHER THE TRIAL COURT ERRED IN RULING THAT
LIMECO HAD NO CORPORATE LIABILITY.

¶31. The Plaintiffs argue that Kidd’s fraudulent misrepresentations while acting as

managing director of Limeco give them leeway to pierce the corporate veil and hold Kidd

liable for the torts he committed when acting as managing director of Limeco. To this end,

the Plaintiffs cite Turner v. Wilson, 620 So. 2d 545 (Miss. 1993), for the general premise

that “ when a corporate officer directly participates in or authorizes the commission of a tort,

even on behalf of the corporation, he may be held personally liable.” Id. at 548. Piercing the

corporate veil is predicated on a showing of fraud. Id. at 548-49.

¶32. The trial court found that there were no viable claims against Limeco due to the

statute of limitations having run as to all claims, including the fraud claim. As a result,

because Limeco could not be held liable, there was no basis for piercing the corporate veil

to hold Kidd personally liable.

¶33. Because this issue is conditioned upon a showing by the Plaintiffs that their fraud

claim was fraudulently concealed from them until 2007, we decline to address this issue and

remand this issue to the trial court for further proceedings in accordance with this opinion.

CONCLUSION

¶34. In sum, the Plaintiffs’ first assignment of error is without merit inasmuch as the trial

court correctly interpreted the statutory requirements for negotiable instruments pursuant to

17
Mississippi Code Section 75-3-104 (Rev. 2002). As to the issue of whether the breach-of-

continuing-guaranty claim was improperly dismissed, we find that it was properly dismissed

as time-barred. As to the issue of whether the fraud claim was improperly dismissed, we

reverse and remand this issue to the trial court, for the reasons stated, for the jury to consider

whether the claim was fraudulently concealed from the Plaintiffs until discovered in March

2007. Also, the final issue must be remanded to the trial court, since piercing the corporate

veil to hold Kidd personally liable would be contingent on the Plaintiffs proving their fraud

claim. Therefore, the final judgment of dismissal entered against R. W. Whitaker and Monty

Fletcher and in favor of Limeco Corporation and William Kidd is affirmed in part, reversed

in part, and remanded for further proceedings consistent with this opinion.

¶35. AFFIRMED IN PART; REVERSED IN PART, AND REMANDED.

WALLER C.J., GRAVES, P.J., DICKINSON, RANDOLPH, LAMAR,
KITCHENS, CHANDLER AND PIERCE, JJ., CONCUR.

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