Peter Russell v. Beachwalk Condominums Association, Inc.

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

NO. 2015-CA-00098-COA

PETER RUSSELL APPELLANT

v.

BEACHWALK CONDOMINUMS APPELLEE
ASSOCIATION, INC.

DATE OF JUDGMENT: 12/18/2014
TRIAL JUDGE: HON. LISA P. DODSON
COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT,
FIRST JUDICIAL DISTRICT
ATTORNEY FOR APPELLANT: L. CHRISTOPHER BREARD
ATTORNEY FOR APPELLEE: THOMAS LYNN CARPENTER JR.
NATURE OF THE CASE: CIVIL - OTHER
TRIAL COURT DISPOSITION: DENIED SANCTIONS
DISPOSITION: AFFIRMED: 05/17/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

BEFORE IRVING, P.J., FAIR AND WILSON, JJ.

FAIR, J., FOR THE COURT:

¶1. Peter Russell entered into a two-year lease for a condominium1 shortly before it was

foreclosed upon, and the continuing validity of his lease was challenged by the new owner.

Beachwalk Condominiums Association, the homeowners’ association, brought a separate suit

against Russell to enjoin him from using the common areas of the complex. Several years

later, Russell surrendered the premises and the Beachwalk suit was dismissed as moot. All

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The lease was actually with Russell and “Bay Homes, LLC,” but the LLC was not
a party to this suit. Russell appears to have signed the lease in the capacity of Bay Homes’
manager, and the lease stated that only Russell would occupy the premises.
that remains are Russell’s various claims for sanctions, which were denied by the trial court.

¶2. Because sanctions are entrusted to the sound discretion of the trial court, and no abuse

of that discretion has been shown, we affirm.

FACTS

¶3. We borrow the following statement of facts from the thorough recitation of the

Harrison County Circuit Court, which heard the first appeal in this case:

The litigation of this matter began in the Chancery Court of the First Judicial
District of Harrison County, Mississippi when [Beachwalk] filed suit against
Russell seeking both a temporary and a permanent injunction. The matter was
litigated in that court for a period of time and was then transferred to the
County Court. By Order dated October 31, 2013, the County Court denied
Russell’s Motion for Protective Order and Russell’s Motion for Summary
Judgment as moot, denied Russell’s Motion for Sanctions, and denied
Beachwalk’s Motion to Amend and Other Relief. Russell sought
reconsideration only as to his Motion for Sanctions. That request was denied
by Order filed February 3, 2014. This appeal followed.

Beachwalk is the homeowners association for the Beachwalk condominium
complex. The Meltons owned a condominium there which was foreclosed on
by the Federal National Mortgage Association (FNMA). Russell was living
in that condominium. At some point, questions were raised about Russell’s
living there and complaints were made about Russell with regard to his alleged
behavior in the common areas of the condominium complex, including at the
pool and around children. Beachwalk filed suit in the Chancery Court seeking
an injunction regarding Russell’s behavior and seeking to enjoin him from use
of the common areas. The Complaint alleged that FNMA owned the
condominium in which Russell was living; that Russell was a squatter who
was trespassing on the common areas of the complex; and that Russell was
engaging in loud, profane, and otherwise offensive conduct and language.

Beachwalk also posted a notice on the door of the condominium in which
Russell lived giving notice of the amount of homeowners association dues or
fees (hereinafter fees) past due and advising that the water was being cut off
and that the common areas could not be used until the fees were paid. Russell

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filed a Motion seeking emergency relief in the Chancery Court suit. The
emergency motion sought to have the water turned back on. It alleged that
Russell had a lease on the condominium with an addendum, which addendum
provided for payment of the monthly homeowners association fees by payment
from Russell of a portion of the rent payments; stated that Russell would pay
the monthly fees; refers to the FNMA suit which was then pending in County
Court stating that FNMA was seeking to remove Russell from the
condominium; raised the issue of standing and a federal act which Russell
alleged protected him concerning the lease; says that Russell’s rights were
violated due to lack of due process; and sought to enjoin Beachwalk from
interfering with his use of the premises.

A hearing was held, and the [c]hancellor ordered that Russell post a
[M.R.C.P.] Rule 65 bond, that Beachwalk turn the water back on at the
condominium, and that both parties were enjoined from interfering with the
other’s use and enjoyment of the premises. That Order stated that the right of
possession of the condominium would be decided by the County Court in the
FNMA suit. Russell also filed an answer in the Chancery Court matter. Other
hearings occurred in Chancery Court, but none involving a final determination
on the merits of the complaint or defenses.

