Adara MSSC Opinion
Adara MSSC Opinion
Adara MSSC Opinion
NO. 2018-IA-01686-SCT
v.
SHANE F. LANGSTON
EN BANC.
12(b)(2) motion to dismiss for lack of personal jurisdiction. The Hinds County Chancery
Court properly denied Networks Inc.’s motion. The chancery court can assert personal
jurisdiction over Networks Inc. under either the doing-business prong of our long-arm statute
or the tort prong. Langston pled sufficient facts to establish Networks Inc. did or does
business in Mississippi and to plead the tort of breach of fiduciary duty. Therefore, we affirm
¶2. At the time the complaint was filed, Networks Inc. was incorporated in Florida1 with
¶3. Shane Langston has been a member of the Mississippi Bar since 1984 and until 2016
¶4. Years before Langston moved to Texas, Langston purchased one million shares of
preferred stock in Networks Inc. for $500,000. This purchase was made at the urging of his
was a paid shill for Networks Inc., acting to entice Langston and other Mississippians to
invest in Networks Inc. In an affidavit filed in this proceeding, Primos swore that since at
least 2002 he has been paid monthly by Networks Inc. to solicit and influence investors for
1
Networks Inc. has since dissolved its Florida incorporation and is currently
incorporated in Nevada.
2
Networks Inc. including residents of Mississippi. Primos annually received IRS forms 1099
¶5. Several years later, Langston was contacted again by Primos on behalf of Networks
Inc. in Mississippi and was persuaded to invest additional funds in the form of a convertible
loan to Networks Inc. In 2013, Langston exercised his right to convert the $250,000 debt
¶6. Throughout the years, Primos regularly communicated with Langston and other
investor residents of Mississippi for Networks Inc. In the same affidavit, Primos swore that
he provided information to Langston and other Mississippi residents at the direct instruction
and behest of the chief executive officer of Networks Inc. Eric Johnson.2
¶7. Networks Inc. has held one shareholder meeting over the twenty-year period that
Langston has been a shareholder. That shareholder meeting was held in Jackson, Mississippi,
with roughly one hundred Mississippi shareholders in attendance. Langston also had several
meetings with Johnson and Networks Inc.’s chief financial officer, Lillian Arbuckle, in
Jackson, Mississippi. In 2003, Langston received a letter from Networks Inc. CEO Johnson
touting sales and developments, listing the University of Mississippi as a customer and
stating that products developed by Networks Inc. would be utilized by the Mississippi
2
In oral arguments presented to the trial court, Langston stated that Johnson’s
broker’s license had been revoked due to civil fraud.
3
¶8. Langston has sought multiple times to examine various corporate documents. Each
time, Primos was dispatched by Networks Inc. to discourage Langston. Primos told Langston
to withdraw his requests because a merger or buyout was imminent and disclosures would
adversely impact Networks Inc. Eventually, Langston joined other Mississippi investors3
seeking financial disclosures, in a demand letter to Networks Inc. dated January 24, 2018.
These shareholders offered to send an accountant to Networks Inc.’s offices in San Jose,
¶9. Networks Inc. countered the shareholders request by producing only selected
documents on April 9, 2018 in Jackson, Mississippi. However, before allowing the investors
That agreement contained a clause requiring that any dispute arising under that agreement
would be governed and interpreted by the laws of Mississippi and, further, that any disputes
that arose were subject to the jurisdiction of Mississippi courts. Langston alleged that the
selective production failed to encompass the documents requested and required by either
¶10. Among the documents produced were financial statements showing that in 2012 more
than 90 percent of Networks Inc.’s cash assets were on deposit with Trustmark National
Bank in Jackson, Mississippi. Furthermore that percentage increased in 2013, 2014, and
3
Those investors were Lance L. Stevens, Vic Welsh, Joe Roberts, Roderick D. Ward,
and James Holland. Christopher Jones and Ed Welch were allegedly also involved in the
request for documents.
4
2015, before subsequent withdrawals by Networks Inc. substantially decreased the balance
in 2016 and 2017. After review, the shareholders again requested full compliance with the
law, but the requests were ignored. Finally, Langston filed a complaint for accounting in the
Chancery Court of the First Judicial District of Hinds County, Mississippi, an appropriate
¶11. Networks Inc. responded with a Rule of Civil Procedure 12(b)(2) motion to dismiss
for lack of personal jurisdiction. Networks Inc. also claimed that it had not subjected itself
to the benefits and protections of Mississippi law, despite evidence to the contrary in the
confidentiality agreement.5 Langston filed affidavits establishing a prima facie case for
personal jurisdiction, while Networks Inc. stood only on its briefs and the arguments
advanced by its counsel. After due consideration, the chancery court denied Networks Inc.’s
4
The dissent suggests unilaterally transforming Langston’s action from the bold-
faced type on his complaint, “COMPLAINT FOR ACCOUNTING,” to a bill of discovery.
See Diss. Op. ¶ 51. This action directly contradicts the long held precept that plaintiffs are
the masters of their complaint. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 395, 107 S.
