DICKINSON, Justice, for the Court:
¶ 1. The four individual parties to this litigation formed two member-managed limited liability companies (LLCs) to operate a business known as Bluewater. The three defendants locked out the plaintiff (literally and figuratively) and notified him they were exercising a provision in both LLCs' operating agreements that allowed them to buy his twenty-five percent interest in Bluewater. After he sued them in chancery court, they changed their minds about buying him out, but insisted that "his firing as an employee [was] affirmed and confirmed." The chancellor—finding the plaintiff was entitled to the fair-market value of his interest in Bluewater—entered judgment against the LLCs and the individual defendants. The defendants claim that, because they withdrew their offer to purchase the plaintiff's interest, the chancellor had no authority to force them to buy him out, and that there was no basis for individual liability.
¶ 2. Under Mississippi law, every member of a member-managed LLC is entitled to participate in managing the business. But even after the defendants claim they had changed their minds about buying the plaintiff's interest in Bluewater, they continued to insist that he was "fired" and could have no part in managing the business. The chancellor held this conduct was a willful, grossly negligent breach of contract. And because the operating agreements provided for individual liability in cases of willful, grossly negligent conduct, the chancellor entered judgment against the individual defendants. We cannot say the chancellor abused his discretion, so we affirm—in part. But because the chancellor incorrectly stated he had no authority to award attorney fees to the plaintiff; and because—without determining a reasonable rate of interest—he awarded post-judgment interest at the "statutory rate," we remand for a hearing on those issues.
¶ 3. James Williford Jr., Patricia Mosser, Marquetta Smith, and Michael Floyd formed two Mississippi limited liability companies—Bluewater Bay, LLC, and Bluewater Logistics, LLC,—to bid on lucrative government contracts related to the aftermath of Hurricane Katrina.
¶ 4. After Bluewater had completed more than $5 million in contracts, and with more than $1 million in payments due
¶ 5. Williford sued both LLCs and the three individual, super-majority members ("Defendants"). In addition to damages, he asked for injunctive relief to protect his interest in the LLCs, and to prevent the three super-majority members from improperly ousting him.
¶ 6. On February 15, 2006, the chancellor held a hearing on the injunction issues. Counsel for Defendants told the chancellor that Bluewater's certified public accountant (CPA), John Havard
¶ 7. The chancellor granted a preliminary injunction and appointed Havard to "oversee the financial affairs of the LLCs." The court ordered that Havard was to have "unlimited access to the financial records of the company on the premises" and that the records "may be made available to the plaintiff." The court's order further provided:
¶ 8. On April 10, 2006, Williford's counsel posted a letter to Havard, asking about the financial information the chancellor had ordered produced. Havard replied that he had, more than a month earlier, requested "a list of the pending jobs, the current status, and projected gross profit of these jobs (if awarded) as well as the status at January 31, 2006," but that he had "yet to receive that information back."
¶ 9. On June 7, 2006, still without the financial information, Williford's counsel filed a motion to compel compliance with the chancellor's prior order. Defendants' counsel responded:
¶ 11. On July 20, 2006, Carpenter requested information from both Williford and the defendants. Having received no response from Defendants by August 10, Carpenter reported to the court:
¶ 12. On August 16, 2006, Defendants served what purported to be responses to Williford's discovery requests. However, the responses were evasive and provided virtually no information. For instance, the first interrogatory and response stated:
¶ 13. In a letter to Defendants' counsel yet again requesting the court-ordered information, Williford's counsel—referring to the evaluation Carpenter was to provide— stated: "I think it would be in the best interest of all the shareholders to see her evaluation. Do you agree?" Defendants' counsel responded on August 21:
(Emphasis in original.)
