Navigating the New World of Venue in Divorces

March 21, 2018 § Leave a comment

As far back as the days when dinosaurs roamed the Jackson prairie, the rule in Mississippi was that divorce venue as spelled out in MCA 93-5-11 conferred subject matter jurisdiction, and, thus, could not be waived or conferred by consent.

Fast forward to the days when Wal-Mart roamed the area, and the rule changed. In Lewis v. Pagel, decided last June, the MSSC reversed ancient precedent and held that subject-matter jurisdiction was conferred not by statute, but by the Mississippi Constitution. The statute, the court held,  governs venue and controls the court’s exercise of personal jurisdiction over the defendant.

I posted about Lewis at this link. I urged readers to “stay tuned” to see how the court’s ruling plays out.

Well, as it turns out, we now have a case that applies Lewis. In Ridgeway v. Hooker, decided February 15, 2018, Patrick Ridgeway appealed from the chancery court’s denial of his R60(b)(6) motion for relief from judgment based on his argument that the trial court lacked subject matter jurisdiction to grant a divorce between him and his ex-wife, Louise Hooker. Here is how Justice Kitchens’s opinion addressed Patrick’s argument:

¶21. Mississippi Code Section 93-5-2(1) provides:

Divorce from the bonds of matrimony may be granted on the ground of irreconcilable differences, but only upon the joint complaint of the husband and wife or a complaint where the defendant has been personally served with process or where the defendant has entered an appearance by written waiver of process.

Miss. Code Ann. § 93-5-2(1) (Rev. 2013). Mississippi Rule of Civil Procedure 60(b)(4) allows a court to “relieve a party . . . from a final judgment” if “the judgment is void . . . .” Ridgeway argues that the chancery court lacked subject-matter and personal jurisdiction because the complaint he filed was not a joint complaint, he never served the complaint on Hooker, and Hooker never entered an appearance by written waiver.

¶22. “Subject matter jurisdiction is the power of the court to hear and determine cases in the general class to which the particular case belongs.” In re Estate of Kelly, 951 So. 2d 543, 548 (Miss. 2007) (citing Case v. Case, 246 Miss. 750, 758, 150 So. 2d 148 (1963)). “Subject matter  jurisdiction is conveyed by the Mississippi Constitution.” Lewis v. Pagel, 2017 WL 2377690, *6 (Miss. June 1, 2017). “Section 159 of the Mississippi Constitution vests subject matter jurisdiction in the chancery courts over divorce proceedings.” Id. at *6 (citing Miss.
Const. art. 6, § 159 (“The chancery court shall have full jurisdiction in the following matters and cases, viz.: . . . (b) Divorce and alimony . . . .”)).

¶23. It is true, as Ridgeway argues, that “the defense of lack of subject matter jurisdiction cannot be waived.” Stuart v. Univ. of Miss. Med. Ctr., 21 So. 3d 544, 548-49 (Miss. 2009) (citing Capron v. Van Noorden, 2 Cranch 126, 6 U.S. 126, 127, 2 L. Ed. 229 (1804) (“[I]t was the duty of the Court to see that [it] had jurisdiction, for the consent of the parties could not give it.”)). But this Court recently overruled cases holding that the venue requirements of Mississippi Code Section 93-5-11 (Rev. 2013) [Fn 1] “could not be waived as it vested subject matter jurisdiction over divorce actions in the chancery court.” Lewis, 2017 WL 2377690, at *6. This Court overruled “these past cases to the extent that they hold that Section 93-5-11 confers subject-matter jurisdiction on chancery courts.” Id. Instead, the Court held that, while the Mississippi Constitution confers subject-matter jurisdiction,“Section 93-5-11 governs the venue of a divorce action and limits the chancery court’s exercise of personal jurisdiction over the defendant,” and the “Mississippi Rules of Civil Procedure control the procedure to be utilized when venue is improper.” Id.

[Fn 1] Mississippi Code Section 93-5-11 governs proper venue for divorce actions:

All complaints, except those based solely on the ground of irreconcilable differences, must be filed in the county in which the plaintiff resides, if the defendant be a nonresident of this state, or be absent, so that process cannot be served; and the manner of making such parties defendants so as to authorize a judgment against them in other chancery cases, shall be observed. If the defendant be a resident of this state, the complaint shall be filed in the county in which such defendant resides or may be found at the time, or in the county of the residence of the parties at the time of separation, if the plaintiff be still a resident of such county when the suit is instituted.

