Denman et al v. Tallahatchie Ducks, LLC et al, No. 2:2010cv00133 - Document 62 (N.D. Miss. 2012)
Court Description: OPINION re 61 JUDGMENT. Signed by Glen H. Davidson on 06/18/2012. (gpk)
Download PDF
<![CDATA[
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI DELTA DIVISION STUART DENMAN, individually; JULIA DENMAN, individually; and DENMAN FARMS, LLC PLAINTIFFS v. CIVIL ACTION NO. 2:lOJCV-00133-GHD ! TALLAHATCHIE DUCKS, LLC and MARK McILWAIN, individually DEFENDANTS OPINION This case came before the Court upon a bench trial beginning on April ~, 2012, pursuant ~ to a dispute concerning a contract between the Plaintiff Denman Farms art! the Defendant I Tallahatchie Ducks, LLC. Upon careful consideration of the testimony and ex~ibits presented at i trial, as well as the parties' post-trial submissions, the Court finds that the pontract must be I interpreted as written and that the Plaintiffs are not entitled to the relief sought. The following ; i constitutes the findings of fact and conclusions of law reached by this Court pu.tsuant to Rule 52 of the Federal Rules of Civil Procedure: A. Findings ofFact The Plaintiffs own real property in Tallahatchie County, Mississippi. Il The Defendant ! Tallahatchie Ducks, LLC leased approximately 2,000 acres of the subject real Jtoperty, pursuant ! to a lease of duck and deer hunting rights ("lease agreement") entered into by the parties through their respective attorneys as of August 28, 2007, for a period often years to expJre on August 28, I i 2017. Pursuant to the lease agreement, Tallahatchie Ducks, LLC constructed kn 8,000 square- I 1 At trial, the Defendants introduced the argument that the Plaintiffs were not the *ctual owners of the real property because the land is in a revocable trust. However, the Plaintiff Stuart Denmanltestified that he and his wife, the Plaintiff Julia Denman, are beneficiaries of the revocable trust. The Court lis satisfied that the Plaintiffs owned the real property and had the authority to enter into the lease agreement. . 1 foot hunting lodge on the real property and purchased fire and extended risk i*surance coverage I for the lodge from Star Net Insurance Company. On February 7, 2010, the Iddge burned. Star i , Net Insurance Company paid Tallahatchie Ducks, LLC $438,000 for the repladement cost of the ! hunting lodge. The Defendant Mark McIlwain, sole member of Tallahatchie tucks, LLC, used the funds to satisfY loans he had made to Tallahatchie Ducks, LLC for the I c~nstruction of the lodge. B. Conclusions ofLaw i This action invokes the Court's diversity jurisdiction. When sitting lin diversity, this Court applies Mississippi substantive law. See In re Knight, 208 F.3d 514, 51h (5th Cir. 2000). "The district court's interpretation of a contract, including the initial I determin~tion , whether the contract is ambiguous, is a conclusion of law." ConAgra, Inc. v. Country Skill~t Catfish Co., 96 I F. App'x 171, 174 (5th Cir. 2004) (citing Royer Homes ofMiss. , Inc. v. Chandd/eur Homes, Inc., i, 857 So. 2d 748, 751 (Miss. 2003) (internal citation omitted)). "Contract and ~eal property law are traditionally the domain of state law." Fid. Fed. Sav. & Loan Ass'n v. de laiCuesta, 458 U.S. 141, 154, 102 S. Ct. 3014, 73 L. Ed. 2d 664 (1982) (citing Aronson v. Quick point Pencil Co., 440 U.S. 257, 262,99 S. Ct. 1096,59 L. Ed. 2d 296 (1979) and Butner v. Unitel! States, 440 U.S. 1 48,55,99 S. Ct. 914, 59 L. Ed. 2d 136 (1979)). The Court notes that the presence of the hunting lodge on the real prop<$iy owned by the Plaintiffs is not dispositive of whether the Plaintiffs had an ownership interest lin the lodge. "It i has been repeatedly held, that a building or other fixture, which is ordinarily a ~art of the realty, is personal property when placed on the land of another by contract or by cons$t of the owner." Jim Walter Corp. & Mid-State Homes, Inc. v. Gates, 370 So. 2d 928, 930 (Mis~. 