¶ 14. Defendants' counsel followed up the letter with a motion asking the court to dissolve, in part, the preliminary injunction. The primary argument was that, because defendants had withdrawn their offer to purchase Williford's stock, the suit was moot. The motion also claimed: "A minority shareholder has no right to dictate
¶ 15. On August 23, 2006—having received neither the court-ordered information nor proper responses to discovery— Williford's counsel filed a motion for contempt and for an order compelling Defendants to provide the requested, court-ordered, information. On September 11, 2006, the chancellor entered an agreed order temporarily staying all proceedings. The order stated that the parties had agreed to a procedure for appraisal of the LLCs; that the court's previous orders were still in effect; and that Defendants were to provide the information Carpenter previously had requested. Specifically, Defendants were to provide her "any and all other financial records, as she deems necessary, to determine a fair market value of the Bluewater entities."
¶ 16. On November 10, Carpenter posted a letter to the parties, pointing out that most of the requested information had not been provided, and requesting that the documents be provided "no later than noon on Friday, November 17, 2006." Because the information still had not been provided a month later, Williford filed yet another motion for contempt, and Carpenter followed up on January 8, 2007, with another request for the documents. She had received no reply as of January 24, so Williford's counsel filed "Plaintiff's Renewed Motion to Compel and Motion for Contempt," asking the court to go forward with a hearing and to take testimony from Carpenter.
¶ 17. When the chancellor heard the motion on February 6, Carpenter's testimony clearly established that Defendants had failed to comply with discovery and the court's previous orders. On one occasion during the hearing, the chancellor— referring to documents that had not been provided—vented his frustration to the defendants' counsel:
¶ 18. The chancellor entered an order on February 8, holding Defendants in contempt and sanctioning them. He ordered them to pay—no later than February 12, 2007—$750 in attorney fees to Williford's counsel. Rather than pay the sanction on February 12, as ordered, Defendants waited until February 16, and then filed a motion requesting the court to "set aside, alter or amend" its February 8, 2007, order.
¶ 19. Williford's counsel responded by filing another motion for sanctions, informing the court that the sanctions previously ordered had not been paid. Counsel for all parties appeared before the chancellor on March 8, 2007. But rather than respond to the motion for additional sanctions, Defendants' counsel argued that counsel for Williford should not be allowed to proceed on his motion for additional sanctions because he had not properly noticed the motion.
¶ 20. After much argument and discussion by the parties—and an utterly amazing display of patience and judicial temperament by the chancellor—counsel for Defendants agreed that his clients would pay the sanction within seven days, and the matter was set for trial. The record
¶ 21. When the matter proceeded to trial, Carpenter testified that the value of Williford's interest, as of the date of the ouster, was $316,768.25. Havard's testimony was approximately the same. At the conclusion of the trial, the chancellor held for Williford against all Defendants, jointly and severally. He awarded Williford the value of his interest in the companies, together with five percent interest from the date of the ouster to the date of judgment, for a total judgment of $340,760.25. He also ordered Defendants to pay Carpenter's bill in the amount of $4,386.63, and post-judgment interest on the judgment at the "statutory rate." Finally, the chancellor denied Williford's request for attorney fees.
¶ 22. Defendants appealed and Williford cross-appealed. The Court of Appeals reversed the judgment, holding that Bluewater successfully had rescinded its ouster of Williford and that the chancellor's award was beyond the scope of the pleadings. We disagree.
¶ 23. Defendants present eight assignments of error and one issue concerning our standard of review. Williford's cross-appeal asserts the chancellor should have awarded him attorney fees. Finally, we address sua sponte the question of post-judgment interest. We condense and restate these issues as follows:
¶ 24. We review a chancellor's legal conclusions de novo; that is, we reach our own conclusions as to the applicable law.
¶ 25. But as to our review of the factual findings in this case, Defendants argue we must apply a different and higher standard of review because the chancellor adopted, verbatim, the plaintiff's proposed findings of fact and conclusions of law. That may be so, and probably is—Williford responds
¶ 26. When a chancellor adopts verbatim, or nearly verbatim, a party's proposed findings of fact, our precedent provides that we should apply "heightened scrutiny"
¶ 27. But our duty already requires us carefully to scrutinize every case, so we reject the former. And as to the latter, if "heightened scrutiny" requires us to abandon the reasonable-chancellor standard and apply a different, higher standard, we find no caselaw or other authority explaining that different standard, or suggesting how it should be applied.