A complaint for divorce based solely on the grounds of irreconcilable differences shall be filed in the county of residence of either party where both parties are residents of this state. If one (1) party is not a resident of this state, then the complaint shall be filed in the county where the resident party resides. Transfer of venue shall be governed by Rule 82(d) of the Mississippi Rules of Civil Procedure.

Miss. Code Ann. § 93-5-11 (Rev. 2013).

¶24. The chancery court has jurisdiction of divorce cases, including irreconcilable differences divorces. See Miss. Const. art. 6, § 159. No case cited by Ridgeway stands for the proposition that the requirements of Section 93-5-2(1), if not strictly complied with, deprive the chancery court of subject-matter jurisdiction of an irreconcilable differences divorce. As in Lewis, Section 93-5-2(1) limits the chancery court’s exercise of personal jurisdiction over the defendant, requiring a joint complaint and either personal service on the defendant or the defendant’s “entry of appearance by written waiver of process.” Miss. Code Ann. § 93-5-2(1).

¶25. Personal jurisdiction “is an individual right that can be waived.” Pekin Ins. Co. v. Hinton, 192 So. 3d 966, 971 (Miss. 2016) (citing Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703, 102 S. Ct. 2099, 2105, 72 L. Ed. 2d 492 (1982)). More specifically, “[o]ne waives process and service . . . upon making a general appearance.” Isom v. Jernigan, 840 So. 2d 104, 107 (Miss. 2003). This Court held, in a case in which the defendant had “appeared by counsel and filed a plea to the jurisdiction of the court, which he later withdrew, and also filed cross-interrogatories to appellant in the taking of her deposition,” that “personal appearance by a defendant in a cause gives the court jurisdiction of his person as completely as if he had been personally served with process within this state.” Clay v. Clay, 134 Miss. 658, 99 So. 818, 819 (1924). The Mississippi Court of Appeals has held that, while actual service of process had not been issued, the signature of
the defendant and his attorney “under the caption, ‘Read, Agreed, and Approved’” constituted the defendant’s having made “a legal appearance in the matter.” James v. McMullen, 733 So. 2d 358, 360 (Miss. Ct. App. 1999).

¶26. Our Mississippi Rules of Civil Procedure also contemplate waiver in this circumstance: “A defense of lack of jurisdiction over the person, . . . insufficiency of process, or insufficiency of service of process is waived (A) if omitted from a motion in the circumstances described in subdivision (g), [Fn 2] or (B) if it is neither made by a motion under this rule nor included in a responsive pleading or an amendment thereof . . . .” Miss. R. Civ. P. 12(h)(1). Ridgeway makes the statement in his brief that, “[a]ll know that where the [Irreconcilable Divorce Act] and, here, Rule 12 conflict, that the IDA governs.” But the converse is true. See Newell v. State, 308 So. 2d 71 (Miss. 1975) (Article 6, Section 144, of the Mississippi Constitution, which states that the State’s “‘judicial power . . . shall be vested in a Supreme Court and other courts as are provided for in this constitution.’ . . leaves no room for a division of authority between the judiciary and the legislature as to the power to
promulgate rules necessary to accomplish the judiciary’s constitutional purpose.”).

[Fn 2] Mississippi Rule of Civil Procedure 12(g) provides that “[a] party who makes a motion under this rule may join with it any other motions herein provided for and then available to him. . . .” Miss. R. Civ. P. 12(g).

¶27. Here, Ridgeway did not comply with Section 93-5-2(1) in filing a joint complaint, in serving the complaint on Hooker, or in obtaining Hooker’s appearance by written waiver. But Hooker never objected to a lack of jurisdiction, to insufficiency of process, or to insufficiency of service of process. She participated in discovery. She initialed every page of the agreement, signed the agreement, and signed the Judgment of Divorce – Irreconcilable Differences. Hooker’s voluntary appearance obviated the necessity of service of process and she consented to the chancery court’s jurisdiction. By failing to raise the defense of lack of personal jurisdiction, insufficiency of process, or insufficiency of service of process, Hooker waived those defenses pursuant to Rule 12(h)(1).

