Ware v. Ware (In re Ware)

348 So.3d 277

In the MATTER OF the ESTATE OF Frankie Don WARE, Deceased: Carolyn Ware, as Executrix of the Estate of Don Ware, Deceased; Carolyn Ware, Individually as Shareholder, Director and Officer of Ware Milling, Inc., Chickasaw Farm Services, Inc., Chickasaw Grain Transportation, Inc., and Ware Construction, Inc.; Dana Carol Ware and Angela Ware MOHR, Individually and as Trustees of the Frankie Ware Family Trust and Marital Trust

v.Richard Ware, Melisa Ware, Legacy Capital, a Foreign Limited Liability Company, Charles D. "Chip" Porter, Derek Henderson, Receiver of Ware Milling, Inc., Chickasaw Farm Services, Inc., Chickasaw Grain Transportation, Inc., and Ware Construction, Inc., and Richard Don Ware, Individually, as an Officer and Shareholder of Ware Milling, Inc., Chickasaw Grain Transportation, Inc., Chickasaw Farm Services, Inc., and Ware Construction, INC., as Beneficiary of the Estate of Frankie Don Ware, and as Trustee of Frankie Don Ware Family Trust, and Melisa Ware, Individually, and as Officer and Shareholder v. Carolyn Ware and the Receiver of Ware Milling, Inc., Chickasaw Farm Services, Inc., Chickasaw Grain Transportation, Inc., and Ware Construction, Inc.

In the Matter of the Estate of Frankie Don Ware, Deceased: Carolyn Ware, Executrix, Co-trustee, Beneficiary, Shareholder, Officer and Director

v.Richard Ware, Melisa Ware, Legacy Capital, a Foreign Limited Liability Company, Charles D. Porter, Derek Henderson, Receiver of Ware Milling, Inc., Chickasaw Farm Services, Inc., Chickasaw Grain Transportation, Inc., and Ware Construction, Inc., and Dana Carol Ware and Angela Ware Mohr V. Charles D." Chip" Porter, Derek Henderson, Receiver of Ware Milling, Inc., Chickasaw Farm Services, Inc., Chickasaw Grain Transportation, Inc., and Ware Construction, Inc., and Richard Don Ware and Melisa Ware v. Carolyn Ware and the Receiver of Ware Milling, Inc., Chickasaw Farm Services, Inc., Chickasaw Grain Transportation, Inc., and Ware Construction, Inc.

NO. 2020-CA-00702-SCT

NO. 2020-CA-00706-SCT

NO. 2016-CA-00288-SCT

NO. 2016-CA-01589-SCT

Supreme Court of Mississippi.

May 26, 2022

ATTORNEYS FOR APPELLANTS: RHETT R. RUSSELL, KEITH CURTIS KANTACK, Tupelo, REX F. SANDERSON, Houston

ATTORNEYS FOR APPELLEES: J. CAL MAYO, JR., Oxford, CASEY LANGSTON LOTT, Booneville, DEREK ANDREW HENDERSON, DUSTIN COLT CHILDERS, Booneville

BEFORE KING, P.J., CHAMBERLIN AND ISHEE, JJ.

KING, PRESIDING JUSTICE, FOR THE COURT:

¶1. Frankie Ware died in 2011. He was survived by his wife, Carolyn Ware, and their three children, Dana Ware, Angela Ware Mohr, and Richard Ware. Richard is married to Melisa Ware. Carolyn was appointed executor of Frankie's estate. At the time of his death, Frankie owned 25 percent of four different family corporations. Carolyn owned another 25 percent of each, and Richard owned 50 percent of each. Frankie's will placed the majority of Frankie's assets, including his shares in the four family corporations, into two testamentary trusts for which Carolyn, Richard, Angela, and Dana were appointed trustees. The primary beneficiary of both trusts is Carolyn, but one trust allowed potential, limited distributions to Richard, Angela, and Dana. Prolonged litigation between Carolyn and Richard ensued over disagreements regarding how to dispose of Frankie's shares in the four corporations and how to manage the four corporations. Richard eventually filed for dissolution of the four corporations. The trial court ultimately consolidated the estate case with the corporate dissolution case. The trial court denied Angela and Dana's motions to join/intervene in both cases. It also appointed a corporate receiver (Derek Henderson) in the dissolution case by agreed order that also authorized dissolution. The chancery court ultimately ordered that the shares be offered for sale to the corporations, and it approved the dissolution and sale of the corporations. Angela and Dana appeal the trial court's denial of their attempts to join or intervene in the two cases. Carolyn appeals a multitude of issues surrounding the trial court's decisions regarding the corporations and shares. Richard cross-appeals the trial court's net asset value determination date and methodology. The Receiver argues that the trial court's judgment should be affirmed on all issues.