Ct. 2425, 96 L. Ed. 2d 318 (1987). The dissent cites Kuljis v. Winn-Dixie Montgomery,
LLC, 214 So. 3d 283 (Miss. 2017). A review of the record in that case reveals that the
pleading in that case was styled as “COMPLAINT FOR DISCOVERY.” Similarly, Moore
v. Bell Chevrolet-Pontiac-Buick-GMC, LLC, 864 So. 2d 939, 941 (2004), recites that the
pleading was styled a “complaint for discovery.”
5
The language in the confidentiality agreement is not disputed and has been entered
into the record. The agreement is not at issue, but it is direct evidence that Networks Inc. was
willing to avail itself of the courts of Mississippi and to hale others into Mississippi’s courts.
See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 62 L.
Ed. 2d 490 (1980).
5
STANDARD OF REVIEW
¶12. This Court reviews jurisdictional questions de novo. Canadian Nat’l Ry. Co. v.
Waltman, 94 So. 3d 1111, 1115 (Miss. 2012) (quoting Knight v. Woodfield, 50 So. 3d 995,
998 (Miss. 2011)). When considering a motion under Rule 12(b)(2), we take all allegations
made in the complaint and their reasonable inferences as true, just as a trial court would. Id.
(quoting R.C. Constr. Co. v. Nat’l Office Sys., 622 So. 2d 1253, 1255 (Miss. 1993)). To
determine whether a Mississippi court can exercise personal jurisdiction, courts ask two
questions: first, whether our long-arm statute permits an exercise of jurisdiction and, second,
whether that exercise of jurisdiction offends the due-process guarantees of the Fourteenth
Amendment. Dunn v. Yager, 58 So. 3d 1171, 1184 (Miss. 2011) (quoting Estate of Jones
ANALYSIS
6
or made as is provided by the Mississippi Rules of Civil Procedure.
Miss. Code Ann. § 13-3-57 (Rev. 2019). Satisfaction of any of the three prongs, be it through
corporation. Id. The parties have presented argument on the applicability vel non of the latter
two prongs. We will address the doing-business prong first because that issue is dispositive.
¶14. In its motion to dismiss, Networks Inc. relied exclusively on federal cases, arguing
that a present nonresident plaintiff cannot utilize the doing-business prong against a
nonresident defendant. Not one of the cases argued share facts or law common with the case
sub judice and therefore offer neither precedential nor persuasive value. The cases cited by
Networks Inc., save one, seek damages for injuries that occurred not only outside of the state
of Mississippi but also outside the United States of America.6 Networks Inc. asked the
6
Networks Inc. relies on Submersible Systems, Inc. v. Perforadora Central, S.A. de
C.V., 249 F.3d 413, 418 (5th Cir. 2001), Murray v. Remington Arms Co., 795 F. Supp. 805,
808 (S.D. Miss. 1991), Senseney v. Manufactured Building Insurance Co., No. 1:12CV86-
LG-JMR, 2013 WL 12121503 (S.D. Miss. Aug. 26, 2013), DeCarlo v. Bonus Stores, Inc.,
413 F. Supp. 2d 770 (S.D. Miss. 2006), and Delgado v. Reef Resort Ltd., 364 F.3d 642, 644
(5th Cir. 2004). In Submersible Systems, the alleged injury occurred in Mexico. 249 F.3d
at 415. In Murray, the alleged injury occurred in Canada. 795 F. Supp. at 806–07. In
Senseney, the alleged injury occurred in the United Kingdom. 2013 WL 12121503 at *3.
In Delgado, the alleged injury occurred in Belize. 364 F.3d at 644. Finally, in DeCarlo, a
Tennessee resident sued Icelandic nationals for an injury that had occurred in Mississippi.
However, the court determined the Icelanders had not committed a wrong against the
plaintiff. DeCarlo, 413 F. Supp. 2d at 776–78. DeCarlo also set forth that the plaintiff must
only present a prima facie case for personal jurisdiction. Id.
7
chancellor to ignore both the plain text of our statute and our precedent regarding its
¶15. The dissent’s opinion similarly offers cases that have no precedential value. Federal
cases may have persuasive value if they share common facts or law. Those cited do not. The
applicable Mississippi law is found in the long-arm statute.7 This Court has interpreted the
plain language found in that statute. In C.H. Leavell & Company v. Doster, 211 So. 2d 813,
7
The dissent adopts Networks Inc.’s theory by relying not on our precedent but on
dissimilar federal cases where injuries were sustained outside the state of Mississippi. Black
v. Carey Canada, 791 F. Supp. 1120, 1122 (S.D. Miss. 1990), and 1330 Broadway Co. v.
Carey Canada, No. S89-0467(G), 1990 WL 443936 at *1 (S.D. Miss. 1990), concerned
damages to buildings contaminated with asbestos situated in California, not Mississippi. In
Smith v. DeWalt Products Corporation, 743 F.2d 277, 278 (5th Cir. 1984), a man severed
his left hand in Louisiana while using power tools manufactured by the defendant. Lee v.