¶ 28. In Rice Researchers, Inc. v. Hiter,
¶ 29. The Hiter Court's "less deference" standard, the Brooks Court's "heightened scrutiny" standard, and the dissent's "heightened sensitivity" standard all suggest that this Court—if not completely, then to some unspecified degree— must become the finder of fact, imposing (again, to some degree) our own view of the facts. But that would be a tricky
¶ 30. One thing is clear. Applying a "heightened-scrutiny" or "lessened-deference" standard would require us to abandon the traditional standard (accepting a chancellor's factual findings that the evidence supports), and employ some different standard. And although the new standard of review has been named ("heightened-scrutiny" or "less-deference"), this Court has yet to explain how it is to be applied.
¶ 31. While it is true that the United States Supreme Court has adopted various levels of scrutiny for particular kinds of cases—for instance, "intermediate-scrutiny" review of gender-based classifications
¶ 32. If we are to adopt and apply a "heightened-scrutiny" standard, simple fairness and justice requires us to publish that standard—in more than name—to the bench and bar. And because that has not been done—and because we decline to do it today—we shall continue to apply the familiar abuse-of-discretion standard to a trial judge's factual findings, even where the judge adopts verbatim a party's proposed findings of fact. And should a party suspect and suggest that the judge's factual findings are somehow tainted or untrustworthy, we hold that the party—upon proper proof—may seek a new trial.
¶ 33. In the case before us today, we find not one sliver of evidence that the chancellor's factual findings were untrustworthy or suspect. His bench opinion discussed his factual findings. And at the hearing on post-trial motions, he engaged in lengthy discussions with counsel concerning his view of the facts. Finally, his factual findings—whether or not identical to those submitted by the plaintiff—were supported by substantial evidence. So we are unable to say he abused his discretion, and this issue is without merit.
¶ 34. Defendants persistently have argued that Williford sought only injunctive relief, and that his pleadings did not justify the chancellor awarding him the fair-market value of his interest in Bluewater. For instance, in arguing post-trial motions, Defendants' counsel stated:
¶ 35. Mississippi has been a "notice pleading" state since January 1, 1982, when we adopted the Mississippi Rules of Civil Procedure.
¶ 36. Our decisions have reflected the shift from older forms of "code pleading" to the Rules' "notice pleading" paradigm. In Pilgrim Rest Missionary Baptist Church v. Wallace, we stated "it is axiomatic that the relief need not be limited in kind or amount by the demand but may include relief not requested in the complaint."
¶ 37. In holding that the chancellor erred in granting Williford money damages, the Court of Appeals inexplicably relied on three pre-rules cases, two of which date to the 1850s.
¶ 38. We hold that Williford's complaint was clearly sufficient to support an award of monetary damages. The complaint is titled "Complaint for Preliminary and Permanent Injunction and Damages." The opening paragraph stated that Williford was seeking damages. Paragraph 5 alleged the ouster was unlawful, "warranting equitable and monetary relief." Count I of the complaint was titled "Breach of Contract" and alleged breach of contract, for which the remedy is compensatory damages. In Count III, titled "Violation of the Mississippi Limited Liability Company Act," Williford asserted "all rights and remedies available under the applicable statute, Miss.Code Ann. § [79-29-101], et seq."
¶ 39. Viewed as a whole, we cannot say the chancellor was in error by finding that
¶ 40. On several occasions, the chancellor expressed concern about Defendants' conduct toward Williford, including their decision to lock him out of the company offices and prevent his involvement in company business. Also, he voiced concern over the large sum of money ($1.2 million) that was unaccounted for during the time Williford was "fired" and locked out.
¶ 41. For example, at the conclusion of trial, just before awarding Williford the fair-market value of his interest in the business, the chancellor stated in his bench opinion:
¶ 42. Defendants zero in on the chancellor's use of the equitable term "unfair," characterizing it as proof he exceeded his legal authority by awarding Williford the fair-market value of his interest. There is no law, they argue, that allows a chancellor to award a money judgment on a "finding of inequity" or "not being fair." They also claim Mississippi's Limited Liability Company Act does not allow such a remedy. On this point, they are incorrect.
