Professional Documents
Culture Documents
Jackson County V SHRS and SRHS MOB Doc 191
Jackson County V SHRS and SRHS MOB Doc 191
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IN THE CHANCERY COURT OF JACKSON COUNTY, MISSISSIPPI ~~~~~~¥i
THIS CAUSE came on for hearing on September 16, 2019, on multiple summary
judgment motions filed by the parties. All parties were represented by counsel. The Court,
after considering oral arguments on behalf of all parties, does hereby FIND, ORDER,
I.
JURISDICTION
The Court has jurisdiction over the parties and the subject matter herein.
II.
PROCEDURAL HISTORY
County"), filed their complaint against the Defendants, Singing River Health System (hereinafter
"SRHS") and Singing River MOB, LLC, an Alabama Limited Liability Company (hereinafter
"MOB").
On July 16, 2018, MOB filed their Notice of Filing Notice of Removal and removed the
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On September 5, 2018, the United States District Court for the Southern District of
Mississippi Southern Division released a Memorandum Opinion and Order Gr~ting Plaintiffs
Motion to Remand but Denying Plaintiffs Motion for Costs, thereby remanding the case back to
On October 11, 2018, MOB filed their Answer to Cross-Claim & Cross-Claim Against
SRHS. On that same day, MOB also filed their Motion to Transfer to Circuit Court.
On October 26, 2018, Jackson County filed their Response to MOB's Motion to Transfer
to Circuit Court. That same day, Jackson County filed a Motion foi: Leave to File Amended
Complaint.
On October 29, 2018, SRHS filed their Joinder in Plaintiffs Response to MOB's Motion
On November 29, 2018, SRHS filed a Motion to Deposit Monies into the Registry of the
Court.
On February 15, 2019, MOB filed their Reply in Support of Motion to Transfer to Circuit
Court and Response to Motion to Amend Complaint. On that same date, MOB also filed their
Opposition to SRHS' s Motion to Deposit Monies into the Registry of the Court.
On February 19, 2019, SRHS filed their Reply to MOB's Response in Opposition to
On February 21, 2019, this Court entered an Order denying the Motion to Transfer to
Circuit Court. That same day, a second Order was entered denying the Motion to Deposit
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Monies into the Registry of the Court. The Court entered a third Order this day, which granted
On March 20, 2019, the Court entered an Order to Show Cause upon learning that there
was a pending Federal action filed after the present action. The Court directed the parties to
appear to show cause as to which cause of action should go forward before mediation.
On March 21, 2019, the Court entered an Order that amended the Order to Show Cause to
change the hearing date from March 22, 2019, to April 1, 2019.
On April 2, 2019, the Court entered an Order setting this matter for a five-day trial
beginning November 18, 2019. The Court further appointed Honorable David Wheeler and Mr.
On April 11, 2019, MOB filed their Motion to Reconsider and to Vacate Order Entered
April 2, 2019.
On April 12, 2019, the Court entered an Order denying MOB's Motion to Reconsider and
On May 23, 2019, SRHS filed their Answer to Amended Complaint and Amended Cross-
Claim.
On May 14, 2019, the Court entered an Order expanding the Scheduling Order of May
14, 2019.
On May 31, 2019, MOB filed their Answer to Amended Cross-Claim by SRHS.
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On June 6, 2019, SRHS filed their Responses to the Court's Scheduling Order Dated May
14, 2019, and the Court's Order Dated May 14, 2019.
On June 7, 2019, Jackson County filed their Memorandum Brief along with their
On that same date, MOB filed their Documents Pursuant to Scheduling Order, along with
On June 10, 2019, the Court entered an Order unsealing the file. The Court also entered
an Order finding that MOB failed to comply with the Scheduling Order set out by this Court.
On June 11, 2019, MOB filed their Documents Pursuant to Scheduling Order.