Memphis Publishing Co., 195 Miss. 264, 14 So. 2d 351, 351 (1943), concerned claims of
libel in a newspaper printed and published in Memphis. Washington v. Norton
Manufacturing, Inc., 588 F.2d 441 (5th Cir. 1979), concerned a worker suing a corporation
for negative effects he sustained as a result of dust inhalation. Where did the worker inhale
the dust? Louisiana. Washington, 588 F.2d at 442–30. In Mills v. Dieco, Inc., 722 F. Supp.
296, 297 (N.D. Miss. 1989), the court was confronted with Pennsylvania plaintiffs injured
in a car accident in Tennessee, suing a delivery company in Mississippi.Walker v. World
Insurance Co., 289 F. Supp. 2d 786 (S.D. Miss. 2003), concerned a plaintiff suing a health
insurance company. There, the court identified that “[t]he actual injury . . . is the alleged
wrongful preparation by Encompass of the determination regarding Plaintiff’s insurance
claim(s). All activities of Encompass related to the preparation of the determination occurred
in Iowa.” Id. at 789. Finally, while the facts in Golden v. Cox Furniture Manufacturing
Co., 683 F.2d 115, 119, (5th Cir. 1982), were not sufficiently developed to be able to
ascertain where the injury occurred, what is clear is that the court rejected the defendant’s
arguments that it should uphold a dismissal for lack of personal jurisdiction. None of these
cases offer precedential value for they fail to bear resemblance to the case sub judice, and
the one that may, came to a conclusion contrary to the dissent’s bent. In short, none of these
cases lend support to the dissent.
8
815 (Miss. 1968) (emphasis added),8 this Court stated,
[t]he defendant in this case is also subject to the jurisdiction of the courts of
Mississippi under category (3) of the first sentence of section 1437. Any
nonresident is subject to suit in this state who shall do any business or perform
any character of work or service in this state if the action or proceeding
accrues from acts done in this state.
Further, the plain text of the statute does not restrict usage of the third prong to only
Mississippi residents. The state of Mississippi, as does every state in the union, has a
profound interest in regulating those who conduct business and who, while doing so, inflict
¶16. Williams v. Liberty Mutual Fire Insurance Co., 187 So. 3d 166 (Miss. Ct. App.
2015), is also relied upon by Networks Inc. Williams is easily distinguishable and can be
added to the long line of cases referenced in footnote 6. Williams’s suit was based on an
accident that occurred in Shelby County, Tennessee; like the others, it concerns an injury that
8
The court in C.H. Leavell & Co. relied upon the following language:
211 So. 2d at 814 (quoting Miss. Code (1942) § 1437 (Supp. 1966)). This language is
identical to our current statute.
9
¶17. Williams also states that Mississippi courts previously interpreted the “doing
business” prong of the long-arm statute; but Williams cites only a decision from the United
States Court of Appeals for the Fifth Circuit, not one from this Court. Williams, 187 So. 3d
at 171 (citing Herrley v. Volkswagen of Am., Inc., 957 F.2d 216, 219 (5th Cir. 1992)). The
court in Herrley summarily affirmed a dismissal for lack of jurisdiction.9 This dismissal was
based on other federal court decisions reiterating the Fifth Circuit’s interpretation of our
long-arm statute in Breeland v. Hide-A-Way Lake, Inc., 585 F.2d 716, 720 (5th Cir. 1978).
Breeland erroneously held this Court’s decision in C.H. Leavell & Co. barred nonresident
defendants from asserting the doing-business prong of our long-arm statute. Reading our
decision in C.H. Leavell & Company should dispel any confusion caused by the language
¶18. Langston has provided ample evidence that Networks Inc. has done business in
Mississippi. The uncontested affidavit of Mississippi resident Ken Primos establishes that
9
Herrley concerned a one-car accident in Florida and suit brought against a company
that, unrelated to that accident, was “merely doing business” in Mississippi. 957 F.2d at 217.
Once again, the injury was sustained outside the state of Mississippi. Id.
10
The dissent rejects the notion that other courts confused our holding in C.H.
Leavell & Co., see Diss. Op. ¶¶ 35–36, and offers one more federal case commenced by a
citizen of Pennsylvania who purchased an anti-malarial drug in “British Hong Kong and
ingested it in the People’s Republic of China from October, 1984 to July, 1985, and in the
Commonwealth of Pennsylvania in August, 1985 and September, 1985,” and then sought
to sue the Swiss producers of the drugs in Mississippi. Prince v. F. Hoffman-La Roche &
Co., 780 F. Supp. 417, 418 (S.D. Miss. 1991). What the dissent fails to grasp is that in every
case, the alleged damages arose from events transpiring wholly outside the borders of our
state.
