Fill and Sign the Plaintiffs Response to Defendants Motion for Partial Summary Judgment Mississippi Form

IN THE CHANCERY COURT OF       COUNTY, MISSISSIPPI       and       vs. NO.             and       PLAINTIFFS' RESPONSE TO DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT COMES NOW Plaintiffs,       ,       and       by and through counsel and file this their Response to Defendants' Motion for Partial Summary Judgment, pursuant to Rule 56 of the Mississippi Rules of Civil Procedure and in support of said motion would show the following, to - wit: I. Defendants raise two issues that they claim are ripe for Summary Judgment. These issues are as follows: 1. Whether the notes attached to their Motion as Exhibits "C' and "D" should be reformed in the manner alleged in Defendants' counterclaim; and 2. Whether       and       are individually liable for the insurance proceeds in dispute. II. With regard to the issue raised on the reformation of the Notes, Plaintiffs have agreed the notes should be reformed, however, Plaintiffs are entitled to an offset of the monies owed from the notes, and therefore, there is a material issue of fact as to the amount actually payable to Defendants. III. Defendants are also not entitled to Summary Judgment on the issue of individual liability as a matter of law. Defendants assert several positions in their Brief in Support of their Summary Judgment Motion and each will be addressed below. 1. Defendants first assert that 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 proceeds. It is true that Defendants did not sign in their representative capacities, and although it may not be controlling, it is an important factor in assessing individual liability. This will be discussed in more detail in response to Defendants’ third contention as set forth in paragraph three (3) below. 2. Defendants next assert that whether or not       and       were to be dissolved does not control which party, if any, is liable for the disputed insurance proceeds. It is true that Defendants were, by Contract, to dissolve the two corporations and have yet to do so. Again, although it may not be controlling, it is an important factor in assessing individual liability. It is clear that the corporations were not to survive and would make       and       the real parties in interest with regard to any liability. Further, the hard assets of the corporations were sold and they ceased to conduct business. The remaining assets of the corporations were cash. This cash was distributed to Defendants. The remaining corporations are but a shell. Pursuant to Miss. Code Ann. §79 - 4 - 14.07, it clearly states as follows: (d) A claim may be enforced under this section: (1) Against the dissolved corporation, to the extent of its undistributed assets; or (2) If the assets have been distributed in liquidation, against a shareholder of the dissolved corporation to the extent of his/her pro rata share of the claim or the corporate assets distributed to him/her in liquidation, whichever is less, but a shareholder's total liability for all claims under this section may not exceed the total amount of assets distributed to him/her . Accordingly,       and       are subject to liability for the extent of assets (in this case money) that was distributed to them. Defendants had no authority to conduct business after the corporations were dissolved but to wind up the affairs of the corporation and distribute the assets pursuant to Miss. Code Ann. §79 - 4 - 14.21. 3. Defendants third and final assertion is that the alleged administrative dissolution of       and       does not control which party, if any, is liable for the disputed insurance proceeds. Defendants further attach Exhibits "I" and "J" certificates of good standing to claim the allegation of dissolution is not true. Then they go on to argue based upon the assumption that "even if it were assumed to be true that they were dissolved. This is a blatant desperate attempt at legal maneuvering that borderlines bad faith. The Defendants further state that at all times relevant,       and       were legally conducting business as corporate entities under Mississippi law. This is a blatant misrepresentation of Mississippi law and fact. Plaintiffs' counsel called the Secretary of State on       (       ) separate occasions to conform the corporate dissolution of       and       as of       ,       . Further, in Paragraphs 18 and 19 of Defendants Answer to Amended Complaint and Counterclaim, Defendants admit that both       ,       and       were administratively dissolved on             ,       . It is beyond Plaintiffs comprehension as to how Defendants can now make this assertion that the dissolution was untrue. Defendants have obviously had the corporations reinstated and are attempting to give new meaning to Miss. Code Ann. §79 - 4 - 14.22. This is evidenced by Defendants arguments in the "even if section of their brief where they state that under 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. "This is true but it does not address the liability for any and all intervening unauthorized actions taken by those purporting to act as a corporation. This reading of §79 - 4 - 14.22 is contrary to basic corporate case law and Mississippi codified law. Miss. Code Ann. §79 - 4 - 14.21, specifically provides that a corporation that has been administratively dissolved"...continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under Section 794 - 14.05 and notify claimants under Section 79 - 4 - 14.06 and 79 - 4 - 14.07. Therefore, any business conducted other than those set forth in §79 - 4 - 14.21 are unauthorized. It has already been shown herein how, under §79 - 4 - 14.07, a shareholder can be individually liable to the extent of assets distributed to him/her . Further, Miss. Code Ann. §79 - 4 - 2.04 states that "All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under Sections 79 - 4 - 1.01 et seq., are jointly and severally liable for all liabilities created while so acting." (emphasis added). See also, Flanagan V. Jackson wholesale Bldg Supply Co., 461 So.2d 761 (Miss 1984.), and Carolina Transformer Co., Inc. V. Anderson, 341 So.2d 1327 (Miss 1977.). Therefore, the Defendants,       and       did sign the contracts in their individual capacity and purporting to act on behalf of a corporation, and are the real parties in interest since the corporations were to be contractually dissolved after the closing leaving no corporate assets. In fact, the existing corporations are nothing more than undercapitalized shells. Further, the corporations were dissolved prior to and at the time of the closing, and accordingly, all transactions and creation of debt during this time was unauthorized leaving the actors liable. Also, any other transactions occurring after the closing while still dissolved were also unauthorized. Accordingly, the filing of the insurance claim, collection and distribution of the proceeds were unauthorized and subject to liability. Therefore, all Defendants herein are jointly and severally liable for all claims set forth in this action. WHEREFORE, Plaintiffs,       ,       and       respectfully request that this Court dismiss and deny Defendants' Motion for Partial Summary Judgment. There are genuine material issues of fact that preclude the Court from granting summary judgment on the issue of reformation of the notes. Further, Defendants are not entitled to summary judgment on the issue of that       and       are not individually liable for the insurance proceeds because, as a matter of law,       and       are jointly and severally liable. Dated this the       day of       , 20       . Respectfully submitted, _______________________________________       Attorney for       Of counsel:                         Telephone:       MSB #       Attorney for       ,