¶28. It was Ridgeway’s failure to comply with Section 93-5-2(1) which created the alleged jurisdictional defect. As the chancellor correctly observed, Ridgeway cannot complain now of an error of his own creation. This Court has held, an “‘[a]ppellant has no standing to seek
redress from [an] alleged error of his own creation.’” Caston v. State, 823 So. 2d 473, 494-95 (Miss. 2002) (quoting Evans v. State, 547 So. 2d 38, 40 (Miss. 1989)).

¶29. In Kolikas v. Kolikas, 821 So. 2d 874, 876 (Miss. Ct. App. 2002), the husband filed a complaint for divorce in Marshall County, Mississippi, but failed to provide notice to his nonresident wife. The chancery court granted the divorce to the husband, and the Mississippi
Court of Appeals reversed and remanded, holding that “[t]he chancery court had not acquired personal jurisdiction over Ms. Kolikas due to lack of proper service of process based on the Mississippi Rules of Civil Procedure . . . .” Id. at 879-80. The appeals court held that “Mr.
Kolikas, in consultation with his attorney, chose what actions to take in pursuit of divorce” and that “[a]s such, it was his obligation, not that of Ms. Kolikas, to ensure that his actions complied with the appropriate statutes and court rules.” Id. at 879. The court continued: “He did not do so, and cannot place the blame for this failure on Ms. Kolikas.” Id. Similarly, Ridgeway cannot place the blame on Hooker for his own failure to comply with the appropriate statutes and court rules now that doing so, if he succeeded, would inure to his benefit.

¶30. Ridgeway relies on the case of Alexander v. Alexander, 493 So. 2d 978 (Miss. 1986), in support of his argument that “a divorce under the [Irreconcilable Differences Act] was void without some form of personal service or written waiver.” But in that case this Court held “the chancery court exceeded its authority in granting a divorce on the ground of irreconcilable differences” because there had been “no written agreement of the parties regarding their property rights as required by the statute.” Alexander, 493 So. 2d at 980. See Gallaspy v. Gallaspy, 459 So. 2d 283, 287 (Miss. 1987) (Robertson, J., specially concurring) (“The chancery court has no authority to grant a divorce on the ground of irreconcilable differences unless the parties have reached agreement on all financial matters.”). Here, unlike in Alexander, the parties reached a “written agreement for the custody and maintenance of [the] children of [the] marriage and for the settlement of any property rights between the parties . . . .” in accordance with Section 93-5-2(2).

¶31. Accordingly, because the chancellor had subject-matter jurisdiction, because Hooker waived any objection to the exercise of personal jurisdiction, and because Ridgeway lacks standing to complain of an error of his own creation, we affirm.

Lots of nutritional value to digest here. We’ll explore it in greater detail in a future post. For now, rest easy in the understanding that personal jurisdiction, along with all of its ramifications, is what venue now is all about in Mississippi divorce.


Leave to Amend is not Automatic

March 20, 2018 § Leave a comment

Conventional wisdom has it that the court will freely grant leave to amend. While there is truth to that, it’s not always the case that you will be given leave to do so in every situation.

When the court grants a R12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, ” … leave to amend shall be granted in accordance with Rule 15(a).” R 15(a) states, in part, that ” … a party may amend a pleading only by leave of the court or upon written consent of the adverse party; leave shall be freely given when justice so requires.”

Cases construing R12(b)(6) have held that, once the motion is granted, the dismissed party must file a R15(a) motion asking leave to amend, attaching a proposed pleading, and giving the court enough information to make a finding that “justice so requires” the amendment.

Claire Flowers and Jane Paixao had filed contested pleadings in the estate of their mother. In the course of the proceedings the court granted a R12(b)(6) motion as to some of the issues they raised and as to certain parties. When they asked the court for leave to amend, the court denied their motion. Following a final judgment they appealed.