10
he was paid by Networks Inc. to perform services for Networks Inc. in Mississippi for more
than sixteen years. Primos was paid to solicit investments by Mississippi residents. Primos
was paid by Networks Inc. to provide information to Mississippi residents. Primos, during
the time that he was receiving regular payments from Networks Inc., acted to deter
Mississippi residents from obtaining an accounting and corporate information about the
company. Networks Inc. has maintained bank accounts in Mississippi. It elected to conduct
shareholder meetings in Mississippi to further its interest and, finally, it decided to provide
corporate documents for examination in the state of Mississippi before then allegedly
¶19. Networks Inc. engaged in “various acts here for the purpose of realizing a pecuniary
benefit or otherwise accomplishing an object” and so did business here. McDaniel v. Ritter,
556 So. 2d 303, 309 (Miss. 1989) (citing Restatement (Second) of Conflict of Laws § 35,
cmt. a (Am. Law Inst. 1971)). Because Langston’s complaint arises from one or more of
¶20. Networks Inc. argues next that the chancery court cannot utilize the tort prong of our
long-arm statute because Langston failed to adequately plead a tort. “Mississippi is a notice
pleading state.” Bedford Health Props., LLC v. Estate of Williams ex rel. Hawthorne, 946
11
So. 2d 335, 350 (Miss. 2006) (citing Estate of Stevens v. Wetzel, 762 So. 2d 293, 295 (Miss.
2000)). Alleging a tort invokes our long-arm statute and provides sufficient notice to
Networks Inc. of a claim. Rule 8 of Civil Procedure abolished the need for technical
pleadings, contrary to Networks Inc.’s arguments. Estate of Stevens, 762 So. 2d at 295.11
¶21. Examination of the complaint reveals that Langston pled that Networks Inc. breached
a fiduciary duty by refusing to properly disclose the financial details of the company to
shareholders, including Langston.12 Further, Langston alleges that Networks Inc. failed to
abide by corporate laws regarding mandatory filings, accountings, and shareholder meetings.
¶22. These allegations of violations of the duty of care are against directors and officers
of Networks Inc. “A director of a corporation owes duties to the corporation that he serves
and, equitably, to its shareholders. Among these duties, a director owes a duty of care and a
duty of loyalty.” Daniels v. Crocker, 235 So. 3d 1, 12 (Miss. 2017) (citing Derouen v.
Murray, 604 So. 2d 1086, 1092 (Miss. 1992); Omnibank of Mantee v. United S. Bank, 607
So. 2d 76, 84, 90 (Miss. 1992)). Specifically, the duty of care is a duty to carry out the actions
and functions of an officer or a director in good faith and in the best interests of the
Analysis and Recommendations § 1.27 (Am. Law Inst., Proposed Final Draft 1992)). Failing
11
The dissent provides an exposition of the specificity required in shareholder
derivative actions. See Diss. Op. ¶¶ 54–56; see also Burgess v. Patterson, 188 So. 3d 537,
552 (Miss. 2016). Langston did not file a derivative action.
12
Networks Inc. conceded in its brief before the trial court that breach of fiduciary
duty is a tort.
12
to follow basic corporate formalities and failing to abide by state laws regulating
corporations, if proved, are clear violations of the duty of care imposed on Eric Johnson, and
others, as officers and directors of Networks Inc. Concealing these violations by frustrating
the right of a shareholder to examine the books and records of the corporation is a further
¶23. As these allegations were clear on the face of the complaint, Langston’s complaint
provided sufficient notice to Networks Inc. and Johnson that Langston sought to bring a suit
against the company for violation of fiduciary duty on the grounds of misrepresentation,
alleged in the complaint that these wrongs were committed in part in Jackson, Mississippi.
Such notice satisfies the pleading requirements under Rule 8. Unquestionably, a Mississippi
court can properly exercise personal jurisdiction over Networks Inc. under the tort prong of
¶24. Exercises of personal jurisdiction are ultimately bound by the Due Process Clause of
the Fourteenth Amendment. Dunn, 58 So. 3d at 1184. To satisfy the Due Process Clause, a
defendant must have minimum contacts with the jurisdiction and the exercise of jurisdiction
must not offend traditional notions of fair play and substantial justice. Id. at 1185 (quoting
Estate of Jones, 992 So. 2d at 1140). Minimum contacts can lead to specific jurisdiction
arising out of the suit at hand or general jurisdiction related to the defendant’s long-term
13
relations with the jurisdiction. Id. at 1140 (citing Helicopteros Nacionales de Colombia, S.A.
v. Hall, 466 U.S. 408, 414–15, nn.8, 9, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984); Burger
King Corp v. Rudzewicz, 471 U.S. 462, 473, n.15, 105 S. Ct. 2174, 85 L. Ed. 2d. 528
(1985)). These minimum contacts must evidence the defendant’s intention to purposefully
avail itself of the “benefits and protections of a State’s laws.” Rudzewicz, 471 U.S. at 482.
Here, Networks Inc.’s, contacts with Mississippi demonstrate such. This suit arises out of
acts occurring in Mississippi, i.e. allegedly using a shill (Ken Primos) in Mississippi,
¶25. The United States Supreme Court has identified four factors to consider in evaluating
whether the traditional notions of fair play and substantial justice are met they are (1) “the
burden on the defendant,” (2) “the interests of the forum State,” (3) “the plaintiff’s interest
in obtaining relief,” and (4) “the interest of the several States in furthering fundamental
substantive social policies.” Estate of Jones, 992 So. 2d at 1142 (internal quotation mark
omitted) (quoting Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S. 102, 113, 107
¶26. We have already noted Mississippi’s and her sister states’ interests in regulating those
who conduct business within their borders. Here, the record reflects that Networks Inc.
