Fill and Sign the Opposition Summary Judgment Form

IN THE CHANCERY COURT OF COUNTY, MISSISSIPPI and vs. NO.       and DEFENDANTS' RESPONSE IN OPPOSITION TO PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT The defendants, , and reply in opposition to plaintiffs' motion for partial summary judgment as follows: Plaintiffs have moved for summary judgment on two issues. The first issue is the reimbursement of certain remodeling expenses in the amount of $ . Defendants are liable for said expenses in the amount of $ , but they are entitled to a set-off therefrom. The second issue involves the disbursement of insurance proceeds. Plaintiffs are not entitled to summary judgment on this issue. FACTS On or about , , the parties entered into an Agreement for the Purchase of and (the Agreement). A copy of the Agreement is attached hereto as Exhibit "A". The Agreement contemplated a sales transaction, whereby and were to purchase the assets of (" ") and (" "). Pursuant to the Agreement, the plaintiffs herein were the buyers and and were the sellers. Plaintiffs have never purchased any of the stock of or . On or about , , a natural disaster occurred that caused water damage to certain assets of , and others. On , , the parties executed an Addendum to Agreement for the Purchase of and (the Addendum). A copy of the Addendum is attached as Exhibit "B". Section II of the Addendum provides for the disbursement of the insurance proceeds received for the assets damaged in the natural disaster. With respect to the disbursement of insurance proceeds, the Addendum states the following: SECTION II. DISBURSEMENT OF INSURANCE PROCEEDS. If Sellers are reimbursed for insured losses that occurred on or about , , said insurance proceeds will be disbursed as follows: Any insurance proceeds representing reimbursement for losses incurred by and shall be paid to Buyers. Any insurance proceeds representing reimbursement for losses incurred to the       shall be paid to Buyers. However, the       shall receive a credit to their account in the amount of said reimbursement. Any insurance proceeds representing reimbursement for losses incurred by shall be paid to Sellers. In anticipation of receiving said insurance proceeds, Sellers will advance Buyers % of the estimated insurance claim as an advance disbursement of insurance proceeds as described above up to $ . Plaintiffs are inviting the Court interpret Section II of the Addendum in a manner that is contrary to the contractual language, the intent of the parties, and to common sense. The intent of the parties respecting the disbursement of insurance proceeds was to make sure that plaintiffs got what they paid for. That is why the phrase "insurance proceeds representing reimbursement for losses" is used over and over again in the Addendum. If plaintiffs purchased a damaged asset that was not replaced prior to the sale, they were entitled to the insurance proceeds for that asset. Plaintiffs have received the insurance proceeds to which they are contractually entitled, but they persist in inviting this Court to give them a windfall of insurance proceeds that do not belong to them. LEGAL ANALYSIS A. Plaintiffs Are Not Contractually Entitled To The Insurance Proceeds They Are Claiming. Plaintiffs are claiming under Section II of the Addendum insurance proceeds that they are not entitled to. In determining the meaning of Section II of the Addendum, the key phrase is "insurance proceeds representing reimbursement for losses. "If insurance proceeds are not "reimbursement for losses," then the plaintiffs are not entitled to them. In other words, a condition precedent to plaintiffs being entitled to any insurance proceeds is that the proceeds actually reimburse some loss relative to the assets transferred in the sale. With that condition precedent in mind, there are seven categories of insurance proceeds. Category 1 is damaged merchandise that was replaced or repaired prior to the sale. Since this merchandise was replaced or repaired, the proceeds received are not "reimbursement for losses" within the meaning of the Addendum. If plaintiffs are permitted to retain the Category 1 proceeds, they will realize a windfall because they will have the replaced merchandise and the insurance proceeds for it. This was never the intent of the parties. Therefore, the Category 1 insurance proceeds belong to and . Category 2 is damaged merchandise that was not repaired or replaced. The Category 2 insurance proceeds belong to and because, with the exception of one item, none of the merchandise was transferred to the plaintiffs in the sale. The Addendum has to be read in conjunction with the Agreement. The Agreement provided that and were to sell certain assets to plaintiffs. The assets sold by and are evidenced by the conduct of the parties and by plaintiff’s responses to discovery. Plaintiffs were asked the following question and responded as set forth below: Request No.4: A list of the assets to be transferred in the transaction contemplated in the contract and addendum thereto attached to the complaint as exhibits "A" and "B". RESPONSE: See numbers 23 and 24 as listed in Response No.1. The documents produced by plaintiffs as numbers 23 and 24 are attached hereto as Exhibits "C" and reading the Agreement and Addendum as a whole, it is obvious that the parties never intended for plaintiffs to be reimbursed for assets that were not transferred in the sale. If a damaged asset was not transferred in the sale, then there was no "reimbursement for losses" within the meaning of the Addendum. The Addendum, when read in conjunction with the Agreement, reveals that the intent of the parties on the issue of disbursement of insurance proceeds was simply this: The plaintiffs were to get what they paid for. In more concrete terms, plaintiffs were to receive the insurance proceeds for the assets of or damaged in the natural disaster for which there was an actual loss in the sales transaction. There is no loss if a damaged asset was either replaced prior to the sale, or if the asset was not transferred in the sale. There is no loss if the asset was replaced prior to sale, for the simple reason that plaintiffs got what they paid for in the sale the particular asset in question. Likewise, there is no loss if the asset was not transferred in the sale, for the simple reason that there cannot be a loss associated with any assets plaintiffs did not purchase. This interpretation squares with the language