176 So. 3d 62
Miss. Ct. App.2014Background
- Two-shareholder Limestone Products Inc operated for 10 years with a credit line personally guaranteed by both Lampkin and Smith; Smith died in 2006 and his estate refused to extend the credit line beyond December 2006, crippling Limestone’s ability to operate; Lampkin formed Delta Stone in January 2007 to run the same rock-supply business and fulfill Limestone contracts; Executors (the Estate) sued Lampkin seeking declarations on independent business rights and damages for alleged fiduciary breaches; chancellor found Lampkin breached fiduciary duty of loyalty by usurping a corporate opportunity and awarded Limestone damages based on 2006 net book value plus future lost profits and remaining assets; executors appealed arguing expert reliance, damages calculations, and fee awards; the court affirmed with a Mississippi Supreme Court dissent on the damages methodology.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Saunders’ expert admissible and reliable? | Executors contend Saunders’ methods and conflict render him unreliable. | Lampkin asserts Saunders is qualified and his methods are admissible. | No abuse of discretion; Saunders properly admitted and relied upon. |
| Did the chancellor properly calculate damages to Limestone? | Executors seek lost profits; dispute the method. | Lampkin argues damages based on historical net profits plus net book value are appropriate. | Damages supported; method not clearly erroneous. |
| Should unreported rock be included in damages? | Executors contend unreported rock inflated losses. | Chancellor resolved credibility; no error in excluding unreported rock. | No reversible error; court did not include unreported rock. |
| Should lease payments affect damages or pierce the corporate veil? | Estate argues damages should reflect lease obligations; may pierce veil. | No lease damages attributable; pleadings/timing/veil issues complicate. | Chancellor properly did not award lease-based damages. |
| Should attorneys’ fees and expert-witness fees be awarded? | Estate seeks fees due to breach and further proceedings. | Fees unlikely without statutory/contractual basis; judge has discretion. | No abuse of discretion; fees denied. |
Key Cases Cited
- Lovett v. E.L. Garner, Inc., 511 So.2d 1346 (Miss. 1987) (loss of future profits permitted with certainty; net profits discussed)
- Sanders v. Dantzler, 375 So.2d 774 (Miss. 1979) (loss of future profits shown via past profits)
- Lynn v. Soterra Inc., 802 So.2d 162 (Miss. Ct. App. 2001) (lost profits vs lost income rule)
- City of New Albany v. Barkley, 510 So.2d 805 (Miss. 1987) (guidance on proof of damages in certain actions)
- Aqua-Culture Technologies, Ltd. v. Holly, 677 So.2d 171 (Miss. 1996) (recovery of profits when fiduciary breaches; damages framework)
- Knox Glass Bottle Co. v. Underwood, 89 So.2d 799 (Miss. 1956) (damages timing and construct of profits; subjective standard)
- Par Indus., Inc. v. Target Container Co., 708 So.2d 44 (Miss. 1998) (standard for reviewing factual findings on appeal)
- Greater Canton Ford Mercury, Inc. v. Lane, 997 So.2d 198 (Miss. 2008) (damages award review; abuse of discretion standard)
- Smith v. Dorsey, 599 So.2d 529 (Miss. 1992) (attorney’s fees award with punitive damages framework)