14
gratuitously chose to produce the documents in this state when Langston and others were
willing to travel to California to inspect the documents. Separately, as part of Networks Inc.’s
document production, Networks Inc. demanded that Langston and others submit to the
jurisdiction of a Mississippi court for any disputes arising from a confidentiality agreement
Networks Inc. drafted. That provides evidence not only of Networks Inc.’s submission to but
also its desire to litigate in the courts of Mississippi. This belies Networks Inc.’s arguments
that it would be burdened by litigating in this state. Langston has an interest in obtaining
relief and assessing the value of his investment. He has given $750,000 to Networks Inc.
Should he be estopped from ascertaining if his investment has retained its value or has been
squandered? An accounting in this state would not be a burden under the Fourteenth
Amendment.
II. Langston’s suit was properly filed in the Chancery Court of Hinds
County.
¶27. Networks Inc. also challenged the subject-matter jurisdiction of the chancery court.
We have said that “[c]ases involving an accounting should be heard in chancery court rather
than circuit court.” Re/Max Real Estate Partners, Inc. v. Lindsley, 840 So. 2d 709, 713
(Miss. 2003) (citing Delta Constr. Co. of Jackson v. City of Jackson, 198 So. 2d 592, 601
(Miss. 1967)). Therefore we affirm the chancery court on this matter as well.
CONCLUSION
¶28. The Chancery Court of Hinds County properly exercised personal jurisdiction over
Networks Inc. in this case. Therefore, we affirm the decision of the chancery court and
15
remand the case for proceedings consistent with this opinion.
¶30. I would reverse the chancery court’s order denying the defendants’ motion to dismiss
for lack of personal jurisdiction under Mississippi Rule of Civil Procedure 12(b)(2), and I
would render a judgment of dismissal without prejudice in favor of the defendants’ Rule
12(b)(2) motion. Shane Langston’s complaint fails under both the doing-business prong and
the tort prong of Mississippi Code Section 13-3-57 (Rev. 2019). And contrary to the
majority’s view, the exercise of personal jurisdiction over Adara Networks would violate the
Due Process Clause of the Fourteenth Amendment. To grant Langston the request he seeks
in this instance would conflict with this Court’s holding in Burgess v. Patterson, 188 So. 3d
537 (Miss. 2016), in which the same request was denied to a stockholder suing a Mississippi
¶31. Neither Shane Langston,13 Adara Networks, Inc.,14 or Eric Johnson15 is a resident of
this state for purposes of Mississippi Code Section 13-3-57 (Rev. 2019). For decades, the
13
Langston is a resident of Texas.
14
Adara was a corporate resident of Florida when this complaint was filed but now
is incorporated in Nevada, with its principal place of business in California.
15
Johnson is a resident of California.
16
federal courts have consistently interpreted Mississippi Code Section 13-3-57 as barring the
defendants.16
¶32. The United States Court of Appeals for the Fifth Circuit, construing Section 13-3-57,
and quoting from a decision by a federal district court in the Northern District of Mississippi,
explained as follows:
We are thus of the view that by the enactment of the state’s long-arm statute,
as consistently construed by prior cases, the [Mississippi] legislature intended
to afford a remedy only to residents who might have claims or grounds of
action against nonresidents from activity done within the state, thus obviating
the necessity for its citizens to resort to a foreign jurisdiction for enforcement
of their rights. When taken in its entirety, the long-arm statute was clearly
enacted for the benefit of residents only, and the legislation has not been
expanded through the process of judicial interpretation to include nonresident
plaintiffs not qualified to do business within the state.
Breeland v. Hide-A-Way Lake, Inc., 585 F.2d 716, 721 (5th Cir. 1978) (quoting Am. Int’l
16
See Murray v. Remington Arms Co., 795 F. Supp. 805, 808 (S.D. Miss. 1991)
(“This Court and numerous other federal courts have repeatedly held that nonresident
plaintiffs may not utilize the doing business portion of the Mississippi long-arm statute to
obtain jurisdiction over a nonresident defendant.” (citing 1330 Broadway Co. v. Carey
Canada, No. S89-0467(G), 1990 WL 352740 (S.D. Miss. April 3, 1990); Black v. Carey
Canada, 791 F. Supp. 1120, 1123 (S.D. Miss. 1990); Smith v. DeWalt Prods. Corp., 743
F.2d 277, 279 (5th Cir. 1984); Golden v. Cox Furniture Mfg. Co., 683 F.2d 115, 117 (5th
Cir. 1982); Washington v. Norton Mfg., Inc., 588 F.2d 441, 444-45 (5th Cir. 1979); Mills
v. Dieco, Inc., 722 F. Supp. 296, 298 (N.D. Miss. 1989)). The federal courts have applied
this precedent “to plaintiffs . . . . who were residents of Mississippi at the time their cause of
action accrued but were not residents of Mississippi at the time they filed their lawsuit.”
