Barry Pope v. Brian Sorrentino
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2005-CA-02338-COA
BARRY POPE, INDIVIDUALLY AND AS A
SHAREHOLDER OF WORLDWIDE FOREST
PRODUCTS, INC., ET AL.
APPELLANTS
v.
BRIAN SORRENTINO, DALE HILL, WORLDWIDE
FOREST PRODUCTS, INC., KEMPER PRESSURE
TREATED FOREST PRODUCTS, INC.,
LIFE2K.COM, INC., ALGONQUIN ACQUISITION
CORPORATION, GENERATION ACQUISITION
CORPORATION, SYNDICATIONNET.COM, INC.
AND CASTLE SECURITIES CORPORATION
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANTS:
ATTORNEYS FOR APPELLEES:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEES
01/06/2005
HON. L. BRELAND HILBURN
MADISON COUNTY CIRCUIT COURT
CLARENCE MCDONALD LELAND
SAM STARNES THOMAS
H.D. GRANBERRY
CIVIL - CONTRACT
SUMMARY JUDGMENT GRANTED IN FAVOR
OF DEFENDANTS
AFFIRMED - 04/15/2008
BEFORE MYERS, P.J., CHANDLER, GRIFFIS AND CARLTON, JJ.
CHANDLER, J., FOR THE COURT:
¶1.
The Circuit Court of Madison County granted summary judgment against Barry Pope,
finding that the claims he asserted against the Appellees were barred by the applicable statute of
limitations. Aggrieved, Pope appeals. He argues that summary judgment was not proper because
the statute of limitations did not bar his claims and because there were issues of material fact. He
also argues the circuit court should not have awarded attorney’s fees to the Appellees.
¶2.
Finding no error, we affirm.
FACTS
¶3.
Pope, individually and as a shareholder of Worldwide Forest Products, Inc., filed a complaint
on November 26, 2001, in the Circuit Court of Madison County. The complaint named the
following as defendants: Brian Sorrentino; Dale Hill; Worldwide Forest Products, Inc.; Kemper
Pressure Treated Forest Products, Inc.; Life2K.com, Inc.; Algonquin Acquisition Corporation;
Generation Acquisition Corporation; Syndication Net.com, Inc.; and Castle Securities Corporation.
¶4.
On January 6, 2003, Pope also filed an amended complaint. The complaint alleged negligent
supervision, securities fraud, fraud, negligent misrepresentation, negligence and breach of fiduciary
duties, tortious breach of contract, willful and knowing inducement to breach contracts and tortious
interference with contractual rights, inducement and breach of oral contract, bad faith breach of
contract, constructive trust, intentional and negligent infliction of emotional distress, and civil
conspiracy.
¶5.
Pope’s current claim stems from his settlement of a prior lawsuit against Worldwide and its
former president, David Wise. In that lawsuit, Pope alleged that he and Worldwide reached an
agreement in 1991, providing that Pope would promote Worldwide in order to raise its stock price
so it would be eligible to be traded on the NASDAQ stock exchange. In exchange, Pope was to
receive shares and stock warrants in Worldwide. Pope claimed that Worldwide again contracted for
his services the following year.
¶6.
According to Pope, he learned in 1994 that Wise and Sorrentino, who raised money for
Worldwide and later became an officer of the corporation, were liars and that they planned to
defraud Pope out of his contracts with Worldwide. Upon learning that Worldwide was not going
to honor his contracts, Pope filed a civil lawsuit against the company. In 1996, the parties negotiated
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a settlement, which the court memorialized in a consent order and an amended consent order. The
amended consent order provided that Worldwide would issue Pope 30,000 shares of stock and
150,000 one dollar stock warrants.1
¶7.
It is this consent order that Pope claimed was induced by fraud. According to Pope, he only
agreed to the settlement because he was shown a “firm commitment letter” from Castle stating that
it would underwrite Worldwide’s stock offering. According to Pope, the letter guaranteed that
Castle would buy Worldwide shares for five dollars per share in the event the stock did not reach
the projected offering price. Pope alleged that Sorrentino told him that Worldwide would go public
in January 1997, but the parties included no such agreement in the consent order or the amended
consent order.
¶8.
Later in 1996, following entry of the consent order, Worldwide was involved in two more
lawsuits. One lawsuit was an involuntary bankruptcy lawsuit against Worldwide, and the other was
a lawsuit by Worldwide against its former president, Wise, alleging that he took money from the
corporation. Pope claimed that, prior to and throughout these trials, Sorrentino continued to assure
him that Worldwide would comply with the consent order and the public offering would go through
as soon as the lawsuits were resolved.