On June 19, 2019, MOB filed a Motion to Redact Sensitive and Private Information. On
that same day, the Court entered an Order directing Mr. Lindsey Boney to compile a list of
On June 25, 2019, the Court entered an Order directing the parties to answer Mr. Lindsey
Boney' s inquiries.
On June 26, 2019, Jackson County filed their Response to June 20, 2019, Questions
Submitted by Court-Appointed Expert. On that same day, the Court entered an Order appointing
the architecture and engineering firm, Machado-Patano, PLLC, as an expert in this case.
On June 28, 2019, SRHS filed their Response to Order Dated June 25, 2019, Regarding
Questions Propounded by Lindsey C. Boney, III, CPA, CFE, CVA. That same day, MOB filed
their Responses to Questions Posed by Court-Appointed Expert Through June 20, 2019, Letter.
On July 11, 2019, MOB filed a Motion to Inspect Documents Placed in the Evidence
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On July 15, 2019, the Court entered a Status Order setting this matter for status hearing
on August 5, 2019. A second Order was entered this date, whereby the Court forwarded the
On July 19, 2019, SRHS filed a Motion for Protective Order requesting the Court block
MOB's attempts to depose Roy C. Williams, former attorney for the Board of Trustees of SRHS.
On July 23, 2019, Jackson County filed a Motion for Protective Order, along with a
Memorandum supporting the same, requesting the Court block MOB's attempts to depose Paula
On July 26, 2019, the Court entered an Order granting MOB's Motion to Inspect
On July 29, 2019, MOB filed responses to both Jackson County and SRHS's motions for
protective orders.
On July 30, 2019, Jackson County filed their Reply in Support of its Motion for
Protective Order.
On July 31, 2019, SRHS filed their Reply in Support of its Motion for Protective Order.
On August 1, 2019, SRHS filed a Motion for Summary Judgment along with a
On August 5, 2019, Jackson County filed a Motion for Inspection of Documents Placed
in the Evidence Vault of the Chancery Clerk. On that same day, the Court ~ntered cm Agreed
On August 5, 2019, the Court also entered an Order allowing MOB to take the deposition
of Roy C. Williams on August 27, 2019, in Courtroom C of the Jackson County Chancery
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Courthouse. This Order also sealed the deposition of Roy C. Williams and denied MOB's
On August 14, 2019, the Court entered an Order stating that all summary judgment
motions of the parties would be heard on September 16, 2019, in George County, Mississippi.
The location of the September 16, 2019 would later be changed to Jackson County, Mississippi.
On August 26, 2019, the Court entered an Order allowing the parties to take the
On August 30, 2019, Jackson County filed their Motion for Summary Judgment Against
Defendants SRHS and MOB. A Memorandum in support of said motion was also filed.
On September 5, 2019, MOB filed a M9tion for Summary Judgment along with a Brief in
On September 11, 2019, SRHS filed their Response to MOB's Motion for Summary
Judgment. On that same date, SRHS filed their Response to MOB's Statement of Undisputed
Material Facts.
On September 12, 2019, Jackson County filed a Response and Memorandum Brief in
Opposition to MOB's Motion for Summary Judgment. That same day, MOB filed their Brief in
On September 17, 2019, the Court entered a Scheduling and Discovery Order, Expert
Witness Designation and Pre-Trial Order. This Order required the parties to designate all expert
witnesses within fourteen (14) days of the entry of the Order and for the parties to complete
discovery and disclose all witnesses by November 1, 2019. As of the date of entry of this Order
Granting Partial Summary Judgment, the parties have not designated any expert witnesses.
Since the parties attended the deposition of Mr. Boney on September 16, 2019, and no other
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expert witnesses were designated within 14 days of the September 11, 2019, Scheduling Order,
the Court will consider Mr. Boney's testimony as that of an expert in the findings to follow.
III.