1979) (quoting Weathersby v. Sleeper, 42 Miss. 732, 1869 WL 2726, at *7 (Oct. Term 1869)). !Thus, in the case I 2 sub judice, the hunting lodge constructed on the Plaintiffs' land pursuant to i th~ lease agreement ! executed by the parties is personal property, not part of the realty. The Court! looks to the four : comers of the contract itself to determine the rights and duties of the parties with respect to any improvements or fixtures. See Check Cashers Express, Inc. v. Crowell, 950 So. 3d 1035, 1041 (Miss. App. 2007). Mississippi law of contracts dictates that courts must interpret a cob-tract as written, i unless it is ambiguous. Royer Homes, 857 So. 2d at 751. "The primary purp<he of all contract , i construction principles and methods is to determine and record the intent oIf the contracting parties." Id. at 752 (citing Kight v. Sheppard Bldg. Supply, Inc., 537 So. 2d Ip55, 1358 (Miss. 1989». The court "is concerned with what the contracting parties have said tp each other, not , some secret thOUght of one not communicated to the other." Id. (quoting Turner v. Terry, 799 ! So. 2d 25, 32 (Miss. 2001) (internal citation omitted». The court looks to the four comers of the contract, that is, the language of the contract i itself, as a whole. See Ivison v. Ivison, 762 So. 2d 329, 335 (Miss. 2000); Brow~ v. Hartford Ins. Co., 606 So. 2d 122, 126 (Miss. 1992). If the court finds the agreement to b~ ambiguous, the court should consider extrinsic or parol evidence to detennine the meaning of (he contract. See Pursue Energy Corp. v. Perkins, 558 So. 2d 349, 352 (Miss. 1990). But "the there fact that the 1 parties disagree about the meaning of a contract does not make the contractl ambiguous as a ! j matter of law." Royer Homes, 857 So. 2d at 753 (quoting Turner, 799 So. 4I at 32 (internal ~ i citation omitted». And "if a contract is clear and unambiguous, then it must ~e interpreted as written." US. Fid. & Guar. Co. v. Martin, 998 So. 2d 956, 963 (Miss. 2008). 3 The lease agreement in this case was drafted by and agreed to by both parties through I their respective attorneys. The lease agreement provides that it is "for the niutual benefit" of both parties and otherwise provides in pertinent part: 3. Renter [Tallahatchie Ducks, LLC] intends to construc~ a hunting lodge on the premises at his expense. 2 Upon expirationjof the primary ten (10) year tenn, the hunting lodge shall become the j property of Owner [Denman Fanns]. I 4. Renter [Tallahatchie Ducks, LLC] shall maintain insura.tj;e on the hunting lodge against fire and extended risks on! a replacement cost basis. Renter [Tallahatchie Ducks, LLC]! is responsible to insure its contents. For purposes hereIn, "replacement cost basis" shall mean the actual replacement cost pf the hunting lodge from time to time. The cost of insurance will ~e paid by renter during the primary ten (10) year tenn. Owrier [Denman Fanns] shall be responsible to maintain, at his expen4e, said insurance during any renewal of this lease. The responsiijle party shall furnish the other party with proof of insurance. Furthtr, Renter [Tallahatchie Ducks, LLC] shall pay property taxes on *e hunting lodge, utilities and all maintenance of the hunting lodge during the primary ten (10) year term. ~ The language of the lease agreement in its entirety reveals that Tallahatfhie Ducks, LLC intended to cover the costs of constructing the hunting lodge on the leased real P,roperty, and that i after ten years, Denman Farms would own the lodge. The lease agreement further provides that Tallahatchie Ducks, LLC would maintain fire and extended risk insurance 0*, the lodge on a ; replacement cost basis. The lease agreement fails to provide two key pieces of infonnation: (1)1 what ownership i interest, if any, Denman Farms would have in the lodge during the primary tenhear term of the 1 ; lease; and (2) which party would be the beneficiary of the fire and extendd:t risk insurance ! policy. I 2 Renter, lessee, pursuant to the terms of the contract, was not obligated to construc~the lodge. 4 , 1 The Court finds that both parties had an insurable interest in the lo<we, but the lease agreement as a whole reveals that the parties intended Tallahatchie Ducks, LLf: to shoulder the I majority of costs associated with the property until the expiration of the prim4rY ten-year lease i term. These costs include several incidental to property ownership: (1) buildint costs associated I with the lodge; (2) liability for actions at law that result from entering into 'fd executing the lease agreement; (3) all property taxes, utilities, and maintenance of the lo~ge; (4) fire and i , i extended risk insurance on the lodge; and (5) liability insurance on the lodge. The lease agreement further provides that in the event of Tallahatchie