¶9.
In November 1996, the National Association of Securities Dealers (NASD) sent a letter to
Worldwide informing the company that its public offering was put on hold pending approval of its
registration statement. Four days later, Pope mailed a letter to Castle in which he offered to sell his
Worldwide shares to Castle for a price less than what he believed Castle committed to pay in the
underwriting agreement.
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Pope’s warrants, if exercised, required him to pay one dollar each to execute them and turn
them into common stock. In this case, Pope could have paid $150,000 and received 150,000 shares
of Worldwide stock.
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¶10.
Nevertheless, Pope claimed he relied on Sorrentino’s assertions throughout the trials, and
he believed Sorrentino and Worldwide would honor the amended consent order once the lawsuits
concluded. Worldwide’s lawsuit against Wise concluded in January 1999, but Pope said he did not
find out about the verdict until the next month.
¶11.
When Pope learned that Worldwide’s lawsuit had concluded, he said he inquired into when
the company would go public. He claimed that he learned Sorrentino never intended to take
Worldwide public and that Sorrentino had lied to him. Instead of working on the Worldwide public
offering, Pope alleged Sorrentino had been secretly converting Worldwide investors’ shares into
shares of Kemper. Pope said he began to hear about such stock conversions in the middle of 1998.
¶12.
Pope said he also found out that Worldwide was saddled with massive Environmental
Protection Agency (EPA) liability from prior contamination of the factory site, which prevented it
from going public. He claimed that Sorrentino knew about the liability all along and, therefore,
knew that Worldwide could never go public. Pope claimed he learned about all of Sorrentino’s
wrongdoings in April 1999, and he filed the present lawsuit on November 26, 2001.
¶13.
The circuit court granted two motions for summary judgment, one made by Castle and the
other by the remaining Appellees except Worldwide (Sorrentino Appellees). Later, the circuit court
issued an amendment to clarify the original judgment. In the amended judgment, the circuit court
charged Pope with knowledge of his claim against Castle prior to November 1998. It found that,
according to the letter Pope wrote to Castle in 1996, Pope was familiar with the terms of the CastleWorldwide contract and with the fact that certain contingencies had to be fulfilled for the contract
to come to fruition. Similarly, the circuit court found that Pope had knowledge of the breaches of
Pope’s contract and agreed judgment by Worldwide and Sorrentino.
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¶14.
The court concluded that Pope’s claims accrued more than three years prior to November
26, 2001, the date on which he filed his initial complaint. Accordingly, the court dismissed Pope’s
claims with prejudice. Following entry of the final judgment, the court granted Pope an extension
of time to appeal, during which he timely filed this appeal.
STANDARD OF REVIEW
¶15.
This Court will review a grant or denial of a motion for summary judgment under a de novo
standard. Partin v. N. Miss. Med. Ctr., Inc., 929 So. 2d 924, 928 (¶13) (Miss. Ct. App. 2005)
(quoting Williamson ex rel. Williamson v. Keith, 786 So. 2d 390, 393 (¶10) (Miss. 2001)). We will
view the evidence in the light most favorable to the nonmoving party. Id. When viewed as such,
if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter
of law, summary judgment is appropriate. Id.
ANALYSIS OF ISSUES
I.
¶16.
Summary Judgment
Pope argues that the circuit court erred in granting summary judgment in favor of Castle and
the Sorrentino Appellees. According to Pope, his claims presented genuine issues of material fact
and were not time-barred; therefore, the circuit court should not have dismissed them.
¶17.
The circuit court granted two motions for summary judgment, the first in favor of Castle and
the second in favor of the Sorrentino Appellees. We will address both motions. In its initial order
granting summary judgment, the circuit court found that there existed no genuine issues of material
fact with regard to Pope’s claim against Castle and that the statute of limitations had expired with
regard to Pope’s claim against the remaining defendants except Worldwide. The circuit court later
entered an amended judgment. In the amended judgment, the circuit court further found that
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granting both motions was appropriate because Pope had not properly filed his claims before the
expiration of the statute of limitations.
A.
¶18.
Sorrentino and Other Appellees Except Castle and Worldwide
Pope filed suit on November 26, 2001; therefore, the relevant date for statute of limitations
purposes is three years prior to that date, on November 26, 1998. Miss. Code Ann. § 15-1-49 (Rev.