STATEMENT OF CLAIMS
In their initial complaint filed on June 7, 2018 (Dkt. 2), and their Amended Complaint
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filed o~ February 26, 2019 (Dkt. 34), Jackson County requested the Court declare a lease
between Jackson County and SRHS as void for failure to comply with the enabling resolution
dated March 16, 2009. In the alternative, Jackson County requested that the lease between
Jackson County and SRHS be found voidable at the discretion of the Jackson County Board of
Supervisors on the basis that the lease improperly bound successor boards. In the event the lease
was declared void by Jackson County, Jackson County requested the Court grant them
possession of the land in question. Jackson County also requested that the Court grant whatever
In their Answer and Cross-Claim filed on September 11, 2018 (Dkt. 11 ), and their
Answer to Amended Complaint and Amended Cross-Claim (Dkt. 76), SRHS joined the relief
sought by Jackson County and requested that this Court find the lease between Jackson County
and SRHS void or voidable. SRHS also requested the Court deem the lease, sub-leases and
amended sub-leases between SRHS and MOB as void or voidable because the rental rate
pursuant to the lease, sub-leases and amended sub-leases was in excess qf the market rental rate
of comparable lease space, the lease, sub-leases and amended sub-leases improperly bound
successor boards and the lease, sub-leases and amended sub-leases were not properly spread
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In their Answer to Cross-Claim & Cross-Claim Against SRHS filed October 11, 2018
(Dkt. 12), MOB requested this Court grant a declaratory judgment finding the leases, sub-leases
and amended sub-leases between Jackson County, SRHS and MOB as valid and enforceable.
MOB further requested that if the Court declared the lease, sub-leases and amended sub-leases
void or voidable that the Court also direct SRHS to purchase MOB's interest in the premises.
MOB also made a claim for Court costs and attorney's fees.
IV.
STATEMENT OF FACTS
Based on the evidence presented to this Court, this case involves an initial transaction
between Jackson County and SRHS wherein Jackson County would lease to SRHS, by way of
a ground lease, a tract of land covering approximately- 13. 78 acres in Pascagoula, Mississippi.
After this initial ground lease, SRHS would lease the same property to Johnson Development,
Johnson Development would lease the medical office project back to SRHS, for which SRHS
The Board of Supervisors of Jackson County, on March 16, 2009, passed a resolution
that authorized the lease agreement between Jackson County and Board of Trustees for SRHS
pertaining to the Singing River Hospital Campus. (Dkt. 2). This resolution required the
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Jackson County and SRHS entered into the above-mentioned lease on March 26, 2009,
and on April 6, 2009, the Jackson County Board of Supervisors passed a resolution ratifying
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the lease agreement between Jackson County and SRHS. (Dkt. 2).
On October 28, 2009, SRHS and MOB entered into the following lease and sub.,.leases:
The four sub-leases were amended on November 30, 2010 {hereinafter "amended sub-
leases"). Sometime between the original lease and sub-leases of October 28, 2009, and the
amended sub-leases of November 30, 2010, MOB began construction on the subject property.
The minutes do not contain the pertinent provisions of the amended sub-leases dated
The minutes presented by the parties for this Court to_ consider are as follows:
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The Court notes that, after the filing of this action, MOB filed an action in federal court
(Civil Action No.: 1:19-cv-33-LG-RHW) seeking to enforce the default and acceleration
provisions of the lease, sub-leases and amended sub-leases for SRHS's failure to pay rent
pursuant to the same. A copy of the Complaint filed by MOB against SRHS in the United States
District Court, Southern District of Mississippi, is attached to this Order as Exhibit "A".
However, the minutes listed above do 'not include language pertaining to the default and/or
V.
"It is well settled that a summary judgment motion is only properly granted when no
genuine issue of material fact exists." Nelson v. Holliday, 83 So. 3d 454,456 (Miss. Ct. App.
2012); Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534,535 (D. Md. 2007); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242,247 (1986); See also Miss. R. Civ. P. 56; Fed. R. Civ. P. 56(c).
"A fact is material if it 'tends to resolve any of the issues, properly raised by the parties."'
