Bailey Brake Farms, Inc. v. Trout
116 So. 3d 1064
| Miss. | 2013Background
- Bailey Brake Farms, Inc. and Bailey Hunting and Fishing Association formed stock-related agreements to govern transfers and buyouts of shares.
- Shareholders Nassar and Trout sought to tender their shares in 2001 under a buy-sell agreement; arbitration was invoked to determine fair market value.
- A special master recommended enforcing arbitration and determining value as of May 19, 2001, with no prejudgment interest due to lack of request.
- Arbitrators issued a 2010 decision valuing Nassar’s and Trout’s shares and suggested resolving unresolved assessment deductions by court or a third arbitrator.
- The chancery court adopted the arbitration framework but ordered Bailey Brake to pay substantially more than the arbitration award, finding the arbitration decision incomplete and formed by undue means.
- On appeal, the court reinstated the arbitration award, reversing the chancellor; cross-appeals challenged amendments and prejudgment interest requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the chancery court properly reviewed the arbitration award | Bailey Brake argues court exceeded authority, disregarding binding arbitration. | Nassar/Trout argue court properly scrutinized the award due to perceived flaws. | Arbitration award reinstated; court exceeded authority by vacating. |
| Whether the chancellor relied on unsupported grounds like undue means | Bailey Brake contends no basis to deem the award procured by undue means. | Nassar/Trout contend the chancellor could review for such defects. | Chancellor erred; no adequate explanation of undue means. |
| Whether the award was incomplete or the assessments affected the value | Bailey Brake claims the award’s incompleteness and assessment issues were improperly treated. | Nassar/Trout contend assessments could be resolved within arbitration or court. | Arbitrators’ determinations reinstated; no basis to deem incomplete. |
| Whether the denial of amendments to add new claims was proper | Nassar/Trout sought to add breach and related claims later. | Bailey Brake argues delay and prejudice justify denial. | Denial of amendment affirmed. |
| Whether prejudgment interest was entitlement under the Buy-Sell Agreement | Nassar/Trout claim prejudgment interest should be awarded. | Bailey Brake asserts no such entitlement since it was not pled or due. | Prejudgment interest not awarded. |
Key Cases Cited
- IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96 (Miss. 1998) (distinct meanings of arbitration vs appraisal; binding arbitration when chosen)
- Margerum v. Bud’s Mobile Homes, Inc., 823 So.2d 1167 (Miss. 2002) (standard for vacating arbitration awards; deference to arbitral decisions)
- Hutto v. Jordan, 36 So.2d 809 (Miss. 1948) (arbitration should be narrowly reviewed; respect for arbitration outcomes)
- Craig v. Barber, 524 So.2d 974 (Miss. 1988) (arbitration proceedings carry substantial presumptions of validity)
- Adams Cmty. Care Center, LLC v. Reed, 37 So.3d 1155 (Miss. 2010) (contract law governs validity of arbitration agreements)
- Upchurch Plumbing, Inc. v. Greenwood Utilities Comm’n, 964 So.2d 1100 (Miss. 2007) (pleading prejudgment interest requires specificity, but not exact date)