¶2. In the estate case, this Court reverses the chancery court's determination that the estate must offer the shares to the corporation prior to transferring them to the trusts. The corporations filed their breach of contract claim after the expiration of the statute of limitations. This Court affirms the chancery court's denial of Angela and Dana's motions to intervene, and we affirm the chancery court's decision in the dissolution case, but we reverse the judgment to the extent that it allowed the corporations to purchase shares from the estate. This Court further remands the cases to the chancery court for a determination of how to distribute the money from the corporate sales, in which the estate holds 25 percent of the corporate shares.

FACTS AND PROCEDURAL HISTORY

¶3. Frankie Ware died testate on April 8, 2011. Carolyn petitioned the chancery court to admit Frankie's will to probate. The chancery court granted letters testamentary to Carolyn as executor. It found that the beneficiaries of Frankie's will were Carolyn, "the Frankie Ware Family Trust, and the Frankie Ware Marital Trust." The will appointed Carolyn, Richard, Angela, and Dana as trustees for both trusts. The will left Frankie's tangible property and insurance policies to Carolyn, and provided that the remainder of his assets were to be distributed to the trusts. Among Frankie's assets to be distributed to the trusts were shares amounting to 25 percent ownership in four closely held corporations: Ware Milling, Inc., Chickasaw Grain Transportation, Inc., Chickasaw Farm Services, Inc., and Ware Construction, Inc (collectively, "the Ware Corporations"). The remainder of the shares of the Ware Corporations were owned by Carolyn (25 percent) and Richard (50 percent).

¶4. Carolyn published notice to creditors for three consecutive weeks in August and September 2011. In 2014, Carolyn petitioned to close the estate. Carolyn, Angela, and Dana each filed a consent to closing the estate. Richard filed an objection to closing the estate, arguing that the estate's attempt to transfer shares of three of the Ware Corporations to the trusts violated the corporations’ bylaws that required shares to be offered to the corporations for purchase. The bylaws of all four Ware Corporations state that for a "Transfer of Shares,"

[n]o shareholder shall have the right to sell, assign, pledge, encumber, transfer or otherwise dispose of any of any [sic] of the shares of the corporation without first offering the shares for sale to the corporation at the annually established net asset value of such shares. Such offer shall be in writing, signed by the shareholder. The written offer shall be sent by registered or certified mail to the corporation at its principal executive office, and shall remain open for acceptance by the corporation for a period of 120 days from the date of mailing.

In 2015, after much litigation, the chancery court ordered Carolyn to offer to sell the shares of the three corporations to those corporations. Carolyn appealed, and this Court found that "Richard's objection to the closing of Frankie's estate is, in reality, a shareholder derivative claim." Ware v. Ware (In re Est. of Ware I) , 238 So. 3d 613, 618 (Miss. 2018). We noted that "Richard is not seeking individual recovery or individual damages. Rather, he has brought an action to enforce corporate bylaws." Id. at 619. We consequently held that Richard lacked standing "because the injury for which he seeks relief, and the gravamen of this matter, pertains to the corporations only." Id. at 620.

¶5. In 2017, while the appeal in the original estate case was pending, Richard filed Complaints for Dissolution, initiating separate cases (later consolidated by the chancery court) asking the chancery court to grant corporate dissolution for the four Ware Corporations. On January 30, 2018, by agreed order, the chancery court authorized dissolution and appointed Derek Henderson to act as the Receiver for the Ware Corporations. The order directed the Receiver to oversee the liquidation and dissolution of the four Ware Corporations. The order provided that "[t]he Parties consenting and signing off on this order do not oppose the appointment of a receiver over the Four Corporations and the Company Assets." Carolyn's attorney signed the order. In March 2018, the Receiver sought to appoint Legacy Capital to assist with the sale of Ware Corporations assets. Richard objected to the fee structure, but in April 2018, the parties amended the fee structure, and the trial court granted the Receiver's motion for Legacy Capital to assist with the sales.

¶6. In the estate case, the Receiver filed an objection to closing Frankie's estate on April 20, 2018. The Receiver argued that, based on the bylaws’ transfer of shares provision, the shares of the Ware Corporations had to be offered to the corporations prior to being transferred to the trusts. In August 2018, the trial court held that the bylaws applied to Frankie's testamentary transfer and that the estate must offer the shares to the respective corporations. It ordered the closing of the estate conditioned upon the offer of shares and any transfer of sale sums to the estate. Carolyn filed several motions, which the trial court denied. Further, it held that the Receiver should use the date December 31, 2017, to determine the net asset values of the shares as mandated by the bylaws. Chicaksaw Grain Transportation elected to purchase the estate's shares for $386,429.57; Ware Construction opted to purchase the estate's shares for $16.56;¹ Ware Milling opted to purchase the estate's shares for $3,116,270.69. Chickasaw Farm Services elected not to...