Woodv. Mossy Oak Properties, Inc., 120 So. 3d 443,446 (Miss. Ct. App. 2013) (quoting Webb
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The moving party has the burden of demonstrating that no genuine issue of material fact
exists within the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits. Byrd v. Bowie, 933 So. 2d 899, 902 (Miss. 2006); Tucker v. Hinds
County, 558 So. 2d 869, 872 (Miss. 1990); Pulliam Inv. Co. v. Cameo Properties, 810 F.2d 1282,
1286 (4th Cir. 1987); Charbonnages de France v. Smith, 597 F.2d 406,414 (4th Cir. 1979).
"When considering a motion for summary judgment, evidence must be viewed in the
light most favorable to the nonmoving party." Hooker v. Greer, 81 So. 3d 1103, 1108 (Miss.
2012) (quoting Waggoner v. Williamson, 8 So. Jd 147, 152 (Miss. 2009)); See also Gill v.
Rollins Protective Services Co., 773 F.2d 592, 598 (4th Cir. 1985).
Partial summary judgment is permitted under Miss. R. Civ. P. 56(a). The rule states:
M.R.C.P. 56(a).
M.R.C.P. 56(d); Brown v. Credit Center, Inc., 444 So. 2d 358, 363 (Miss. 1983).
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Partial summary judgment utilizes the same criteria for a grant or denial of a summary .
judgment. Waggoner, 8 So. 3d at 153; See also Covington County School Dist. V Magee, 29 So.
3d 1, 4 (Miss. 2010).
VI.
It is well established in Mississippi faw that a "[p]ublic board 'speaks and ayts only
through its minutes."' Kennedy v. Claiborne Cnty., Miss. ex rel. Bd ofSupervisors, 233 So. 3d
825, 829 (Miss. Ct. App. 2017) (quoting Wellness, Inc. v. Pearl River Cnty. Hosp., .178 So. 3d
1287, 1290 (Miss. 2015)). "The minutes 'are the sole and exclusive evidencf of what the board
did' and 'must be the repository and the evidence of their official acts."' Kennedy, 233 So. 3d at
829 (quoting Pike Cnty., Miss. ex rel. Bd a/Supervisors v. Indeck Magnolia, LLC, 866 F. Supp.
2d 589, 591-92 (S.D. Miss. 2012)). The requirement that a board of supervisors can only act by
and through its minutes has been described as "stringent." See Warren Cnty. Port Comm 'n v.
Farrell Const. Co., 395 F.2d 901,904 (5th Cir. 1968) (noting that minutes requirement is so
stringent that order entered upon minutes is void if minutes are not signed by president of board).
Even further, the minutes requirement has been characterized by the Mississippi Supreme Court
as "'an important public policy issue,' cautioning that 'public interest requires adherence thereto;
notwithstanding the fact that in some instances the rule may work an apparent injustice."' Urban
Developers LLC v. City ofJackson, Miss., 468 F.3d 281,299 (5th Cir. 2006) (quoting Butler v.
Bd ofSupervisors for Hinds Cnty., 659 So. 2d 578,579 (Miss. 1995)). "'[T]he policy of
protecting the public's funds for use by and for the public is paramount to other individual rights
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When a "public board enters into business with another entity, a contract must be
recorded on the official minutes of the board and stated in express terms." Dhealthcare
Consultants, Inc. v. Jefferson Cnty. Hosp., 232 So. 3d 192, 194 (Miss. Ct. App. 2017). "'[T]here
can be no such thing as a verbal or oral order of [the] board,"' and "[n]o contract can be implied
or presumed." Burt v. Calhoun, 231 So. 2d 496, 499 (Miss. 1970) (quoting Smith Cnty. v.