of the Agreement and the Addendum and with the structure of the sales transaction between the parties. Pursuant to the sale transaction executed by the parties, plaintiffs purchased certain assets of and . The assets purchased are set forth on Exhibits "C" and "D" hereto. In the context of the insurance proceeds, plaintiffs were to receive the proceeds for the assets they purchased, and that were damaged in the natural disaster for which there was a loss. Again, there was no loss if a damaged asset was replaced (because plaintiffs got the asset they purchased), or if they did not purchase the asset (because plaintiffs did not pay for it). Any other interpretation would be contrary to the Agreement and the Addendum, and to a common sense interpretation of the same. Category 3 is property that belonged to . Therefore, the Category 3 insurance proceeds belong to the seller. Category 4 is personal property. With the exception of one item belonging to and valued at $ , the Category 4 insurance proceeds belong to some of the defendants. Category 5 is Hospice property. Therefore, the Category 5 insurance proceeds belong to the buyer. Category 6 is reimbursement for services rendered prior to the sale as a direct result of the loss. Category 6 is not reimbursement for any assets owned by any entity or person. It simply is not a reimbursement for any loss. Therefore, Category 6 insurance proceeds belong to and . Category 7 is damaged merchandise that the defendants' are unable to ascertain whether the merchandise was replaced by plaintiffs. If any of the Category 7 merchandise was replaced by plaintiffs, then plaintiffs are entitled to the insurance proceeds for that merchandise. Exhibit "E" hereto lists the Category that each item of property or services falls into. Exhibit "F" hereto contains a compilation of the amount of insurance proceeds falling into each Category. Summary judgment should be granted if there is no material factual dispute and the moving party is entitled to judgment as a matter of law. MRCP 56; Box V. State Farm Mut. Auto. Ins. Co., 692 So.2d 54, 55 - 56 (Miss.1997). Plaintiffs are not entitled to summary judgment on the issue of the disbursement of the insurance proceeds because the following genuine issues of material exist: 1. The meaning of the phrase "insurance proceeds representing reimbursement for losses," as used in Section II of the Addendum. 2. Whether a "loss" was incurred within in the meaning of the Addendum on any assets plaintiffs did not purchase in the sales transaction. 3. Whether a "loss" was incurred within the meaning of the Addendum on any assets that were replaced prior to the sale. 4. If an asset was replaced prior to the sale, are plaintiffs entitled to the replaced asset and the insurance proceeds therefor. 5. Whether plaintiffs are entitled to the insurance proceeds that represent reimbursement for services rendered as a result of the water damage sustained in the natural disaster. B. and Are Not Individually Liable For The Disputed Insurance Proceeds. Plaintiffs allege that and are jointly and severally liable along with the corporate defendants for the disputed insurance proceed because (1) they did not expressly sign the Agreement and the Addendum in their representative capacities, (2) pursuant to the Agreement, and were to be dissolved, and (3) and were allegedly administratively dissolved. (1) The Fact That and Did Not Expressly Sign The Agreement And The Addendum In Their Representative Capacities Does Not Control Which Party, If Any, Is Liable For The Disputed Insurance Proceeds. The sales transaction in dispute involved a sale of assets of and not a sale of stock. Although and did not sign the Agreement or Addendum with a corporate designation, that does not control who may be liable for the disputed insurance proceeds. and had no authority to sell the assets of and in their individual capacities. The assets in question belonged to and , not and . For this reason, and executed the corporate resolutions attached hereto as Exhibits "G" and "H", and provided the same to plaintiffs prior to and at closing. Without the corporate resolutions, the sale of assets of and would be null and void because the sale would not have been authorized. It would have been unauthorized because and would have been selling something they did not individually own. As specified in Miss. Code Ann. §§ 79 - 4 - 12.01 and 79 - 4 - 12.02, and could not individually sell the assets of and . Plaintiffs are thus inviting the Court to adopt a legal impossibility. Moreover, the disputed insurance proceeds were paid to and . See exhibits "I" and "Y'. The insurance proceeds were paid to and for two reasons. The first reason is that and were the insurers. The second reason is that and owned the assets. (2) Whether Or Not and Were To Be Dissolved Does Not Control Which Party, If Any, Is Liable For The Disputed Insurance Proceeds. Plaintiffs' contention that and are individually liable for the disputed insurance proceeds because and were to be dissolved is wrong. Liability for the disputed insurance proceeds has nothing to do with whether or not and were to be dissolved. The question is who had authority to sell the assets of and . The answer is and , not and . (3) The Alleged Administrative Dissolution of and Does Not Control Which Party, If Any, Is Liable For The Disputed Insurance Proceeds. Plaintiffs raise another issue by arguing that and were administratively dissolved on , . Exhibits "K" and "L" attached hereto demonstrate that this allegation is not true. However, even if it is assumed that and were administratively dissolved on , , then the analysis must turn to the law. Pursuant to Miss. Code Ann. §79 - 4 - 14.22, reinstatement of a corporation "relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution never occurred." At all times relevant, and were legally conducting business as corporate entities under Mississippi law. CONCLUSION There are genuine material issues of fact that preclude the Court from granting plaintiffs summary judgment on the issue of the disbursement of insurance proceeds. Moreover, plaintiffs are not entitled to summary judgment on the issue of whether and are individually liable for the insurance proceeds because, as a matter of law, and cannot be individually liable. Respectfully submitted, _______________________________________       Attorney for       Of counsel:                         Telephone:       MSB #       Attorney for