Bailey Brake Farms, Inc. v. Trout

Summary

The Mississippi Supreme Court held that a chancery court improperly set aside a binding arbitration award determining the value of shares in a closely held corporation. The court reversed and rendered judgment reinstating the arbitration award, while leaving the corporation’s waiver of assessments undisturbed. On cross-appeal, the court affirmed the denial of the shareholders’ late motion to amend and their request for prejudgment interest.

Holdings

1. The agreement required binding arbitration, not a nonbinding appraisal, because it expressly referred to arbitrators and made their valuation binding on the corporation and shareholders.
2. The chancellor lacked a sufficient legal and evidentiary basis to set aside the arbitration award because the order did not establish corruption, fraud, undue means, excess of authority, or an incomplete award under Mississippi Code section 11-15-23.
3. The chancery court did not abuse its discretion by denying the shareholders' motion to amend their complaint five and a half years after filing when they offered no adequate justification for the delay and the amendment would have substantially changed the nature of the litigation.
4. The shareholders were not entitled to prejudgment interest because they did not demand it in their original complaint and the contractual interest provision applied only when the corporation had agreed to purchase stock at an arbitrated value and was more than thirty days late in making payment.

Questions Presented

1. Whether the buy-sell agreement required binding arbitration or merely an appraisal subject to the chancellor's discretion.
2. Whether the chancellor had a statutory basis to set aside the arbitrators' stock valuation for undue means or an incomplete award.
3. Whether the chancellor abused his discretion by denying the shareholders' motion to amend their complaint five and a half years after filing.
4. Whether the shareholders were entitled to prejudgment interest under Mississippi law or the buy-sell agreement.

Disposition

reversed_and_remanded