Case: Equitable remedies available to vendee even though contract to purchase is void under statute of frauds

SEL Business Services, LLC v. Lord, 367 So. 3d 147 (Miss. 2023). In November 2019 Dr. William Lord and SEL Business Services, LLC (“SEL”) entered into a verbal agreement that Lord would sell to SEL land and a building in Rolling Fork for $60,000. No closing occurred, and no lease was entered into between the parties, but SEL paid the ad valorem taxes and began making improvements to the building, including installing a new HVAC system and rewiring the building. SEL learned that Dr. Lord was negotiating to sell the property to another party and filed an action in the Chancery Court of Sharkey County against Dr. Lord seeking specific performance of their agreement to sell and purchase the property, equitable reimbursement and other equitable remedies. The day after SEL filed its complaint, Dr. Lord sold the property to a hospital for $110,000. The owners of the hospital, Sharkey County and Issaquena County, demanded that SEL vacate the property in one week. SEL added the hospital and the counties as defendants to its existing lawsuit against Dr. Lord. SEL changed its claim from specific performance to one for equitable reimbursement of the money that SEL had put into the building, in the amount of $80,000. Dr. Lord, the hospital and the counties filed motions for summary judgment on the grounds that the verbal contract between SEL and Lord was unenforceable because it violated the statute of frauds, and that any derivative equitable claims also were barred. The Chancery Court granted the motions for summary judgment. On appeal by SEL, the Court of Appeals, in a unanimous decision, affirmed. 359 So. 3d 645 (Miss. Ct. App. 2022). The Court of Appeals relied on the Mississippi Supreme Court’s decision in Barriffe v. Estate of Nelson, 153 So. 3d 613, 620 (Miss. 2014). In Barriffe the Mississippi Supreme Court held that the remedy of an equitable lien on property was not available when a verbal contract to purchase the property was unenforceable because it violated the statute of frauds. The Court of Appeals wrote that Barriffe also barred the remedies of equitable estoppel and unjust enrichment. On a petition for writ of certiorari by SEL, the Mississippi Supreme Court, in a unanimous en banc decision, affirmed in part and reversed and rendered in part. The Supreme Court overruled Barriffe to the extent that Barriffe held that the statute of fraud bars any claim for an equitable lien or other equitable remedy. While the equitable remedy of specific performance is not available when a contract to sell land is void under the statute of frauds, the remedies of equitable liens, equitable estoppel and unjust enrichment are available. The Supreme Court reversed the summary judgment ruling in favor of Dr. Lord and remanded SEL’s equitable claims against Dr. Lord to the Chancery Court for further proceedings consistent with the opinion. The Supreme Court affirmed the grant of summary judgment as to the hospital and the counties since SEL had no equitable claims against them.

Note 1: To be clear, no one seriously argued that the verbal contract for the purchase and sale of the land and building was enforceable. SEL gave up this argument after initially asserting it. This case is important because it changes the law regarding available remedies for the plaintiff seeking to enforce a contract to purchase land and whose contract is void because of the statute of frauds. The editor’s reading of this case is that any equitable remedy other than specific performance is now available to such a plaintiff.

Note 2: The Supreme Court’s decision has not yet been released for publication.