Mangum, 89 So. 913 (Miss. 1921)). "However, a contract, though not spread on the minutes in
its entirety, may still be enforced 'where enough of the terms and conditions of the contract are
contained in the minutes for determination of the liabilities and obligations of the contracting
parties without the necessity of resorting to other evidence.'" Dhealthcare, 232 So. 3d at 194
(quoting Wellness, Inc., 178 So. 3d at 1291). The minutes must "evidence[] what the board did,
and show[] the substantial provisions of the contract." Bd ofSupervisors, Adams Cnty v. Giles,
68 So. 2d 483,488 (Miss. 1953). "[E]ach person, firm or corporation contracting with a board of
supervisors is responsible to see that the contract is legal and properly recorded on the minutes of
the board." Thompson v. Jones Cnty. Cmty. Hosp., 352 So. 2d 795, 797 (Miss. 1977).
VII.
"Equity will not suffer a wrong without a remedy." Griffith, Mississippi Chancery
Practice, 2d Ed., 1950, § 35, p. 38. "Equity delights to do complete justice and not by halves."
Griffith, § 37, p. 39. "[E]quity must follow the law." Joel v. Joel, 43 So. 3d 424, 427 (Miss.
2010). "But where the law provides no remedy, equity may do so." Id.
Unjust _enrichment is an equitable re_medy. Willis v. Rehab Sols., PLLC, 82 So. 3d 583,
588 (Miss. 2012); Taylor Made Smiles, PLLC v. Franklin Collection Serv., Inc., 224 So. 3d 565,
568 (Miss. Ct. App. 2017). Unjust enrichment is based on the equitable principle that a person
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shall not be allowed to enrich himself unjustly at the expense of another. Avakian v. Wilmington
Trust, Nat'/ Ass'n, 242 So. 3d 961,971 (Miss. Ct. App. 2018); Beasley v. Sutton, 192 So. 3d 325,
where there is no legal contract but where the person sought to be charged is in possession of
money or property which in good conscience and justice he should not retain but should deliver
to another, the courts imposing a duty to refund the money or the use value of the property to the
person to whom in good conscience it ought to belong." Estate ofJohnson v. Adkins, 513 So. 2d
922, 926 (Miss. 1987) (quoting Hans v. Hans, 482 So. 2d 1117 (Miss. 1986)); See also Old
Men's Home v. Lee 's Estate, 4 So. 2d 23 5 (Miss. 1941) (discussing the equitable properties of a
"quasi contract").
"The amount of recovery for unjust enrichment is 'that to which the claimant is equitably
entitled."' Cates v. Swain, 215 So. 3d 492,495 (Miss. 2013) (quoting Estate ofJohnson, 513 So.
2d at 926).
VIII.
The Court does hereby FIND, ORDER, ADJUDGE and DECREE as follows:
1.
The summary judgment standard cited hereinabove requires the Court to find that there
are no genuine issues of material fact that relate to the issue of the minutes containing the
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2.
The law cited hereinabove regarding minutes of public bodies and public boards
requires this Court to find that the essential terms contained in the leases, sub-leases and
amended sub-leases are not contained in the minutes as stated hereinabove and in this
3.
However, the unjust enrichment law and the principles of equity require this Court to
find that although the leases are void as a matter of law ·and there is no genuine issue of
material fact, SRHS must pay some amount of money for the leases and some amount of
4.
Furthermore, the Court is bound by the pleadings of the parties as stated herein.
5.
The law requires that the minutes of both the Jackson County Board of Supervisors and
SRHS Board of Trustees contain essential elements as to the terms of any leases, sub-leases and
amended sub-leases for the same to be valid. The Court finds two essential provisions of the
leases, sub-leases and amended sub-leases that are not contained in either the minutes of the
Jackson County Board of Supervisors or in the minutes of the SRHS Board of Trustees: (1)
default provisions and (2) amended sub-lease provisions. The amended sub-lease provisions
setting forth the amounts to be paid by SRHS to MOB are not contained in any minutes of SRI-IS
Board of Trustees or the Jackson County Board of Supervisors, as required by law. The law
requires this Court to find all of the leases, sub-leases and amended sub-leases VOID.
