Ross v. NATIONAL FORMS & SYSTEMS GROUP

882 So. 2d 245, 2004 WL 1386204
CourtCourt of Appeals of Mississippi
DecidedJune 22, 2004
Docket2002-CA-01182-COA
StatusPublished
Cited by2 cases

This text of 882 So. 2d 245 (Ross v. NATIONAL FORMS & SYSTEMS GROUP) is published on Counsel Stack Legal Research, covering Court of Appeals of Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ross v. NATIONAL FORMS & SYSTEMS GROUP, 882 So. 2d 245, 2004 WL 1386204 (Mich. Ct. App. 2004).

Opinion

882 So.2d 245 (2004)

Timothy V. ROSS, Todd Ross and Champion Industries, Inc., Appellants
v.
NATIONAL FORMS & SYSTEMS GROUP, INC. and Mickey McCardle, Appellees.

No. 2002-CA-01182-COA.

Court of Appeals of Mississippi.

June 22, 2004.
Certiorari Denied September 16, 2004.

*247 April D. Reeves, Jackson, David Lee Sandefur, and Neville H. Boschert, Laura L. Gibbes, Jackson, attorneys for appellants.

Reuben V. Anderson, Gary E. Friedman, James W. Craig, Jackson, attorneys for appellees.

EN BANC.

MODIFIED OPINION OF MOTION FOR REHEARING[1]

BRIDGES, P.J., for the Court.

¶ 1. Timothy V. Ross, et al. are appealing from the Hinds County Circuit Court's verdict in favor of National Forms & Systems Group, Inc. and Mickey McCardle, on all counts for $1,744,937 in compensatory damages and $750,000 in punitive damages. The verdict was later amended to include $645,119 in attorney's fees and expenses for a total judgment of $3,140,056. The issues are stated verbatim.

STATEMENT OF THE ISSUES
I. THE TRIAL COURT ERRED IN FINDING AS A FACT THAT TIM WAS PRESIDENT OF NATIONAL AND THAT TIM OWED FIDUCIARY DUTIES TO NATIONAL AS A MATTER OF LAW.
II. THE TRIAL COURT ERRED IN FAILING TO GRANT DEFENDANTS' MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT OR FOR NEW TRIAL BECAUSE TIM DID NOT BREACH FIDUCIARY DUTIES AS A MATTER OF LAW.
III. THE TRIAL COURT ERRED IN FAILING TO GRANT DEFENDANTS' MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT FOR NEW TRIAL BECAUSE DEFENDANTS DID NOT TORTIOUSLY INTERFERE WITH NATIONAL'S CONTRACTUAL AND BUSINESS RELATIONS AS A MATTER OF LAW.
IV. THE TRIAL COURT ERRED IN FAILING TO GRANT DEFENDANTS' MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT OR FOR NEW TRIAL BECAUSE DEFENDANTS DID NOT COMMIT CIVIL CONSPIRACY AS A MATTER OF LAW.
V. THE TRIAL COURT ERRED IN FAILING TO GRANT DEFENDANTS' MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT OR FOR NEW TRIAL BECAUSE NATIONAL FAILED TO PROVE PROXIMATE CAUSATION AS A MATTER OF LAW.
VI. THE TRIAL COURT ERRED IN FAILING TO GRANT DEFENDANTS' MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT OR FOR NEW TRIAL BECAUSE NATIONAL FAILED TO PROVE ACTUAL AND PUNITIVE DAMAGES AS A MATTER OF LAW.
VII. THE TRIAL COURT ERRED IN FAILING TO GRANT THE DEFENDANTS' MOTION TO DISMISS BASED UPON NATIONAL'S AND McCARDLE'S MATERIAL MISREPRESENTATIONS TO THE COURT.

