Alpha Mgmt. Corp. v. Harris

362 So.3d 25

ALPHA MANAGEMENT CORPORATION v. Betty HARRIS, individually, and Betty Harris on behalf of all the Wrongful Death Beneficiaries of John Harris, Deceased, and Kevin Gooden

Community Park Apartments, Inc., and Alpha Management Corporation v. Betty Harris, individually, and Betty Harris on behalf of all the Wrongful Death Beneficiaries of John Harris, Deceased, and Kevin Gooden

NO. 2022-IA-00354-SCT

CONSOLIDATED WITH NO. 2022-IA-00355-SCT

Supreme Court of Mississippi.

June 1, 2023

ATTORNEYS FOR APPELLANT: STEPHEN GILES PERESICH, COWLES EDGAR SYMMES, Biloxi

ATTORNEY FOR APPELLEES: JOE N. TATUM, Jackson

ATTORNEYS FOR APPELLANTS: STEPHEN GILES PERESICH, COWLES EDGAR SYMMES, Biloxi, LANNY R. PACE, JAMES SETH McCOY, Jackson

BEFORE KITCHENS, P.J., MAXWELL AND CHAMBERLIN, JJ.

MAXWELL, JUSTICE, FOR THE COURT:

¶1. The controlling issue in this interlocutory appeal is fraudulent joinder—did the plaintiffs join a defendant for the sole purpose of establishing venue in Hinds County?

¶2. The plaintiffs are the wrongful-death beneficiaries of a man killed in an apartment fire and two other people injured in the same fire. The fire occurred at an apartment complex in Pike County. The plaintiffs sued the apartment complex's management company, Alpha Management Corporation, which has its principal place of business in Madison County. And they also named as a defendant the purported property owner, Community Park Apartments, Inc. (CPA). At the time the complaint was filed, the Mississippi Secretary of State's website listed CPA as having its principal office in Hinds County. ¹ So the plaintiffs filed suit in Hinds County.

¶3. Alpha Management responded immediately. It asserted that CPA did not own the apartments. And because CPA was not a proper defendant, Alpha Management moved that venue be transferred from Hinds County to Pike County or Madison County. As support for its motion, Alpha Management attached a certified copy of a warranty deed showing CPA sold the apartment complex almost fifty years ago in 1975. CPA similarly filed a motion to dismiss, attaching a copy of the same warranty deed showing it had sold the apartments in 1975 and then ceased to operate as a nonprofit corporation.

¶4. Still, the Hinds County Circuit Court denied both motions. In the trial judge's view, the warranty deed was not sufficient proof that CPA had in fact sold the property a half-century ago. The entity to which CPA sold the apartment complex had a similar name, Community Park Associates, Ltd., and only the grantor—but not the grantee—had signed the warranty deed. So the trial judge found it was "difficult to believe that the warranty deed shows that this was not a straw man's action" in which CPA sold the apartment complex to itself.

¶5. We reverse the trial court's ruling and remand with instructions to dismiss CPA as a defendant and transfer the case to either Madison County or Pike County. Mississippi has never required a deed be signed by the grantee to be valid. And no evidence supports the trial judge's conjecture that the transaction was somehow fraudulent or anything other than what the deed showed it to be—the transfer of the property from one distinct corporation to another distinct partnership. Because CPA indisputably sold the apartment complex in 1975, the beneficiaries’ allegation that CPA owned the apartment building at the time of the fire is demonstrably false. So the plaintiffs cannot recover from CPA on their theory of premises liability. Therefore, CPA is not a material and proper party and cannot be joined to establish venue in Hinds County. ²

Background Facts and Procedural History

I. Complaint

¶6. At this early stage of litigation, the underlying facts have not been fully developed. But we know from the complaint that there was a fire in an apartment complex called Community Park Apartments in McComb, Mississippi. John Harris died, and Betty Harris and Kevin Gooden were injured. Betty Harris—individually and on behalf of John Harris's wrongful-death beneficiaries—and Gooden (collectively, Harris) filed a complaint in Hinds County Circuit Court, First Judicial District, against Community Park Apartments, Inc. (CPA), and Alpha Management Corporation. At the time the complaint was filed, the Mississippi Secretary of State's website listed CPA as having its principal office in Hinds County. Alpha Management undisputedly has its principal place of business in Madison County.

¶7. The complaint alleged that CPA and Alpha Management "owned, operated, and managed" Community Park Apartments. Further, Harris alleged, "as owners, operators and managers of the subject premises," CPA and Alpha Management "failed to fulfill their duties to make the premises reasonably safe and secure and to take reasonable measures to protect tenants from foreseeable harm and danger from fire ...."