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In violation of the law, since the provisions stated hereinabove were not in the minutes
and are essential terms, MOB improvidently filed a Federal Court action seeking to enforce the
default provisions and accelerate the rent against SRHS as set forth in the terms of a Ground
Lease.
The Court finds that there are no genuine issues of material fact concerning the terms of
the leases, sub-leases and amended sub-leases in this matter, as the essential elements of the
terms of the leases, sub-leases and amended sub-leases are not contained in either the minutes of
the Jackson County Board of Supervisors or in the minutes of the Board of Trustees for SRHS.
\
The Court therefore finds that the lease between Jackson County and SRHS dated March 26,
2009, the Ground Lease between SRHS and MOB dated October 28, 2009, the four (4) sub-
leases between MOB and SRHS dated October 28, 2009, and the four (4) amended sub-leases
between MOB and SRHS dated November 30, 2010, are void as a matter oflaw. The public has
a right to know when public money is used and paid to a private party. Here, the essential terms
of the leases, sub-leases and amended sub-leases are not in the minutes.
The law and the principles of equity require the Court to determine the value of the rental
tate for the space used in the building from October 28, 2009, to the present date. The law
requires this Court to calculate the rental rate based on value of the building. On September 17,
2019, this Court entered an Order directing that an appraisal be conducted by Valbridge Property
Advisors. This appraisal was completed and filed with the Court on October 7, 2019. The
appraisal found the fair market value of the building to be $17,800,000.00, and a fair market
annual rental rate of $1,681,249.00. (Dkt. 184-1). The Court has figured the monthly rental rate
to be $140,104.08. The Court also notes that the void leases, sub-leases and amended sub-leases
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impose a triple-net lease without reference to same in the minutes simply because the amounts
paid under all the leases are not reflected in the minutes. Although the leases in question in this
matter are void as a matter of law, the principles of equity and the doctrine of unjust enrichment
mandate that the hospital system and/or others pay the fair market value for the rental and the
7.
The Court finds that, since the leases, sub-leases and amended sub-leases are void, the
Court sustains MOB's prayer in their pleadings that SRHS purchase MOB's interest in the
8.
The Court finds that the duty to ensure that the minutes were accurate and properly
spread upon the minutes of the boards is upon MOB and Mr. Johnson. The Court finds that
MOB and Mr. Johnson failed in this duty. See Thompson, 352 So. 2d at 797.
9.
Since the Court has found that the leases, sub-leases and amended sub-leases described
hereinabove are void as a matter of law, it now becomes the duty of this Court to determine the
liability for all remaining funds, if any, owed by past trustees, past supervisors and/or the
following entities or persons: Johnson Development, LLC; Singing River MOB Manager, LLC;
Mississippi PW JJ Investments, LLC; DY-Singing River QEI, LLC; MBFC Sub-CDE I, LLC;
CCG Sub-CDE 10, LLC; Dudley Ventures Hancock Fund, LLC; JD 2011, LLC; Perry White;
Sallie R. Johnson; and Milton R. Johnson. This shall include any and all banks and/or financial
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10.
The law requires this Court to determine what benefit, if any, SRHS received as a result
of occupying the building even though the leases, sub-leases and amended sub-leases are void.
Furthermore, the Court finds that based on Mr. Boney's reports and deposition testimony,
Johnson Development, owned by Mr. Johnson and/or others, holds an alleged debt, apart from
the deed of trust, on the building. MOB claims this debt as being owed and payable by them to
another entity, which is also owned by Mr. Johnson. This debt has been referred to by the parties
in the pleadings and at the hearings as a "B" Note. However, the debt claimed is not filed of
record in the Chancery Clerk papers as a deed of trust or a lien as required by the law.
Mr. Boney, as a Certified Public Accountant, Certified Fraud Examiner and Certified
Valuation Expert (See Dkt. 149), opined that since the doc~ments presented to him for review
show that related parties owned both sides of the debt in question, the outstanding debt is
effectively cancelled out and not owed. See Expert Witness Report of Lindsey C. Boney, III
dated August 12, 2019 (Dkt. 149), and September 25, 2019 Supplement to Expert Witness
Report of Lindsey C .. Boney, III (Dkt. 176); See also Deposition of Lindsey C. Boney, III, pp.