Ducks, LLC's de~ult on the lease, I "all of Renter's [Tallahatchie Ducks, LLC' s] real property and fixtures locate~ on the premises shall become the sole property of Owner [Denman Farms]." This language! reveals that the improvements and fixtures on the premises would not be the property of De~n Farms for the , primary ten-year term of the lease, in the absence of default. The lease agreement provides with respect to insurance that Tallahat~ie Ducks, LLC must maintain both fire and extended risk insurance and liability insuranc~ on the lodge. Although the lease agreement requires the Defendants to list the Plaintiffs as adhitional insureds ! on the liability insurance policy, the lease agreement IS silent with respect! to the required ; j insureds on the fire and extended risk insurance policy. I The Court notes that the parties are highly educated with significant busijness experience. i The Plaintiff Stuart Denman holds an advanced degree in veterinary medicine ahd has practiced , i his profession and engaged in significant farming and leasing operations for seteral years. The i Defendant Mark McIlwain holds an advanced degree in dental medicine and ha~ engaged in the ; practice of dentistry in Alabama for several years; he has also engaged in sigI)ificant business l endeavors over the years. The parties also had experienced attorneys r~resenting them ! 5 throughout the negotiation and preparation of the lease agreement. Dentnan testified by I deposition that McIlwain's attorney sent an initial proposed draft of the lease 19reement, which , , Denman rejected. Pl.'s Dep. [38-3] at 11. Denman then testified that he fax~d over a lease to I i use as a go-by (see Pl.'s Ex. la), and McIlwain's attorney added language ~to the proposed lease about building the lodge and insurance coverage on the lodge. Id. i The Defendants proposed language which would have required the Plaintiffs to pay a portion of the insurance and taxes on the hunting lodge during the primary ten-year term of the lease. TIle proposed draft 1 contained the following language: The costs of insurance will be paid by renter [Tallahatchie Ducks, LLC] during the first year. Each year thereafter, owner [Denmlm Farms] shall pay an additional ten percent (10%) of the insuranFe cost. By way of example, in year two (2) renter shall pay 90% ~d owner shall pay 10% of the insurance cost; in year 3, renter sh~l1 pay 80% and owner shall pay 20% etc. ; t PI. 's Ex. 1c. Denman rejected this draft, stating that he did not want any res~nsibi1ity for the lodge for the first ten years. Denman testified at trial: I t I told [McIlwain] I don't want another expense. I want $65,000 tPr hunting on my land. I'm not going to pay the taxes. I'm not going to p~y the insurance. This is if you build a lodge, you will be responsible fori it for the first ten years and I'll pick it up the next ten. Trial Tr. Vol. I at 91. The Court is of the opinion that it need not look beyond the four cOl'~ers of the lease agreement to ascertain the parties' intent with respect to the lodge. The lea~ itself does not provide that Plaintiffs have any ownership interest in the lodge until the expirati~n of the primary ten-year term of the lease or Defendants defaulted on the lease. The lease ag¢ement similarly does not specify any of the following: that Denman Farms must be listed as an allditional insured t on the fire and extended risk insurance policy; that the lodge must be rebui1~ by Tallahatchie 6 Ducks, LLC; or that Denman Fanns is entitled to any of the fire and extend~d risk insurance proceeds. The fact that the Plaintiffs are not listed in the lease agreement as ha~ing an interest in , the lodge and in the insurance proceeds on the sworn statement of loss is unfortunate, but the j j Court feels the language of the contract controls and is not ambiguous. Theref~re, the Plaintiffs i are not entitled to any legal or equitable relief. A. Conclusion Based on the foregoing authorities and analysis, the Court finds that the lease agreement j must be enforced as written. Thus, the Plaintiffs are not entitled to any ~ompensatory I equitable relief, and the Court rules in favor of the Defendants. A separate order in accordance with this opinion shall issue this day. ~ THIS, the I 11day of June, 2012. SENIOR JUDGE 7 or
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