FACTS

¶ 2. Timothy V. Ross began working for National Forms & Systems Group, Inc. *248 (National), as a sales representative in mid-1998. Tim previously worked as a sales representative for Dixie Data, from 1991 until 1997, which sells a product similar to National's. Tim began working for National as an independent contractor bringing with him existing customers and soliciting new ones. Tim kept 75% of the gross profits and paid for all sales expenses himself. His relationship was similar to National's relationship with other salesmen, namely Bill Conner and Al Watts.

¶ 3. National's sole shareholder was a company called Jackson Business Forms, Inc. (JBF). Mickey McCardle was the president of JBF and he was also one of the two directors of National. JBF manufactured and sold forms to distributors. National was a distributor and sold forms to their end users. Therefore National was a competitor of JBF's other customers. JBF had separate offices from National but all of National's billing, invoicing and collection operations were performed at the JBF offices by JBF employees. Also, all sales and accounting records were maintained in JBF offices since the chief financial officer (CFO) of JBF is also the CFO of National.

¶ 4. The independent contractor salesmen National employed were not required to sign non-competition agreements and were not required to sign trade secret agreements in order to protect the confidentiality of customer information. Also, invoices of sale orders had a carbon copy entitled "salesman's copy" which National allowed the salesmen to either keep or throw away.

¶ 5. In February of 1999 Tim became a National employee in order to obtain health insurance and also began leasing a building on Highway 80 in Jackson, Mississippi, rather than working from his home. The work done for National in the JBF offices was not moved to the new offices on Highway 80 and Tim later hired several employees to help him in the Highway 80 office. In order to rent the space Tim had to submit business plans and projections. He did not sign those plans or projections as president nor did he sign the original lease as such but he did sign later lease amendments as president of National. The newly hired employees were individuals he had known and worked with previously at Dixie Data. All of them, like Tim, brought with them existing customers and did not sign non-competition agreements. Many of these employees were unaware of the company's connection with McCardle.

¶ 6. In July of 1999 Tim began signing checks and agreements as president of National at McCardle's request. Tim claims he was unaware that the board had voted him president and that such a position came with fiduciary duties. Tim believed he was signing merely to hide JBF's involvement with National, since it was a competitor to JBF's other customers. Tim also highlights the fact that revisions were done to the July 1999 corporate minutes long after Tim had left National and just before they were submitted for discovery. However, National claims Tim was fully aware of his role as president and the responsibilities it required.

¶ 7. Tim did not have access to any of National's financial information or control over National's accounting method which was changed without his knowledge, authority or consent. This change greatly reduced Tim's salary since it was computed based on gross profits. Tim did not even have keys to the JBF offices where these records were kept. Tim also had no contact with Watts and Conners, National's other independent contractors who did not know Tim had been voted president.

¶ 8. In March of 2000 Tim refused McCardle's proposal for a reorganization *249 of the business requiring him to sign a non-competition agreement and to have Bill Banks become manager of the business. Tim went to his brother, Todd Ross, division manager of the Champion Industries office in Jackson and obtained the name and number of Doug McElwain, a vice president of Champion, and requested a meeting to discuss a possible position with them. Todd knew Tim was an officer of National prior to their discussions; however, McElwain did not. McElwain and Tim had a lunch meeting on March 28, 2000, and at that meeting nothing was decided but either the next day or the day following Tim called McElwain to accept a position with Champion. On March 31, 2000, Tim and McElwain met at the National office, those also present were Lynn Taggart, Bobby Renfroe, and Grady Ross, the employees Tim had hired. How exactly the meeting was conducted and what topics were covered is a matter of debate amongst the parties. However, after the meeting everyone had decided to leave National to work for Champion.

¶ 9. They began selling under the Champion name the next week on April 4, 2000. Tim told McElwain he was leaving on the second or third of April and the other employees resigned on the fourth.

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Cite This Page — Counsel Stack

Bluebook (online)
882 So. 2d 245, 2004 WL 1386204, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ross-v-national-forms-systems-group-missctapp-2004.