Harold v. Manufactured Buildings Ins. Co., Ltd., No. 1:12CV86-LG-JMR, 2013 WL
12121503, at *2 (S.D. Miss. Aug. 26, 2013) (citing Walker v. World Ins. Co., 289 F. Supp.
2d 786, 787-88 (S.D. Miss. 2003)).
17
Pictures, Inc. v. Morgan, 371 F. Supp. 528 (N.D. Miss. 1974)).
¶33. Breeland also noted this Court’s decision in C. H. Leavell & Co. v. Doster, 211 So.
2d 813 (Miss. 1968), in which two foreign corporations qualified to do business in this state
had sued a nonresident defendant to recover damages alleged to have arisen from a contract
that was to be performed entirely within this state. Id. at 720 n.9. Breeland construed C.H.
Leavell & Co. to hold that a foreign corporation not qualified to do business in Mississippi
constitutes a nonresident and cannot invoke the long-arm statute’s doing-business prong to
¶34. Our legislature’s amendment of Section 13-3-57 in 1980, which expressly extended
the tort prong to nonresident plaintiffs, reaffirmed for the federal courts that their prior
Herrley v. Volkswagen of Am., Inc., 957 F.2d 216, 218 (5th Cir. 1992) (quoting Smith v.
DeWalt Prods. Corp., 743 F.2d 277, 279 (5th Cir. 1984)).
¶35. We of course are not bound by the Fifth Circuit’s interpretation of our long-arm
statute. But the statute is not expressly clear when it comes to whether a nonresident plaintiff
defendant. And this Court has yet to illuminate the answer fully, which has often left our
18
federal courts sitting in diversity jurisdiction with an Erie17 guess as to how this Court would
determine the question. See e.g. Prince v. F. Hoffman-La Roche & Co., 780 F. Supp. 417,
419 (S.D. Miss. 1991) (“If the Shewbrooks[18] court really intended the ‘doing business’
this Court is confident they would have at least cited the statute somewhere in their opinion.
Also, this Court is persuaded that if the Mississippi Supreme Court meant what plaintiffs
contend they did, then that court would have cited the numerous federal court cases that have
¶36. The majority continues the uncertainty in this case by stating simply that the federal
cases relied upon by Adara Networks do not “share[] facts or law common with this case[,]”
and are dissimilar because they “involve an alleged harm sustained . . . outside of the state
of Mississippi.” Maj. Op. ¶14. Further, according to the majority, the federal courts have
¶37. This is incorrect. First, unlike the majority does here, the federal cases cited by Adara
Networks do not conflate the doing-business provision with the contract or tort provisions
of the long-arm statute. Second, these federal cases do not misconstrue this Court’s holding
17
Erie R.R. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938)
18
Shewbrooks v. A.C. & S., Inc., 529 So. 2d 557 (Miss. 1988), superseded by statute
on other grounds as stated in N. Am. Midway Entm’t, LLC v. Murray, 200 So. 3d 437, 439
n.4 (Miss. 2016).
19
¶38. In C.H. Leavell & Co., as mentioned above, two foreign corporations sued a
nonresident defendant to recover damages arising out of a contract between the plaintiffs and
the defendant to be performed entirely within Mississippi. C.H. Leavell & Co., 211 So. 2d
at 813-14. The trial court had ruled that the nonresident defendant “was not subject to a suit
in Mississippi by the corporate plaintiffs within the meaning of [our long-arm statute].” Id.
at 814. This Court held that the trial court erred in dismissing the suit. Id. at 815.
¶39. This Court explained that because the two plaintiffs (foreign corporations) had both
qualified to do business in this state, they constituted residents of this state for purposes of
our long-arm statute. Id. “[A] foreign corporation qualified to do business under the
corporate laws of this state should have the same privileges and advantages of invoking the
aid of the courts of this state under [the long-arm statute] as resident corporations if they are
to have equal protection of the laws.” Id. (citing Miss Code (1942) § 5309-222 (Supp.
1966)).
¶40. C.H. Leavell & Co. further held that the nonresident defendant was “also subject to
the jurisdiction of the courts of Mississippi under category (3)” of the long-arm statute, which
provides that “[a]ny nonresident is subject to suit in this state who shall do any business or
perform any character of work or service in this state if the action or proceeding accrues from
¶41. Like the nonresident plaintiffs argued in Breeland, the majority here construes C.H.
Leavell & Co. to say that, because the nonresident the defendant was subject to the doing-
20
business provision of the long-arm statute, this allowed the nonresident plaintiffs to invoke
the doing-business provision. But C.H. Leavell & Co. held no such thing, as Breeland
correctly noted. See Breeland, 585 F.2d at 720 n.9 (The Court in C.H. Leavell & Co.