¶ 43. While it is true that equitable principles ordinarily are not applied under contract law, this is not unheard of. For instance, rescission is an equitable remedy available in certain contract cases,
¶ 44. In 1994, the Legislature authorized the formation of limited liability companies in Mississippi.
¶ 45. Although an LLC operating agreement is a contract, subject to contract law, the Act specifically allows a chancellor to "enforce a limited liability company agreement by injunction or by such other relief that the court in its discretion
¶ 46. Defendants argue that the chancellor had no authority to grant judgments against them as individuals. Under the Act, members of a limited liability company (such as Bluewater) normally are not individually liable for the obligations of the LLC.
¶ 47. The Act also says that—subject to certain exceptions inapplicable here—an LLC's operating agreement may address the liability of the individual members for "any action taken, or any failure to take any action, as a manager or member. . . ."
¶ 48. Both LLCs' operating agreements included the following provision:
¶ 49. This provision—agreed to by all members—clearly establishes the chancellor's authority to hold the individual defendants personally liable for acts of gross negligence or intentional wrongdoing. And in his Findings of Fact and Conclusions of Law, the chancellor stated that the
¶ 50. The chancellor's final judgment as amended cites our decision in Fought v. Morris
¶ 51. In Fought, we held that "in a close corporation where a majority stockholder stands to benefit as a controlling stockholder, the majority's action must be `intrinsically fair' to the minority interest."
¶ 52. A closely held corporation "is a business entity with few shareholders, the shares of which are not publicly traded."
¶ 53. All of these factors are present in this case. Accordingly, the Bluewater members had a duty to one another and to the LLCs,
¶ 54. Because of the Act's provision, the agreement of the parties, and the authority cited above, we find this issue has no merit.
¶ 55. The chancellor found that Defendants had breached the Bluewater operating agreements in a willful, grossly-negligent manner. Both operating agreements provided that
¶ 56. Despite the agreements' provision that a super-majority ouster was allowed only when the member to be ousted had committed a felony or had jeopardized the company status as an approved government contractor, Defendants' ouster notice alleged neither. The ouster notice informed Williford that, on January 31, 2006, at 1500 hours, "his status as a partner of Bluewater . . . ha[d] been terminated," and that he would be paid one-quarter of the fair-market value of Bluewater.
¶ 57. Only after Williford filed suit did Defendants attempt to reverse their super-majority decision. They took the position
¶ 58. Defendants' position does not square with the facts or the law. Their notice and actions clearly were not consistent with an "offer" that later could be withdrawn. For instance, in the notice, they characterized the ouster as a thing that already had been accomplished—even providing the exact date and time ("January 31, 2006 at 1500 hours") that Williford's "status as a partner of Bluewater" had been "terminated."
¶ 59. Of more concern, however, were Defendants' other actions that were wholly inconsistent with Williford's rights as an LLC member. They changed the locks on the doors of the offices and notified Williford that "as of January 31, 2006 he [was] to cease and desist from performing any business on behalf of Bluewater." He was to
¶ 60. Defendants argue, without any citation of authority, that they were authorized to change their minds and allow Williford to remain an LLC member while, and at the same time, to "fire" him and exclude him from any involvement in the LLCs' business. While their argument might apply to other types of legal entities, it has no application to member-managed LLCs.
¶ 61. Unless the members of a Mississippi LLC employ or appoint a manager to manage the LLC's business affairs, "every member is an agent of the limited liability company for the purpose of conducting its business and affairs . . . ."
¶ 62. So, according to the statute and the operating agreement, Williford—as a member of both LLCs—was entitled to participate in the management of both LLCs, and he could not be "fired." Defendants could have removed him as a manager only by amending the operating agreements. But both operating agreements specifically prohibited amendment without "consent of all Members,"
¶ 63. An LLC operating agreement is contractual in nature and binding on the members of the company.