While the Chancery Court matter was pending, the FNMA suit against Russell
in County Court sought to evict him from the condominium, alleging that the
purported lease was invalid. Russell defended, claiming a valid lease and
protection of federal statutes concerning lessees of foreclosed property. At
some point, the Chancery Court matter was transferred to County Court.
Beachwalk then sought to consolidate its claims with those in the FNMA suit.
This motion was denied by the judge assigned to the FNMA case. Both
matters then proceeded separately in County Court before different judges.

In the Beachwalk case, Beachwalk filed a Motion to Amend on January 11,
2013. That Motion sought to amend the complaint to claim that Beachwalk
was a third party beneficiary to the lease addendum and to seek the payment
of the homeowners association fees. Russell opposed the amendment and also
sought summary judgment and sanctions. The motions were all apparently set
by the parties, but did not get put on the County Court Judge’s docket and
were, therefore, not heard. Those motions were reset for July 3, 2013. The
FNMA County Court case was resolved between FNMA and Russell. As a
result of that resolution, Russell was to vacate the condominium by March 4,
2013. FNMA then sold the condominium. The past due homeowners

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association dues were paid in full in April of 2013.

At the July 3, 2013 hearing in this case, Beachwalk’s attorney advised the
County Court that all motions were moot with the exception of the motion
seeking sanctions. This was based on the fact that, as of that hearing date,
Russell had moved out and the past due fees had been paid. The County Court
Judge heard the arguments and took the matter under advisement. The County
Court Judge later found that Beachwalk was successful in obtaining part of the
relief which it sought in Chancery Court and found that the motion seeking to
amend in Count Court was not frivolous and not a hopeless endeavor. He
denied sanctions. The judge further noted that Beachwalk had indicated that
it was withdrawing its motion seeking to amend should sanctions be denied.
He, therefore, denied the motion to amend. The judge then found the other
two motions to be moot.

The circuit court affirmed the county court’s decision to deny sanctions, and Russell has

again appealed.

DISCUSSION

¶4. Russell enumerates two issues for appeal, but his statements of the issues are

compound and convoluted, and his fifty-page brief meanders from one assertion to the next

with little heed to the purported outline. Mississippi Rule of Appellate Procedure 28(a)(3)

requires that the appellant’s brief “separately number” each issue, which Russell has not

done. More importantly, “[n]o issue not distinctly identified shall be argued.” Id. And each

issue which is identified must be thoroughly and distinctly argued. See M.R.A.P. 28(a)(5)-

(6). We will not address contentions that have not been distinctly identified in the statement

of issues, nor will we address contentions that have not been separately and distinctly argued.

1. Failure to Consider Claims Individually

¶5. Russell argues that the county court erred in not considering all of his claims for

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sanctions on their own individual merits. It is not an exaggeration to say that Russell claims

on appeal that nearly every contested fact asserted by Beachwalk and every cause of action

asserted by Beachwalk warranted sanctions. Any failure of the county court to specifically

address these potential claims stems from the lack of specificity in Russell’s motion for

sanctions, which, like his brief on appeal, lacks a clear statement of the issues presented. The

only claims for sanctions that were presented in any detail related to Beachwalk’s

investigation prior to filing the complaint and its attempt to amend the complaint to seek

homeowners’ association fees from Russell. The trial court addressed these contentions

directly in its order denying sanctions. As to the other claims, we will not hold a trial court

in error for a matter not properly presented to it for decision. Moffett v. State, 49 So. 3d

1073, 1088 (¶41) (Miss. 2010).

2. Mootness

¶6. Russell contends that the trial court erroneously denied his motion for sanctions based

on its finding that the underlying issues in the lawsuit had become moot after Russell moved

out of the condominium. This contention is simply meritless. Both sides agreed during the

hearing that the sanctions requests were not moot, and there is no indication the trial court

believed otherwise. The trial court specifically addressed and rejected Russell’s requests for

sanctions, on the merits of his claims.

¶7. We find no merit to Russell’s arguments that the trial court employed the wrong legal

standard in denying sanctions.

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3. Merits of Claims for Sanctions

¶8. Mississippi Rule of Civil Procedure 11(b) states that a trial court may award sanctions

against a party or attorney who has filed a pleading that is frivolous or was filed for the

purpose of harassment or delay. The Litigation Accountability Act of 1988 provides

complementary, overlapping authority to impose sanctions for claims brought “without

substantial justification” or “interposed for delay or harassment.” Miss. Code Ann. § 11-55-5

(Rev. 2012); Stevens v. Lake, 615 So. 2d 1177, 1183-84 (Miss. 1993). “Without substantial

justification” means a filing that is “frivolous, groundless in fact or in law, or vexatious, as

determined by the court.” Miss. Code Ann. § 11-55-3(a) (Rev. 2012). A claim is frivolous

when, “objectively speaking, the pleader or movant has no hope of success.” Leaf River

Forest Prods. Inc. v. Deakle, 661 So. 2d 188, 195 (Miss. 1995). We employ the same test

to determine whether a filing is frivolous under both Rule 11 and the Litigation

Accountability Act. Id. at 196-97.