2003). Pope’s claims, including fraudulent and negligent misrepresentation and/or omission, are
covered under section 15-1-49. Rankin v. Am. Gen. Fin., Inc., 912 So. 2d 725, 726 (¶2) (Miss.
2005). If Pope knew about his claims or with reasonable diligence could have discovered his claims
prior to that date, then those claims are barred by the statute of limitations. Miss. Code Ann. § 15-149. If, however, Pope can show that (1) the Sorrentino Appellees committed some affirmative act
of concealment and (2) he did not know about the fraud and could not have discovered it with
reasonable diligence, then the statue of limitations is tolled because of the Sorrentino Appellees’
fraudulent concealment. Miss. Code Ann. § 15-1-67 (Rev. 2003).
¶19.
In regard to an allegation of fraudulent concealment, “there must be shown some act or
conduct of an affirmative nature designed to prevent and which does prevent discovery of the
claim.” Sanderson Farms, Inc. (Prod. Div.) v. Ballard, 917 So. 2d 783, 790 (¶33) (Miss. 2005)
(quoting Reich v. Jesco, Inc., 526 So. 2d 550, 552 (Miss. 1988)). Mere allegations that the opposing
party has complete control over the information are not sufficient. Id. at 790 (¶34). “[T]here must
be some subsequent affirmative act by the defendant which was intended to prevent and which did
prevent discovery of the claim.” Andrus v. Ellis, 887 So. 2d 175, 181 (¶30) (Miss. 2004) (citing
Stephens v. Equitable Life Assur. Soc’y of the U.S., 850 So. 2d 78, 83-84 (¶18) (Miss. 2003)).
¶20.
In addition to proving an affirmative act of concealment, the party alleging fraudulent
concealment must prove that despite his due diligence, he was unable to discover the claim before
the expiration of the statute of limitations. Parker v. Horace Mann Life Ins. Co., 949 So. 2d 57, 59
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(¶8) (Miss. Ct. App. 2006) (citing Reich, 526 So. 2d at 552). Only then will the statue of limitations
be tolled for the cause of action. Id. “[T]he test on whether to toll the statute of limitations is
whether a reasonable person similarly situated would have discovered potential claims.” Andrus,
887 So. 2d at 180 (¶27) (citing Am. Bankers’ Ins. Co. v. Wells, 819 So. 2d 1196, 1201 (¶12) (Miss.
2001)).
¶21.
In order for Pope’s allegation of fraudulent concealment to toll the statute of limitations, he
first needed to show that the Sorrentino Appellees engaged in some affirmative act to conceal the
following: (1) that Worldwide was saddled with massive EPA liability, which would prevent it from
going public and (2) that they knew all along that Worldwide would never go public. Additionally,
Pope needed to show that he did not know, or could not have discovered with reasonable diligence,
that the Sorrentino Appellees knew about the EPA liability or that they never intended to go forward
with the Worldwide public offering.
¶22.
Pope claims he alleged sufficient facts to withstand summary judgment based on the running
of the statute of limitations. He alleged that Sorrentino knew about Worldwide’s EPA liability since
at least 1994, as evidenced by Sorrentino’s testimony from a 1994 deposition. He then claimed that
Sorrentino had a duty to disclose said information, but instead, he actively concealed it from Pope
until 1999. During that time, Pope claimed that Sorrentino was secretly converting shares of
Worldwide into shares of Kemper.
¶23.
According to Pope, even though Sorrentino knew Worldwide would never go public, he
convinced Pope to settle his prior claims against Worldwide for shares in the company. Thereafter,
Sorrentino repeatedly promised Pope that Worldwide’s public offering would take place at the
conclusion of Worldwide’s pending lawsuits. Pope claimed these reassurances took place from the
end of 1996 until April 1999, when Pope said he learned that Sorrentino never intended to go public
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with Worldwide. The effect of Sorrentino’s fraud was to render Pope’s Worldwide shares, which
he received in the settlement, worthless. Instead of taking Worldwide public, Pope claimed that
Sorrentino had always planned to convert Worldwide shareholders into shareholders in Kemper and
then to eventually go public with Kemper. Pope also said he learned about Worldwide’s EPA
liability in April 1999.
¶24.
However, as we have said, mere allegations are not sufficient. Sanderson Farms, 917 So.
2d at 790 (¶34). Despite his mostly unfounded allegations, it is evident that Pope either knew of or
should have discovered his claims against Sorrentino and the other Appellees prior to November 26,
1998.
¶25.