On the issue of the chancellor’s denial of the motion to amend, the COA affirmed. In the case of Flowers, et al. v. Estate of Flowers, decided February 6, 2018, Judge Carlton wrote the opinion that laid out the pertinent facts and rationale:

¶23. We next consider Claire and Jane’s contention that the chancellor erroneously denied Claire’s Rule 15(a) motion to amend her petition. The sisters argue that none of the various attorneys asserted they would suffer prejudice if the chancellor granted the motion to amend. We review the denial of a motion to amend for abuse of discretion. Crater v. Bank of New York Mellon, 203 So. 3d 16, 19 (¶7) (Miss. Ct. App. 2016).

¶24. As previously discussed, Claire filed an amended petition for compensatory and punitive damages in which she sought to assert claims of fraud and negligence per se against the attorneys who represented the interests of Brenda’s estate, the testamentary trust, and D.A.’s guardianship. Claire then filed a Rule 15(a) motion for leave to admit her amended petition. The specially appointed judge denied Claire’s motion for leave to admit and dismissed her claims against the attorneys, finding that Claire failed to state a claim under Rule 12(b)(6). The special judge also granted the attorneys’ motions to strike themselves as defendants due to Claire’s failure to obtain leave to join them under Mississippi Rule of Civil Procedure 21.

¶25. Following the Rule 12(b)(6) dismissal of her claims, Claire filed a motion for leave to amend her petition under Rule 15(a) to include claims against the attorneys and to allege “fraud and negligence per se with the correct specificity.” However, Claire’s motion for leave to amend failed to provide the substance of the amendment to inform the court of what facts or acts constituted the fraud or negligence per se. See M.R.C.P. 9(b) (providing that fraud must be pled with specificity); Faul v. Perlman, 104 So. 3d 148, 156 (¶26) (Miss. Ct. App. 2012) (discussing the elements a plaintiff must show to establish negligence per se). [Fn 7] The motion to amend instead contained only bare allegations and no facts from which to determine the existence of a cause of action.

[Fn 7] See also Price v. Price, 430 So. 2d 848, 849 (Miss. 1983) (“When a party proposes to amend his pleading, he should ordinarily make known to the trial court the substance of his proposed amendment.”).

¶26. One of the attorneys identified in Claire’s petition and amended petition filed a response that the other attorneys joined. In asking the court to deny Claire’s Rule 15(a) motion to amend, the attorneys noted that Claire had failed to “attach a proposed amended petition that would permit the [c]ourt to determine whether justice requires that leave to amend be granted.” The attorneys also noted they had been “dismissed as [respondents] . . . as a result of [Claire’s] failure to obtain leave of court to add [them] as [parties].” Furthermore, the attorneys contended that, even if the court granted Claire’s motion to amend, the amendments would not affect them because of their prior dismissal from the matter under Rule 21. As discussed, the record shows that Claire’s motion for leave to amend indeed failed to inform the chancellor of what facts or acts constituted fraud or negligence per se.

¶27. Where a trial court dismisses a complaint under Rule 12(b)(6) for failure to state a claim, Rule 15(a) requires the trial court to freely give the plaintiff the opportunity to amend her complaints “when justice so requires.” M.R.C.P. 15(a). As previously discussed, we will affirm the chancellor’s decision “unless the discretion he used is found to be arbitrary and clearly erroneous.” Breeden v. Buchanan, 164 So. 3d 1057, 1064 (¶27) (Miss. Ct. App. 2015) (quoting Poole v. Avara, 908 So. 2d 716, 721 (¶8) (Miss. 2005)). In the present case, we have the benefit of the chancellor’s explanation since the record sets forth why he denied Claire’s Rule 15(a) motion to amend. See Breeden, 164 So. 3d at 1064 (¶¶28-31) (finding an abuse of discretion where a chancellor failed to explain his denial of the plaintiff’s Rule 15(a) motion). The specially appointed judge found that Claire had failed “to state how she would amend her prior pleadings or . . . to attach a proposed amended pleading [that] would allow the [c]ourt to determine whether justice required that she be given leave to file amended pleadings[.]”