¶9. We review the trial court’s decision to grant or deny sanctions under the Litigation

Accountability Act or Rule 11 for an abuse of discretion. Choctaw Inc. v. Campbell-Cherry-

Harrison-Davis & Dove, 965 So. 2d 1041, 1045 n.6 (Miss. 2007).

A. Standing to Sue

¶10. Russell argues that Beachwalk lacked authority or “standing” to sue him based on

provisions in its formation documents and bylaws requiring certain procedures – warnings

and the like – to be imposed before remedies may be taken against offending owners or

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“lawful occupants.”

¶11. These arguments are all premised on the unsupported assertion that Russell was a

lawful tenant when Beachwalk filed suit. Russell claims, without any real argument, that his

lease continued to be valid after the property was acquired by FNMA through foreclosure.

Russell bases this argument on the Protecting Tenants at Foreclosure Act of 2009. Pub. L.

No. 111-22, Title VII, §§ 701-704 (2009) (as amended by Pub. L. No. 111-203, Title XIII,

§ 1484 (2012)). But Russell does nothing more than cite to the Act – which, contrary to his

suggestion, does not automatically preserve his lease; the lease is protected only if Russell

was a “bona fide” tenant. Id. at § 702. This required that the lease be the product of an

“arms-length transaction” and that the rent not be “substantially less than the fair market rent

for the property.” Id. Russell offered no proof on either of these points, and he certainly has

not shown that there was no colorable argument that his lease was invalid. In fact, Russell

was in litigation with FNMA over the validity of his lease at the time Beachwalk filed suit,

though the question was apparently never resolved on the merits. Also, there is some

evidence in the record suggesting the potential for a factual dispute – Russell’s two-year

lease was executed shortly before the foreclosure, and the rent was $800 per month, only

$300 more than the homeowners’ association fees.

¶12. We find no merit to this argument.

B. Amended Complaint

¶13. Russell adequately briefs only one other requested sanction, regarding Beachwalk’s

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motion for leave to file an amended complaint, which would have sought homeowners’

association fees from Russell based on an agreement he executed with an agent of FNMA

after it obtained the condominium following the foreclosure, where Russell agreed to pay

$500 of his $800 per month rent directly to Beachwalk. Russell initially stated that he

intended to pay the homeowners’ association dues, but he never actually did because no one

would accept his money.

¶14. Russell now contends that the agreement with FNMA was an illegal modification of

his lease under the Protecting Tenants at Foreclosure Act, but this contention is unsupported

by any argument or authority except reference to the Act by name. The issue does not appear

to have been resolved in the suit between Russell and FNMA, and FNMA was not brought

into the instant litigation by either party.

¶15. Russell also argues that Beachwalk had no standing to assert this claim against him

because it was only an incidental beneficiary to the agreement between him and FNMA. He

provides little argument in support, and makes no real effort to show that Beachwalk’s

contention was frivolous. In fact, the Mississippi Supreme Court has recognized that the law

on third-party beneficiaries is rather complicated. See Burns v. Wash. Savings, 251 Miss.

789, 793-97, 171 So. 2d 322, 324-25 (1965). This weighs against an award of sanctions.

And, as the court noted, it is generally the case that “a third person may in his own right and

name, enforce a promise made for his benefit even though he is a stranger both to the

contract and the consideration.” Id. at 795, 171 So. 2d at 324 (citation omitted). FNMA

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owed Beachwalk association dues, and Russell owed FNMA rent. He agreed to pay the dues

to Beachwalk in lieu of some of his rent. Russell lived in the condominium and enjoyed the

services provided by Beachwalk, but neither Russell nor FNMA paid the association dues.

Beachwalk’s claim to be a third-party beneficiary was hardly frivolous.

¶16. Finally, Russell contends that the county court should have awarded sanctions based

on Beachwalk’s failure to immediately withdraw the motion seeking to amend the complaint

after FNMA ultimately paid the dues. This contention was not presented in Russell’s motion

for sanctions and is procedurally barred.

CONCLUSION

¶17. Russell has not shown any abuse of discretion in the county court’s denial of

sanctions.

¶18. THE JUDGMENT OF THE CIRCUIT COURT OF HARRISON COUNTY,
FIRST JUDICIAL DISTRICT, IS AFFIRMED. ALL COSTS OF THIS APPEAL
ARE ASSESSED TO THE APPELLANT.

LEE, C.J., IRVING AND GRIFFIS, P.JJ., BARNES, ISHEE, CARLTON,
JAMES, WILSON AND GREENLEE, JJ., CONCUR.

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