In their motion for summary judgment, the Sorrentino Appellees argued that Pope knew of
or should have discovered his claims prior to November 26, 1998. The circuit court agreed and
found that prior to that date Pope became aware that there would be a noncompliance with the
agreed judgment. The circuit court also found that as early as 1994, Pope said that he thought
Sorrentino was a liar and a cheat. At that time, Pope said Sorrentino did not intend to honor Pope’s
contracts with Worldwide, and Sorrentino told Pope that he would get nothing.
¶26.
Further proof that Pope knew the Worldwide stock offering would not go forward was the
letter he sent to Castle following the NASD notice putting the offering on hold. In the letter, Pope
offered to sell his shares of Worldwide to Castle for less than what he believed he would receive
under the terms of the “firm commitment letter.” The NASD notice came at the end of 1996, around
the time Pope claimed that Sorrentino began telling him that Worldwide would go public following
the pending lawsuits.
¶27.
If we are to believe Pope’s testimony, he began to distrust Sorrentino as far back as 1994.
Nevertheless, even though Sorrentino told Pope he was going to defraud him out of his contracts,
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Pope claimed to have relied on Sorrentino’s assurances by agreeing to settle his claims against
Worldwide. Thereafter, Pope claimed that he continued to rely on Sorrentino’s assurances for more
than two years after the initial date on which Sorrentino told him Worldwide would go public.
Taking all the facts into account, we cannot say the circuit court was in error in charging Pope with
knowledge of his claims prior to November 26, 1998.
¶28.
We are similarly unpersuaded that Pope remained unaware of the environmental problems
connected to Worldwide until April 1999. He admitted that, as early as 1993, he was suspicious of
Worldwide and its connection to Winston Holdings. Pope said he found out about the contaminated
land adjacent to the Worldwide site, which was technically owned by a company called Winston
Holdings. However, sources told him that Winston Holdings was, in fact, a part of Worldwide, and
Worldwide paid the property taxes on the contaminated land. Pope even claimed that at the time,
Sorrentino told him to keep quiet about it and to stop making trouble.
¶29.
Pope’s claim that Sorrentino converted Worldwide shares into shares of Kemper also does
not support his contention that he was unaware of his potential claims until 1999. Pope specifically
said he began learning about such conversions sometime in the middle of 1998. Nevertheless, even
if the statute of limitations began to run sometime in the middle of 1998, Sorrentino’s November 26,
2001, filing remains untimely.
¶30.
Ultimately, we find that a reasonable person in Pope’s situation should have discovered his
claims against the Sorrentino Appellees prior to November 26, 1998. Taking the evidence in a light
most favorable to Pope, it remains that he believed Sorrentino was a liar and planned to defraud him.
Sorrentino told Pope in 1996 that the Worldwide offering would be delayed. We cannot say a
reasonable person would have relied on the assurances of someone that he believed to be a liar and
a crook for more than two years in expectation that the liar would eventually make good on his
9
promises. Furthermore, Pope cannot say he remained unaware of the EPA liability connected to
Worldwide until 1999 when he admitted he became suspicious about it as far back as 1993.
¶31.
After reviewing the evidence under a de novo standard, we do not find that the circuit court
erred in granting summary judgment in favor of the Sorrentino Appellees. This issue is without
merit.
B.
¶32.
Castle
Pope’s argument against summary judgment in favor of Castle is similarly without merit.
Pope’s claim against Castle stems from Worldwide’s EPA liability and the document Pope refers
to as a “firm commitment letter.” Pope alleged that the “firm commitment letter” guaranteed that
Castle would purchase Worldwide stock at a designated price at public offering if the stock price
did not rise to a certain level. Pope claimed he was shown this letter during settlement negotiations
regarding his first lawsuit. As a result, Pope said he settled his first lawsuit, relying on the “firm
commitment letter” as a guarantee that he would receive the value of the shares he accepted in
settlement.
¶33.
Pope argues that Castle did not exercise due diligence by investigating the Worldwide site
for possible EPA liability prior to underwriting the stock deal. He claims that he learned of the lack
diligence in April 1999, when Mike Studor, managing underwriter for Castle, told him that Castle
did not properly investigate the Worldwide deal. Pope further claims that Castle could have easily
discovered the EPA liability connected with the site if it had exercised due diligence. Pope argues
that, if Castle had conducted proper investigations, it would not have agreed to underwrite the deal,
and Pope would not have detrimentally relied on the “firm commitment letter” when he agreed to
settle his first lawsuit against Worldwide.
¶34.