¶28. The record here demonstrates that Claire failed to meet her burden to sufficiently support an amendment of her petition. Furthermore, the chancellor dismissed the attorneys from the litigation under Rule 21 because Claire failed to obtain the court’s leave to join them, and Claire filed no appeal of the attorneys’ dismissal. See Crater, 203 So. 3d at 21 (¶16) (finding no abuse of discretion in the denial of a Rule 15(a) motion to amend where the motion only asserted claims against a nonparty and the claims were futile). For these reasons, we find no abuse of discretion from the chancellor’s denial of Claire’s Rule 15(a) motion to amend. See id. at 19 (¶7). We therefore affirm the chancellor’s judgment with regard to this issue.


  • It’s a good practice, whenever you need a court order to amend your pleadings, to attach a proposed pleading to the motion. That proposed pleading must state a claim sufficient to survive its own R12(b)(6) motion, or your motion to amend will be denied because justice does not require leave to amend to state an insufficient claim.
  • R21 joinder of parties requires leave of court. (And a reminder that there is a specific procedure to allow intervention per R24, as I have posted about here previously).
  • Conventional wisdom is better than no wisdom at all, I reckon; however, don’t let conventional wisdom substitute for your own thought processes or for reading (and following) the rules.

NOTE: The court reached a similar conclusion in a companion case about which I posted at this link.

Is a Law Degree a Good Idea in the 21st Century?

March 19, 2018 § Leave a comment

Philip Thomas at Mississippi Litigation Review & Commentary emphatically raises some serious questions. You can read his take at this link.

Dispatches from the Farthest Outposts of Civilization

March 16, 2018 § Leave a comment


When It’s Too late to Change Beneficiaries

March 14, 2018 § Leave a comment

Annie Patterson owned an Alfa life insurance policy in the amount of $50,000 on the life of her nephew and ward, Christopher Nance. Annie was also the beneficiary. She named Christopher’s mother, Angela Nance, as contingent beneficiary. The policy included a provision that, “upon death of the owner, ownership and control of the policy … shall pass to the estate of the deceased owner.”

Annie died in April, 2013, and her father, C.D. Pulliam, attempted to make himself owner and beneficiary, along with his siblings. They submitted an affidavit to Alfa claiming to be Annie’s sole heirs. One of C.D.’s siblings also completed a “Change of Ownership” form that purported to make C.D. owner and primary beneficiary of the policy. C.D. claimed that Alfa produced the form and directed that it be signed. He also claimed that he paid all premiums on the policy after Annie’s death.

No estate was ever opened for Annie.

After Christopher died in November, 2014, Alfa issued a letter to Annie stating that her recent policy change request had been “closed as incomplete” due to irregularities in the form submitted.

Alfa interpled the policy proceeds per MRCP 22 in January, 2015, naming C.D. and his siblings as defendants, since they claimed to be beneficiaries. C.D. filed a counterclaim against Alfa. The chancellor ruled that Alfa had properly interpled the funds and dismissed C.D.’s counterclaim as moot. The chancellor also ruled that C.D. had no legal right or authority to change ownership or beneficiaries of the policy. C.D. appealed.

In Pulliam v. Alfa Ins. Co. and Nance, handed down January 30, 2018, the COA affirmed on the issue of C.D.’s power and authority to change ownership and beneficiaries. Judge Wilson wrote for a unanimous court:

¶23. “Generally, a policy of life insurance is a stand-alone contract whose purpose is to provide a sum of money to the named beneficiary upon the death of the listed insured.” Barber v. Balboa Life Ins., 747 So. 2d 863, 866 (¶11) (Miss. Ct. App. 1999). The policy owner may select any individual as the policy’s beneficiary. Van Zandt v. Morris, 196 Miss. 374, 380, 17 So. 2d 435, 436 (1944). However, “[t]he policy owner’s rights largely end at the death of the insured. The policy beneficiary then has a right to the proceeds, which until death is only an expectancy. At the insured’s death the right to change the beneficiary no longer exists; the rights of the beneficiary have vested.” Evans v. Moore, 853 So. 2d 850, 855 (¶22) (Miss. Ct. App. 2003) (citations omitted).