76-85.
IX.
It is therefore,
ORDERED, ADJUDGED and DECREED that the leases, sub-leases and amended sub-
ORDERED, ADJUDGED and DECREED that based on the fair market yearly rental rate
of $1,681,249.00, as found in the October 7, 2019, appraisal, Singing River Health System shall
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I
pay rent to Singing River MOB, LLC for the month of November 2019 and only the month of
November 2019 in the amount of One Hundred Forty Thousand One Hundred Four Dollars and
Eight Cents ($140,104.08). This rent shall be payable by Singing River Heal~h System on
November 1, 2019, and Singing River Health System shall not pay any further monthly rental
rate;
ORDERED, ADJUDGED and DECREED that based on the fair market value of the
building, Singing River Health System shall pay the amount of Seventeen Million Eight Hundred
Thousand Dollars and Zero Cents ($17,800,000.00) to Singing River MOB, LLC, for the
purchase of the building. This amount shall be paid-in-full on or before December 1, 2019, and
part of these funds shall be used to pay off all of the Hancock Bank deed of trust in the amount
ORDERED, ADJUDGED and DECREED that the Court will determine the liability, if
any, others may have for the amounts wrongfully paid pursuant to the foregoing leases, sub-
leases and amended sub-leases that were held void as a matter of law. The parties are hereby
directed to issue process and/or subpoena all parties they contend are responsible for the amount
of money that was paid pursuant to the leases, sub-leases and amended sub-leases from October
28, 2009, to October 31, 2019. This is issue that the Court will hear and adjudicate during the
ORDERED, ADJDUGED and DECREED this th~ -1l day of October, 2019.
(J~s~
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COMPLAINT
Singing River MOB, LLC ("Singing River MOB" or "Plaintiff') hereby submits this
Complaint against Singing River Health System ("SRHS" or ''Defendant") to recover rent and
other amounts owed under the four subleases between Singing River MOB and SRHS.
Jackson County, Mississippi through its ownership of a medical office building built pursuant to
agreements with SRHS. Singing River MOB's members are citizens of the state of Alabama.
3. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C.
§ 1332 because the parties are completely diverse and the amount in controversy exceeds
$75,000.
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4. Venue is proper in the Southern Division of the U.S. District Court for the
Southern District of Mississippi because Defendant SRHS is located in and owned by Jackson
FACTUAL ALLEGATIONS
Development"), an Alabama limited liability company, to make a proposal to assist SRHS in·
therewith, Johnson Development presented SRHS with proposals that would allow for the
development of the medical office building using advantageous financing through the use of
GoZone tax exempt bond financing and the use of new market tax credits.
reliance upon representations of SRHS regarding its verified authority to enter into a series of
transactions that included an initial ground lease from Jackson County (''the Prime Ground
L¥ase") and a sub-ground lease to Singing River MOB ("the SRHS Ground Lease"), followed by
7. As a predecessor transaction to the SRHS Ground Lease and the SRHS Subleases,
on March 26, 2009 Jackson County and SRHS entered into the Prime Ground Lease, in which
Jackson County leased unimproved real property to SRHS for the leasehold improvements
8. SRHS proceeded to enter into subleases with Singing River MOB, namely the
SRHS Ground Lease and the SRHS Subleases. Copies of the SRHS Ground Lease and the SRHS
2
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9. Singing River MOB then entered into binding financing agreements and
proceeded with construction of the medical office complex for the benefit of SRHS.
10. The SRHS Subleases consist of four twenty-five year leases for: an "Imaging
Space" with a current annual lease payment of $341,965.11, an "Option Space" with .a current
annual lease payment of $118,601.28, a "Multi-Use Space" with a current annual lease payment
of $612,322.25, and a "Wellness Space" with a current annual lease payment of $666,366.34.