The circuit court referenced the letter from Castle to Worldwide in its order granting
summary judgment. It noted that, per the agreement, Castle’s underwriting of Worldwide’s stock
10
offering was contingent upon a number of conditions. After reviewing the letter, we agree with the
circuit court that the “firm commitment letter” was not a guarantee that Castle would underwrite
Worldwide’s public offering upon which Pope could have relied.
¶35.
The letter makes clear that there were a number of conditions that needed to be met before
Castle would underwrite the Worldwide stock offering. Importantly, one condition was the approval
of Worldwide’s registration statement by the Securities and Exchange Commission. It also
contained provisions specifying that the letter created no obligation between the parties and that it
was not a binding agreement to consummate the public offering. The letter specifically stated that
Castle did not have the funds to cover the public offering and might not be able to raise sufficient
funds to act as an underwriter. In such event, Castle could have elected not to proceed with the
underwriting.
¶36.
Pope says Sorrentino showed this letter to him, and it convinced him to agree to the
settlement memorialized in the consent order and amended consent order. As shown, the agreement
represented in the letter is not a finalized agreement by Castle to underwrite Worldwide’s stock
offering. There remained a number of contingencies that had to be fulfilled before Castle would
underwrite the Worldwide stock offering.
¶37.
The party who requests summary judgment must prove that there is no genuine issue of
material fact, and the nonmoving party receives the benefit of the doubt as to whether such an issue
of material fact exists. Williamson v. Keith, 786 So. 2d 390, 395 (¶19) (Miss. 2001) (quoting Ellis
v. Powe, 645 So. 2d 947, 952 (Miss. 1994)). In opposition to the motion, the nonmoving party must
show there is significant probative evidence that such an issue of fact exists. Id. Mere allegations
unsupported by detailed and precise facts are not sufficient. Id.
11
¶38.
With regard to Pope’s claim against Castle, we agree that no genuine issue of material fact
exists. Pope cites to the “firm commitment letter” as the basis for his claim. Upon reading the letter,
we, however, do not agree that it supports Pope’s contentions. We do not find it to be an agreement
that could have reasonably led Pope to believe that Castle was bound to underwrite Worldwide’s
public offering.
¶39.
As we have previously discussed, Pope’s claims are also barred by the three-year statue of
limitations of Mississippi Code Annotated section 15-1-49. Because Pope began investigating the
EPA conditions at the Worldwide site in 1993, he either had knowledge of or reasonably should
have had knowledge of the liability that he claims Castle should have discovered. Furthermore,
Pope tried to sell his shares to Castle at a reduced rate at the end of 1996 when it was clear the
Worldwide deal would not take place.
¶40.
Pope’s attempt to place liability on Castle because of this “firm commitment letter” is
misplaced. As the circuit court found, and as reflected by his experience, Pope was a person of
knowledge in the securities industry. It is clear from a cursory reading of the letter that it contains
a number of contingencies that would prevent Castle from actually underwriting the Worldwide
stock deal. In addition, just as with Pope’s claims against the Sorrentino Appellees, Pope’s claims
against Castle are barred by the statute of limitations.
¶41.
We find the circuit court properly granted Castle’s motion for summary judgment. This issue
is without merit.
II.
¶42.
Attorney’s Fees
We review the circuit court’s decision to grant attorney’s fees under an abuse of discretion
standard. Miss. Power & Light Co. v. Cook, 832 So. 2d 474, 478 (¶7) (Miss. 2002). Determining
12
reasonable attorney’s fees is generally within the court’s discretion. Id. (quoting Gilchrist Tractor
Co. v. Stribling, 192 So. 2d 409, 418 (Miss. 1966)).
¶43.
Pope argues that the circuit court erred in the January 10, 2005, order granting summary
judgment because it found that the Sorrentino Appellees and Castle were entitled to attorney’s fees
as a result of Pope’s continuance of the September 22, 2004, trial date.
¶44.
The record, however, contains no further mention of attorney’s fees by the court. The
attorney for the Sorrentino Appellees submitted an affidavit detailing his expenses, but the record
contains no subsequent order awarding attorney’s fees. The amendment to the original order, filed
five months later, also made no mention of attorney’s fees.
¶45.
Because there is no record of the circuit court ordering an award of attorney’s fees, we have
nothing to review. Accordingly, this issue is moot.
¶46. THE JUDGMENT OF THE CIRCUIT COURT OF MADISON COUNTY IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANTS.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE,
ROBERTS AND CARLTON, JJ., CONCUR.
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