Brothers v. Winstead, 129 So. 3d 906

Background

Kilby Brake Fisheries, LLC formed March 2000 with three members: Harry Simmons, Phillips Brothers, LP, and Ray Winstead, each owning one‑third.
Operating agreement silent on capital contributions; three startup loans totaling over $800,000 were signed by all members with Winstead guaranteeing and renewing.
Winstead operated the hatchery; Simmons, as manager, could borrow money and control business decisions; Winstead was later fired in 2007.
Winstead sued in 2009 for salary nonpayment and various tort/derivative claims; defendants counterclaimed for theft and related damages.
Trial in 2011 awarded Winstead about $1.725 million including $1.16m compensatory and $100k punitive; post‑judgment interest and fees followed; appellate issues followed.
Mississippi Supreme Court reverses in part, renders in some parts for defendants, and remands for a new trial on several issues.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Parol evidence and contract interpretation	Winstead relied on oral cash‑contribution agreement.	Operating agreement is unambiguous; no external contributions allowed.	Parol evidence error; contract not ambiguous; render for Simmons on this issue.
Sufficiency of fraud based on Wise Place purchase	Wise Place funded by Kilby Brake; misrepresentation by defendants.	No Kilby Brake funds used; purchase in names of Simmons/Phillips; no fraud proven.	Insufficient clear and convincing evidence; reverse and render for Simmons on Wise Place fraud claim.
Sufficiency of fraud for withheld pay	Withheld pay and personal deductions; damages supported by evidence.	Some deductions personal; no misrepresentation by Phillips Brothers; some damages unsupported.	Reverse as to Phillips Brothers for lack of evidence; with regard to Simmons, no clear CF evidence of fraud; remand for new trial on amounts owed.
Corporate freeze‑out as to Winstead	Majority actions denied Winstead ownership benefits; deliberate exclusion.	No willful breach; management decisions and firing were legitimate business purposes.	Winstead failed to prove willful or intentional freeze‑out; reverse and render in favor of Simmons.
Breach of fiduciary duty and damages tied to missing fish	Simmons/Phillips breached duties; damages include missing fish value.	Damages miscalculated; discovery limitations harmed defense; derivative vs direct action concerns.	Reverse and remand for new trial on liability and damages; discovery issues require reevaluation; render as to Phillips Brothers on some claims.

Key Cases Cited

Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908 So.2d 107 (Miss. 2005) (silence may not create ambiguity; parol evidence limits apply)
Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857 So.2d 748 (Miss. 2003) (contract construction focuses on four corners; intent from language)
Fought v. Morris, 543 So.2d 167 (Miss. 1989) (fiduciary duties in closely held corporations; minority protections)
Bluewater Logistics, LLC v. Williford, 55 So.3d 148 (Miss. 2011) (applies Fought rationale to LLCs)
Natchez Electric & Supply Co., Inc., 968 So.2d 358 (Miss. 2007) (open account defenses; necessity of showing obligation exists)
Derouen v. Murray, 604 So.2d 1086 (Miss. 1992) ( Murray exceptions for derivative claims treated in certain actions)