These amounts are calculated according to the "Rental" section of each sublease. See Exhibits
Bl-B4 at Section 5.
11. The SRHS Subleases each provide that SRHS shall make a monthly lease
payment on the first day of e·ach calendar month. Id. at Section 5.1.
12. SRHS has not made the payments due January 1, 2019 under the SRHS
Subleases.
13. The SRHS Subleases each provide that "[a] late fee often percent (10%) of the
Base Rental then in effect shall be due and payable with respect to all installments of Rent more
than ten (10) days past due." Id. at Section 5.3. Those late fees incurred on January 11, 2019 total
$18,261.51.
14. SRHS has not paid the 10% late fee on the past due rent installments.
15. Each of the SRHS Subleases defines "any failure of Tenant to pay any Rental or
other sums of money when due hereunder" as an event of default by which SRHS "shall be
deemed in breach and default of this Lease ...." Id. at Section 24.1. "Rental" is defined as ''the
Base Rental and any other sums to be paid by Tenant to Landlord hereunder." Id. at Section 1.2.
16. In the event of default by SRHS, Singing River MOB is entitled to, "without
further notice or demand of any kind" and in addition to other available remedies, accelerate the
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rent due under the subleases._ Additionally, Singing River MOB may "proceed by ... suit or
otherwise to collect" delinquent or accelerated rent and any other amounts due under the
17. The SRHS Subleases each provide for the recovery of attorneys' fees and court
costs incurred by Singing River MOB in the event of default by SRHS and in connection with a
18. The SRHS Subleases each provide for the recovery of interest on past due rental
amounts and on "any costs or expenses incurred by Landlord" in the event of default. Id at
19. On January 24, 2019, Singing River MOB, through its counsel, issued four
demand letters to SRHS for the rental payments and late fees owed. However, to date, SRHS has
not paid the past-due amounts owed under the SRHS Subleases. See Exhibits Cl-C4.
20. On the morning of January 28, 2019, Singing River MOB, through its counsel,
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issued four notices of acceleration for the respective SRHS Subleases. See Exhibits D 1-D4.
22. On March 26, 2009, SRHS entered into the four SRHS Subleases with Singing
River MOB. Under the SRHS Subleases, SRHS agreed to make monthly lease payments on the
first day of each calendar month and to pay late fees on past due lease payments.
23. SRHS has defaulted according to the terms of the SRHS Subleases and has
breached the subleases by failing to make the lease payments due January 1, 2019 and the late
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24. As a result, Singing River MOB is. entitled to judgment against SRHS in the
amount of the lease payments due January 1, 2019, and the late fees due January 11, 2019, which
25. Also as a result of SRHS's default, Singing River MOB has accelerated the
remaining rental amount due under the SRHS Subleases according to the terms of the subleases.
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Singing River MOB is entitled to the accelerated rent, which amount totals $49,295,542.79.
26. Under the SRHS Subleases, Singing River MOB is additionally entitled to its
reasonable attorneys' fees and court costs incurred in collec;ting these past-due amounts.
27. Under the SRHS Subleases, Singing River MOB is entitled to interest on the
accelerated rental amounts and on its attorneys' fees and court costs incurred in collecting these
past due-amounts.
28. WHEREFORE, Singing River MOB prays that this Court will enter an order
payments and late fees and the remaining rental amount due under the SRHS
Subleases;
b. its attorneys' fees and court costs incurred in bringing this action and in
Subleases.
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CERTIFICATE OF SERVICE
· I hereby certify that I have served a copy of the foregoing document on the following by
U.S. First Class Mail, hand delivery, fax, or email on this the 28th day ofJanuary, 2019.
Patrick R. Buchanan
Michael E. Bruffey
· Brown Buchanan, P.A. - Biloxi
P.O. Box 1377
Biloxi, MS 39533-1377
Telephone: (228) 374-2999
[email protected]
Attorneys for Defendant Singing River Hospital System