Lee Kennedy v. Jeffrey Hall , 680 F. App'x 269 ( 2017 )

Case: 16-60569 Document: 00513879893 Page: 1 Date Filed: 02/17/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-60569 FILED
Summary Calendar February 17, 2017
Lyle W. Cayce
Clerk
LEE F. KENNEDY,
Plaintiff - Appellant
v.
JEFFREY L. HALL; BRYAN NELSON, P.A.,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 2:15-CV-135
Before DAVIS, SOUTHWICK, and HIGGINSON, Circuit Judges.
PER CURIAM:*
Plaintiff Lee F. Kennedy appeals the district court’s grant of Defendants’
motion for summary judgment in this legal malpractice suit against attorney
Jeffrey L. Hall. Kennedy complains that attorney Hall negligently represented
her in an underlying suit in which Kennedy was sued on a guaranty agreement
following default on a note. The district court held that Plaintiff failed to raise
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 16-60569 Document: 00513879893 Page: 2 Date Filed: 02/17/2017
No. 16-60569
an issue of material fact that but for the Defendants’ negligence in the
underlying action she would have been successful in the defending against the
suit to recover on Kennedy’s personal guaranty. Mississippi law, which
controls in this case, requires that Kennedy show that but for her attorneys’
negligence, she would have been successful in the underlying action. Kennedy
failed to make that showing, therefore, we AFFIRM the district court’s
judgment and DENY Defendants’ motion to strike a portion of Kennedy’s reply
brief.
I.
This legal malpractice suit arises from an underlying action brought by
HCB Financial Corporation (“HCB”) against Kennedy. 1 There, HCB filed suit
against Kennedy to collect on Kennedy’s personal guaranty, guaranteeing
payment of a promissory note that was in default. 2 HCB filed a motion for
summary judgment, which the district court granted, holding that Kennedy
failed to raise an issue of material fact regarding her liability on her personal
guaranty. 3 In the underlying action, the trial court entered a judgment against
Kennedy for $2,019,495.82. 4
HCB Fin. Corp. v. Kennedy, No. 1:10cv559HSO-JMR, 2013 WL 12090332, at *1 (S.D.
1
Miss. Mar. 14, 2013), aff’d, 570 F. App’x 396 (5th Cir. 2014). In sum, Kennedy, along with
several other investors, purchased property along the Gulf Coast of Mississippi after
Hurricane Katrina to develop it. HCB Fin. Corp., 570 F. App’x at 398. To finance the
purchase, the investors obtained a $7,438,400 loan from Double A Firewood and in exchange
the investors executed a promissory note and deed of trust encumbering the property. Id.Each investor also executed personal guaranty agreements for the full payment of the note
plus interest, costs, and attorney’s fees incurred in collecting the payment. Id. Upon default,
Double A initiated foreclosure proceedings. HCB Fin. Corp., 2013 WL 12090332, at *1.
Central Progressive Bank purchased the loan from Double A. Id. When Central Progressive
was closed and liquidated, HCB was assigned the note and sought to recover the deficiency
owed by Kennedy based on her personal guaranty. Id.2 Id.3 Id. at *5.
4 Id.
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Kennedy filed the instant malpractice suit against her attorney and his
former law firm, alleging Defendants’ negligence caused the adverse judgment.
II.
We review a district court’s grant of summary judgment de novo,
applying the same standard as the district court. 5
III.
Defendants assert that Kennedy cannot prove that their alleged
negligence was the proximate cause of her injuries. Under Mississippi law,
“[a] legal malpractice case requires proof by a preponderance of the evidence
the following: (1) existence of a lawyer-client relationship; (2) negligence on the
part of the lawyer in handling the affairs entrusted to him; (3) proximate cause;
and (4) injury.” 6 “[T]o prove proximate cause[,] the plaintiff must show that
but for his attorney’s negligence he would have been successful in the
prosecution or defense of the underlying action.” 7 We agree with the district
court that Kennedy failed to raise a genuine issue of material fact tending to
show this critical element of her cause of action.
The district court correctly points out that Kennedy only argues that her
attorney was negligent in not urging the court to credit any sums Kennedy
owed under the guaranty by the fair market value of property given as
collateral for the loan.
The district court correctly held that the personal guaranty Kennedy
executed waives any such right of offset. The guaranty states that the
guarantor “waives any right . . . [to] require that resort be had to any security
or to any balance of any deposit account or credit on the books of the
5 Stanley v. Trinchard, 500 F.3d 411, 418 (5th Cir. 2007) (citing Cutrera v. Bd. of
Supervisors of La. State Univ., 429 F.3d 108, 110 (5th Cir. 2005)).
6 Century 21 Deep S. Props., Ltd. v. Corson, 612 So. 2d 359, 372 (Miss. 1992) (citing
Hickox v. Holleman, 502 So. 2d 626, 633 (Miss. 1987)).
7 Id. (citing Hickox, 502 So. 2d at 634).
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Beneficiary in favor of the Debtor of [sic] any other person.” 8 It has long been
the law in Mississippi that with a guaranty of payment, the guarantor is
immediately liable upon the debtor’s default. 9 The creditor does not have to
institute any legal proceedings against the debtor or pursue collateral before
suing the guarantor. 10 The only “prescribed condition” to suing on a personal
guaranty is default on the primary debt. 11 So any evidence Kennedy could
have presented in the underlying action regarding the fair market value of
collateral properties would not have changed the amount of the final judgment
rendered against her.
Because Kennedy failed to put forth any evidence to show that but for
Defendants’ negligence, she would have been successful in defending against
the underlying suit, we AFFIRM the judgment of the district court.
Defendants moved to strike portions of Kennedy’s reply brief that relies
on judicial estoppel. We DENY that motion as moot.
8 Continuing Personal Guaranty, signed by Lee F. Kennedy, Sept. 28, 2006.
9 Bosarge v. LWC MS Props., LLC, 158 So. 3d 1137, 1143 n.5 (Miss. 2015).
10 Brown v. Hederman Bros., LLC, No. 2014-CA-01553-COA, 2016 WL 2862363, at *4
(Miss. Ct. App. May 17, 2016) (quoting Wren v. Pearce, 12 Miss. 91, 98 (1845)).
11 Id. (citing Woods-Tucker Leasing Corp. v. Kellum, 641 F.2d 210, 215 n.7 (5th Cir.
1981)).
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