II. Defendants’ Responses

¶8. Alpha Management responded to the complaint with a motion to dismiss or, alternatively, transfer venue. Alpha Management asserted that venue was improper because the defendant that was sued to establish venue in Hinds County, CPA, had been fraudulently joined. Contrary to the allegation in the complaint, CPA did not own, operate, or manage Community Park Apartments. Instead, CPA sold the property in 1975. As the only valid defendant, Alpha Management asserted venue was proper in Pike County, where the fire occurred, or Madison County, where Alpha Management's principal place of business is located, but not in Hinds County. ³ See Miss. Code Ann. § 11-11-3(1)(a)(i) (Rev. 2019).

¶9. The same day Alpha Management filed the motion to dismiss or transfer venue, Harris filed an application for entry of default against CPA, which had not yet responded to the complaint. The clerk quickly entered a default the next day. A month later, Harris moved for a default judgment against CPA. Alpha Management filed a response to this motion, asserting the venue and jurisdictional issues needed to be resolved before the trial court addressed Harris's motion.

¶10. CPA then filed an answer and motion to dismiss. In this brief filing, CPA asserted it had been a non-profit corporation that developed a low-income housing project called Community Park Apartments. In 1974, a tornado struck the complex. CPA claimed that the complex "was restored in accord with federal and local housing requirements." Then, in 1975, Community Park Apartments was sold to Community Park Associates, Ltd. And CPA, "the formerly established and recognized Mississippi non-profit corporation ceased to be." ⁴ Counsel for CPA explained that he had personally met with Harris's counsel about this fact around the close of the thirty-day window for CPA to file its answer. Harris's counsel said he would get back with CPA's counsel, but he never did.

III. Trial Court's Ruling

¶11. The trial court held a hearing on CPA's motions to dismiss and Alpha Management's motion to dismiss or transfer venue. The day before the hearing, CPA filed a motion to set aside the entry of default. But the trial court did not hear arguments or rule on this motion. Instead, the focus was on whether CPA and/or Alpha Management should be dismissed and whether venue should be transferred to either Pike or Madison County.

¶12. Alpha Management and CPA presented a certified copy of the 1975 warranty deed. According to the deed, "COMMUNITY PARK APARTMENTS, INC., a Mississippi corporation (herein called ‘Grantor’) does hereby sell, convey and warrant until C. PARK INC., a Mississippi corporation on behalf and as General Partner of COMMUNITY PARK ASSOCIATES, LTD., a Mississippi limited partnership (herein called ‘Grantee’)" the property known as Community Park Apartments. In response, Harris presented a print-out of Pike County's online tax rolls. This printout showed "Community Park Inc c/o Alpha Management Corp" owned the apartment complex.

¶13. At the hearing, the trial judge expressed concern that only the representative of the grantor had signed the deed. In her view, "[i]t looks like that there was only one person that—that this property was being transferred from the same person to the same person. That's what this deed looks like because there's only one signature on it."

¶14. CPA's counsel—the very person who had signed the deed in 1975—explained that CPA, the grantor corporation, and Community Park Associates, the grantee partnership, were "totally separate and apart." He made clear that, "[a]lthough they may sound alike, ... they are two separate entities." The trial judge rejected this explanation, reiterating that the deed had just one signature.

¶15. The trial judge denied both CPA's motion to dismiss and Alpha Management's motion to transfer venue based on fraudulent joinder. ⁵ In the written order, the trial judge determined "a fact issue" existed with the assertion that CPA sold the property in 1975 because the warranty deed "did not contain the signature of the grantee." Consequently, the trial judge found it "difficult to believe that the warranty deed shows that this was not a straw man's action" in which CPA was simply renamed. The judge then concluded, "[b]ecause of the Court's determination that CPA did not sell the property in 1975, [Harris] still ha[s] viable wrongful death claims against CPA."

¶16. Both Alpha Management and CPA filed petitions for permission to file interlocutory appeals, which this Court granted. ⁶ The two appeals have been consolidated.

Discussion

I. Fraudulent Joinder

¶17. This Court has said that, "[i]n suits involving multiple defendants, where venue is good as to one defendant, it is good as to all defendants." Blackledge v. Scott , 530 So. 2d 1363, 1365 (Miss. 1988). "This is true where the defendant upon whom venue is based is subsequently dismissed from the suit." Id. "In such situations, venue as to the remaining defendants continues despite the fact that venue would have been improper, if the original action had named them only." Id. (citing ...