¶24. As discussed above, the policy was issued to Annie as the owner and primary beneficiary, with Angela designated as the contingent beneficiary. The policy provides that “upon the death of the owner, ownership and control of the policy . . . shall pass to the estate of the deceased owner.” “The language and provisions of insurance policies are viewed as contracts and are subject to the same rules of interpretation as other contracts.” Hayne v. The Doctors Co., 145 So. 3d 1175, 1180 (¶12) (Miss. 2014). “Because insurance policies are creatures of contract, if the language is clear and unambiguous, then the language of the policy must be interpreted as written.” Id. Therefore, when Annie died ownership and control of the policy passed to her estate.

¶25. The chancellor concluded, and we agree, that C.D. and Otis had no authority to change the ownership of the policy or designate new beneficiaries. No estate was ever opened for Annie, nor was there ever any determination of her heirs. The only purported authority for C.D.’s and Otis’s action is an affidavit they provided to Alfa identifying themselves (and Willie Mae) as Annie’s heirs. This was insufficient to give them authority to change the ownership of a policy that, by its clear and unambiguous terms, was the property of Annie’s estate. Cf. Long v. McKinney, 897 So. 2d 160, 174 (¶60) (Miss. 2004) (holding that an “estate must, of course, be opened and administered through the chancery court” before claims may be pursued on its behalf); Delta Health Group Inc. v. Estate of Pope ex rel. Payne, 995 So. 2d 123, 125-26 (¶12) (Miss. 2008) (holding that when “no estate had been opened,” a party could not act as “the administrator of a non-existent estate”).

¶26. While there does not appear to be a Mississippi case addressing this precise issue, courts in other states have reached the logical conclusion that parties such as C.D. and Otis lack authority to make changes to the ownership or beneficiaries of a life insurance policy owned by a deceased relative. In Prudential Insurance Co. v. Stephens, 498 F. Supp. 155, 157 (E.D. Va. 1980), the court held that when the policy owner died,

title to the policy passed to her administrator whenever he may qualify as such, not to her husband . . . in his capacity as the sole heir of her estate. Although her husband was preferred by statute for appointment as administrator of her estate, he had to apply to qualify as administrator. Because he never qualified, title to the policy never passed to him, and any act of dominion he exercised over the policy, other than those acts specifically permitted by statute, had no legal effect. A change of the beneficiary of a life insurance policy does not fall within the . . . narrow categories of permitted acts.

Id. at 157. [Fn 1] (Emphasis supplied) (internal citation omitted).

[Fn 1] Like Virginia, Mississippi has certain statutes that permit a decedent’s heirs at law to take possession of certain categories of the decedent’s assets without opening and administering an estate. See, e.g., Miss. Code Ann. § 91-7-322 (Rev. 2013); see generally Robert A. Weems, Wills and Administration of Estates in Mississippi § 2.52 (3d ed. 2003). It is not apparent that any of these statutes would apply to the facts of this case or that C.D. complied with the necessary statutory requirements. Nor has C.D. argued that any of these statutes apply or authorized him to change the ownership and beneficiaries of the policy. Therefore, this opinion does not address the applicability of any such statutes.

¶27. Similarly, in [Ky. Cent. Life Ins.] v. Vollenweider, supra, the Missouri Court of Appeals held that the deceased policy owner’s husband lacked authority make changes to the policy, although he was the insured and was named as her executor in her will. See Vollenweider, 844 S.W.2d [460] at 462 [(Mo. Ct. App. 1992)]. The court held that the husband “never became the personal representative of [his deceased wife’s] estate because her estate was not opened until after [his] death,” and the husband lacked authority to make himself “the owner of the policy merely because he was named as personal representative under [her] will.” Id.

¶28. The result is the same in this case. Neither C.D. nor Otis opened an estate or took any other steps to obtain the authority necessary to act on behalf of Annie’s estate. Therefore, C.D. and Otis lacked the authority to make changes to the ownership or beneficiary designations of the subject life insurance policy, which became the property of Annie’s estate upon her death. Accordingly, Annie’s designation of Angela as the policy’s contingent beneficiary remained in effect at the time of Christopher’s death. And the chancery court correctly concluded that there was no genuine issue of material fact and that Angela was entitled to the proceeds of the policy.

The court reversed and remanded on the issue of dismissal of C.D.’s counterclaim. That’s an issue for another post.