¶ 64. The Court of Appeals found that "the remaining members communicated the rescission of the ouster to Williford multiple times" in the form of letters their attorney sent well into the litigation, as well as by a motion to dissolve the injunction which "clearly rescinded Williford's ouster." We disagree.
¶ 65. Neither Bluewater nor the Court of Appeals identified any authority that allowed Bluewater unilaterally to rescind Williford's ouster after it had invoked the "Right of Redemption" provision of the LLC operating agreement. Bluewater repeatedly has argued in terms of "withdrawing its offer to purchase Williford's shares." But framing the issue in these terms does not square with the action Bluewater took.
¶ 66. By exercising the "Right of Redemption" provision in the operating agreement, the majority members of Bluewater were not merely making Williford an offer to purchase his shares; they were invoking their right to purchase his shares. In contract terms, Bluewater's action was analogous to the exercise of an option contract rather than an offer which could be rescinded later.
¶ 67. But Defendants' argument fails for another reason. When they decided to exercise the super-majority provision and buy Williford's interest in the LLCs—and assuming they were within their rights to do so—they could have made it effective either immediately, or at some future time. By choosing the former, they had every right to exclude him from the business, but they had a companion duty to tender payment to him. Had they chosen the latter, they had no right to exclude him from the business until they tendered payment.
¶ 68. Defendants chose the best of both options for themselves, and the worst for Williford. They locked him out and excluded him from all business affairs, and then later claimed they hadn't really decided for sure to purchase his interest. The chancellor found this to be a willful, grossly negligent breach of contract, and we are unable to say the chancellor was manifestly in error. Therefore, this assignment of error is without merit.
¶ 69. Williford argues on cross-appeal that the chancellor erred in failing to award him reasonable attorney fees. While Williford is correct that attorney fees may be awarded in some cases of intentional breach of contract and breach
¶ 70. The chancellor did not find that Williford's demand for attorney fees lacked merit. Instead, he was of the opinion that he had no authority to award attorney fees. Specifically, he stated: "[T]he Court does not know of any authority that the Court has to authorize attorney's fees, so the Court does not approve attorney's fees for Mr. Williford." Thus, the question before us is a legal, rather than a factual, one.
¶ 71. Attorney fees generally are not available in breach-of-contract cases.
¶ 72. On remand, the chancellor may consider an award of attorney fees to Williford. And if the chancellor decides not to award attorney fees, the decision must be based on the chancellor's conclusion that attorney fees are not factually warranted, rather than the legally erroneous conclusion that they are not allowed.
¶ 73. We raise this issue sua sponte. The chancellor awarded post-judgment interest at the "statutory rate." For many years, Mississippi had a statutory rate of interest to be applied to judgments.
¶ 74. We have addressed this issue in several opinions,
¶ 75. But in today's case, the chancellor did not award post-judgment interest at eight percent (the former statutory rate). Instead, he awarded post-judgment interest "at the statutory rate." Since there is no specific "statutory rate" for post-judgment interest, we must reverse the award of post-judgment interest and remand for a determination of post-judgment interest
¶ 76. We affirm the chancellor's $340,760.25 judgment against all Defendants and reverse the judgment of the Court of Appeals. We remand the case for a hearing on the issue of whether Williford is entitled to recover attorney fees and, if so, in what amount; and for a determination of a reasonable rate of post-judgment interest.
¶ 77.
CARLSON, P.J., RANDOLPH, LAMAR, KITCHENS AND CHANDLER, JJ., CONCUR. GRAVES, P.J., CONCURS IN RESULT ONLY. WALLER, C.J., CONCURS IN PART AND IN RESULT WITH SEPARATE WRITTEN OPINION JOINED BY PIERCE, J.
WALLER, Chief Justice, concurring in part and in result:
¶ 78. Because I disagree with the majority opinion addressing Issue I procedurally and substantively, I concur in part and in result with an otherwise excellent opinion.