“indicated that the nonresident defendant was also subject to suit under the ‘doing business’
provision of the statute. The appellants contend that this alternative holding supports their
theory that a nonresident plaintiff may invoke the ‘doing business’ provision against a
nonresident defendant. Their theory goes counter to the overwhelming weight of Mississippi
jurisprudence.”).19
¶42. Acknowledging this precedent, Langston told the chancery court that Section 13-3-
57’s doing-business prong “was not the issue.” Rather, he had alleged a tort against Adara
Networks, claiming that Adara Networks breached its fiduciary duty owed to him. At the
Brunini Law Firm located in Jackson, Mississippi, Adara Networks produced incomplete
documentation in violation of its obligations under applicable Florida law. This is the
19
Breeland also rejected the claim that such a construction of our long-arm statute
“denie[s] nonresident [plaintiffs] due process and equal protection of the law and infringe[s]
their privileges and immunities[.]” Breeland, 585 F.2d at 721. “[T]he object sought to be
accomplished [by the long-arm statute] is the protection of the rights of Mississippi
residents, as first proclaimed in Lee v. Memphis Publishing Company, (195 Miss. 264, 14
So. 2d 351 (1943)); and this classification is in no way discriminatory. Sugg v. Hendrix,
(142 F.2d 740 (5th Cir. 1944)).” Id. (quoting Am. Int’l Pictures, Inc. v. Morgan, 371 F.
Supp. 528, 532 (N.D. Miss. 1974)).
20
Indeed, as the majority acknowledges, the case is here on Adara Network’s
gratuitous choice “to produce documents in this state when Langston and others were
willing to travel to California to inspect the documents.” Maj. Op. ¶ 26. Had that occurred,
21
¶43. I know of no Mississippi case that holds or even contemplates that a corporation’s
duty it owes to the shareholder constitutes a tort for purposes of Mississippi’s long-arm
statute. This Court has recognized that stockholders had a common-law right to inspect his
or her corporation’s books and records. Sanders v. Neely, 197 Miss. 66, 19 So. 2d 424, 425-
26 (1944) (citing 13 Am. Jur. 480).21 But as Sanders also instructed, such a right was “not
absolute,” but a “qualified one,” enforceable by a writ of mandamus “as a proper remedy.”
Id.
¶44. This common-law right to inspection has since been codified in Mississippi by the
Mississippi Business Corporation Act (MBCA), which, like Florida, has codified the Model
Business Corporation Act. See generally Miss. Code Ann. §§ 79-4-1.01 to -17.01 (Rev.
2013); Fla. Stat. § 607.0101 to .1908.22 Both acts eliminate the stringent requirements of the
extraordinary writ of mandamus under the common law, “by giving the stockholder ‘a
22
positive right’ to inspect corporate books and records.” See Shaw v. Agri-Mark, Inc., 663
A.2d 464, 468 (Del. 1995) (explaining the same for purposes Delaware corporate law)
(quoting State ex rel. Thiele v. Cities Serv. Co., 115 A. 773, 774 (Del. 1922)), superseded
by statute on other grounds as stated in Cent. Laborers Pension Fund v. News Corp., 45
¶45. And both acts provide statutory remedies to stockholders if a corporation does not
properly comply with a stockholder’s reasonable request to inspect corporate books and
records. See generally Miss. Code Ann. §§ 79-4-16.01 to -16.04; Fla. Stat. §§ 607.1601 to
.1604.
¶46. In its January 24, 2018 letter to Adara Networks requesting certain financial
information, Langston and other investors invoked Florida law and its requirements for
23
convenient to you and your staff. It is our intention, and our hope, that this
review will satisfy the legitimate curiosities expressed by stockholders,
allowing the corporation to function without the need of numerous, periodic
requests imposed upon the corporation by the likes of us.
¶47. If Adara Networks did not fully comply with the FBCA’s requirements, then the
remedy for its failing lay in Florida for a Florida court to administer and supervise under the
FBCA. Fla. Stat. § 607.1604.23 Long ago, this Court cautioned that Mississippi courts will
23
Florida Statute Section 607.1604 provides as follows:
(3) If the court orders inspection and copying of the records demanded
under s. 607.1602(2), it may impose reasonable restrictions on the
disclosure, use, or distribution of, and reasonable obligations to
24
not “exercise any supervisory or visitorial power over the internal management of the
business of a foreign corporation.” Clark v. Equitable Life Assurance Soc’y, 76 Miss. 22,
¶48. Langston knew Florida law applied when he first invested in Adara Networks in 2002
and again in 2012.25 But despite having concerns—as he claims—beginning in 2011 about
his investment, Langston never fully exercised his rights to inspect under Florida law until
maintain the confidentiality of, such records, and it shall also order the
corporation to pay the shareholder’s expenses incurred, including
reasonable attorney fees, incurred to obtain the order and enforce its
rights under this section unless the corporation establishes that the
corporation refused inspection in good faith because the corporation
had:
(a) A reasonable basis for doubt about the right of the shareholder
to inspect or copy the records demanded; or
25
2018 when he and other investors submitted their (aforementioned) letter.26 And Langston
did not pursue the remedy provided by Florida law when—as he claims—Adara produced
inadequate and incomplete information at Brunini and to Langston personally at his home
in Texas.
¶49. According to Langston, he is entitled to more than what Florida statutory law requires,
and is asking for relief beyond what Florida statutory law provides. He is requesting that the
chancery court allow him an accounting, “to do discovery and to get financial records and
to take depositions.”
¶50. Inexplicably, the majority affirms this request by simply stating that, “[a]n accounting
in this state would not be a burden to [Adara Networks] under the Fourteenth Amendment[,]”
and that, “[w]e have said that ‘cases involving an accounting should be heard in chancery
¶51. First, while Langston styles his complaint as a “complaint for accounting,” his actual
request clearly constitutes a bill of discovery. Langston does not seek to divest from Adara
Networks, or recoup any funds owed to him by the corporation. He simply seeks more
¶52. As this Court has held, a bill of discovery may only be pursued when there is no other
26
According to Langston, when he had considered seeking financial information
from Adara Networks in the past (before to January 2018), Primos, along with Pittman, had
dissuaded him from doing so because it could jeopardize potential buyouts that Adara
Networks was negotiating.
26
remedy. Kuljis v. Winn-Dixie Montgomery, LLC, 214 So. 3d 283, 285 (Miss. 2017). And
“the complaint must show that the plaintiff has been diligent and has made reasonable efforts
939, 947 (Miss. 2004) (quoting V.A. Griffith Mississippi Chancery Practice § 429 (2000
ed.)). The same holds true for an “accounting.” Both are equitable remedies that first require
proper demands by the petitioner to the principal. 1A C.J.S. Accounting § 54. Further, under
our longstanding tenet in chancery, “[h]e who seeks equity must do equity[,]” for our “laws
serve the vigilant, and not those who sleep over their rights.” Grant v. State, 686 So. 2d
1078, 1089 (Miss. 1996) (internal quotation marks omitted) (quoting Comans v. Tapley, 101
¶53. By his own admission, Langston has acquiesced to others by failing to exercise his
inspection rights under Florida law. And after finally acting on those rights, he chose not to
pursue the remedy provided to him by Florida law. Langston now comes to a Mississippi
court seeking discovery to—as the majority accurately puts it—“ascertain[ whether] his
investment has retained its value or has been squandered[.]” Maj. Op. ¶ 26.
¶54. This is not permitted, as this Court’s holding in Burgess illustrates. In Burgess, a
common-stock shareholder filed a derivative action against the directors and officers of a
Mississippi corporation. Burgess, 188 So. 3d at 539-40. The shareholder sought discovery
to investigate the shareholder’s claims that the corporation’s officers had breached their
27
fiduciary duties by their “material misrepresentations and gross mismanagement of the
Company[.]” Id. The trial court denied the request, finding “that in derivative proceedings
you must have a legally sufficient Complaint in order to conduct discovery.” Id. at 544.
¶55. This Court agreed, holding that while the shareholder may have been “entitled to the
Special Committee’s report under Section 79-4-16.02(a), the [MBCA] statute governing the
rights of shareholders to inspect corporate records[,]” the shareholder made “no such demand
. . . . ” Id. at 559. And the shareholder was not entitled to discovery in order to assist him
“in meeting the particularized pleading requirements.” Id. at 559-60 (quoting Grimes v. DSC
Commc’ns Corp., 724 A.2d 561 (Del. Ch. 1998)). Burgess added, “[s]imply because
‘something might be caught on a fishing expedition’ is not a sufficient reason to allow [the
shareholder] to augment his pleadings with discovery.” Id. at 560 (quoting Auerbach v.
¶56. The same rule applies here, because Langston’s pleadings are even more lacking than
those found in Burgess. Langston told the chancery court that he needs an accounting “to
do discovery” because he has “reason to believe” that Adara Network’s “CEO, Mr. Johnson,
. . . has engaged in waste and fraud.” But Langston does not formally claim or plead either
to be the case.
¶57. If the shareholder in Burgess was not permitted the discovery he sought to “augment
his pleadings” against a Mississippi corporation, then Langston should not be permitted the
discovery he seeks against a foreign corporation just to “ascertain” whether “his investment
28
has retained its value or has been squandered.”
¶58. The majority finds Burgess irrelevant because Langston has not filed a derivative
¶59. Langston does not make a bona fide claim of any of the conduct that he says he is
concerned about in his complaint. All that Langston has at this point are concerns, which he
admits he failed to relieve by not following through with his statutory remedy under Florida
law. As Langston says in his complaint, he continually “receded from the demand[] for
financial disclosures required under Florida corporate law, . . . in fear of ‘shooting himself
in the foot[.]’” Langston may very well have a legitimate derivative action against Adara
Networks. But as Burgess instructs, Langston cannot bypass the statutory remedies available
to him and go straight to an equitable accounting with discovery to investigate whether or not
¶60. Contrary to the majority’s view, allowing Langston the remedy he seeks is
inconsistent with Burgess. And it is inconsistent with this Court’s admonition in Clark.
¶61. For this Court to now hold otherwise for this particular case against a foreign
corporation does in fact offend the notions of fair play and substantial justice, and it violates
Networks has sufficient minimum contacts with this state so as to demonstrate purposeful
availment.
¶62. So even if I were to agree that our long-arm statute allows for jurisdiction in this case,
29
I would still hold that personal jurisdiction is not proper in this case under the Due Process
30