¶ 79. Bluewater asserted on appeal in Issue I that this Court does not have to give deference to the chancellor's factual findings as the chancellor had adopted verbatim Williford's proposed findings of fact and conclusions of law. The discussion need go no further, as whatever Williford submitted to the trial court is not in the record. Notwithstanding the procedural bar, the majority then goes on to disregard our precedent on the "heightened-scrutiny" standard of review for certain limited decisions that are appealed to this Court. Bluewater did not provide the part of the record needed for us to determine whether a less deferential standard of review would be more appropriate. Miss. R.App. P. 28. All that we have is speculation that the chancellor did something (adopted Williford's findings verbatim) that is not supported in the appellate record before this Court. Therefore, we should find no merit in its argument without further discussion on the subtleties of standards of review. See Miss. R.App. P. 28; Wood v. Gulf States Capital Corp., 217 So.2d 257, 273 (Miss.1968).
¶ 80. While the majority's discussion of our standards of review is unwarranted, two points must be emphasized. First, the abuse-of-discretion standard does not apply in situations in which a chancellor adopts a party's proposed findings verbatim. Maj. Op. ¶ 32. City of Jackson v. Spann, 4 So.3d 1029, 1032 (Miss.2009). We apply heightened scrutiny, and this less deferential standard is firmly embedded in our jurisprudence. Heightened scrutiny refers to appellate review with a heightened "sensitivity to the possibility of error. . . ." In re Estate of Grubbs, 753 So.2d 1043, 1048 (Miss.2000). In other words, the Court still defers to the chancellor's findings but with a closer examination of the record. See id.
¶ 81. I agree with the majority that we must carefully review cases and remain sensitive to errors. Maj. Op. ¶ 27. No one disputes that. However, the issue is what deference chancellors should be afforded in their factual decisions when the
¶ 82. Second, the abuse-of-discretion standard is not limited to allowing a party a new trial upon proof that a chancellor's factual findings are "tainted or untrustworthy." Maj. Op. ¶ 32. Powell v. Campbell, 912 So.2d 978, 981 (Miss.2005). This Court defers to a chancellor's findings unless the chancellor was "manifestly wrong, clearly erroneous, or applied the wrong legal standard." Id.
¶ 83. Even though the Court of Appeals improperly relied on Barnes, French, and Tucker, those cases should not be overruled. Maj. Op. ¶ 37. They support the practice codified in our current procedural rules.
¶ 84. Barnes and French show that a party is entitled to what she proves at trial. In Barnes, we reversed the grant of exclusive possession of a couple's land to the husband because the chancellor made the award without any proof at trial. Barnes v. Barnes, 317 So.2d 387, 388-89 (Miss.1975). Today, we would have reached the same result had a chancellor awarded a spouse marital property without proper Ferguson findings. Ferguson v. Ferguson, 639 So.2d 921 (Miss.1994). See, e.g., Reddell v. Reddell, 696 So.2d 287, 288 (Miss.1997) (failure to classify wife's pension as marital asset reversible error). In French, this Court (then known as the High Court of Errors and Appeals of Mississippi) held that the plaintiff was entitled to judgment in the amount of his actual loss rather than the lesser specific amount he had requested in his complaint. French v. Davis, 38 Miss. 218, 1859 WL 3683, *4 (Miss.Err. & App.1859).
¶ 85. Finally, Tucker involved a lower court's order for Jane Buckingham to account for trust-estate profits she had earned during the time frame that she had controlled and managed trust property. Tucker v. Cocke, 32 Miss. 184, 1856 WL 2657, **1-2 (Miss.Err. & App.1856). For reasons inapplicable today, Buckingham could not have been held liable. Id. at *3. Thus, the issue there was not so much that the Tuckers were denied relief that was outside the scope of their complaint. See id. Rather, the lower court had granted the Tuckers relief to which they were not legally entitled. Id. at **2, 4.
¶ 86. Here, Williford's complaint clearly alleged breach of contract and requested compensatory damages. The chancellor awarded Williford the damages that he proved at trial. Because the result here does not conflict with principles in Barnes, French, or Tucker, these cases should not be overruled. Thus, I respectfully concur in part and result only.
PIERCE, J., JOINS THIS OPINION.