As for that footnote, it’s worth your time to dig through the statutes to discover the various ways that heirs (usually called “successors” in the statutes) can transfer ownership of a decedent without going through probate. Bank and securities accounts and car titles are susceptible to such procedures. I have not researched whether life insurance may be changed via a similar statute. My uninformed guess is that the reason no such statute was pled or argued on appeal in this case is that there is none.

The State of Law Practice in the State

March 13, 2018 § 4 Comments

Fifteen years ago it was not uncommon to see trials going on before both chancellors in our district as many as four or five days a week. By ten years ago that had slowed somewhat, but the number of court hearings was robust. Now, hearings and filings are down, except perhaps in probate matters. What’s the deal?

An article by a “Legal Marketing Expert” in The Above the Law Blog had this to say about the phenomenon in other parts of the republic:

It was easier to be a lawyer a decade ago – the demand for legal services always seemed to be growing, along with the revenue and profit that came with it. With the Great Recession, everything changed. The flow of clients slowed while competition increased, leaving profit margin and productivity to suffer.

If the latest Report on the State of the Legal Market from Georgetown University Law Center and Thomson Reuters Legal Executive Institute is any indication, the trend continues. Consider their findings from 2017:

  • Only intellectual property, tax and corporate work saw modest gains in business, but demand has waned in all other practices – including general litigation, which makes up for 30% of all practice activity.
  • The number of attorneys at U.S. law firms increased by 1.3% in 2017, but there’s less work. On average, lawyers are working 156 fewer hours than in 2007.
  • Profits remain stagnant, except for a few of the AmLaw 100, but even most of them experienced modest financial returns.

Even so, the competition is poised to further disrupt the marketplace. You may have heard that AVVO, the first company to take the legal marketplace online, has just been purchased by Internet Brands. A news release noted that AVVO attracts more than 100 million visitors annually, and that Internet Brands has seen “strong growth over the past decade.”

So it appears there is, indeed, a strong demand for legal services – just not from traditional law firms. This points to one of the reasons that many law firms may be stagnating: They still operate like it’s 2007. They cling to the traditional law firm model, do things the way they’ve always done before and, of course, get the same results. This is more than just a hypothesis when you consider the findings of the Thomson Reuters 2017 State of U.S. Small Law Firms Report which reveals that while:

  • 75% are finding it challenging to acquire new business, 71% aren’t doing anything about it.
  • 70% say they spend too much time on administrative tasks, 81% aren’t doing anything about it.
  • 61% want more control over costs and expenses, 74% aren’t doing anything about it.
  • 59% say clients are demanding more for less, and 80% aren’t doing anything about it.

Only the firms that break from tradition and adapt to a new way of thinking will survive the tenuous landscape. And, as noted above, that’s currently just a small fraction. The strategies often used in past to overcome market declines such as expense cuts and rate increases, are less likely to be as effective going forward.

Embracing change will allow firms to more effectively compete and be better positioned to take hold of the marketplace that typically seeks alternative legal services. This is underscored by the Thomson Reuters Legal Executive Institute, which says the future could be brighter for firms that proactively provide clients the value they’re looking for.

Okay, can’t disagree much with the premise, but that’s like saying “plague is caused by germs.” What we want is the vaccine; the cure. If the “traditional law firm model” doesn’t work, then what does?

To me, the most revealing dynamic in that article is that “clients are demanding more for less.” Clients access all kinds of free general legal advice, data, and information on Google and don’t understand why you have to charge them for the particularized advice and counsel you provide. Clients can buy generalized form pleadings and agreements online for a fraction of what you must charge to tailor documents to their needs. Although many of those DIY, one-size-fits-all rigs wind up back in court to fix their built-in flaws, I guess people think it’s worth the chance that they won’t.

“[T]he future could be brighter for firms that proactively provide clients the value they’re looking for.” How does a small-town practitioner do that? The expert doesn’t reveal the secret in her article. Or maybe there’s no real secret to reveal. Maybe one must just be aware and keep trying new techniques until something clicks. The only credentials I have to offer for that advice are my 33 years of private practice in which I had to do that very thing through all kinds of ups and downs of the legal profession. Since I’m not a “Legal Marketing Expert,” there’s no charge.

When Objection to Administration is a Shareholder’s Derivative Action

March 12, 2018 § Leave a comment

Frankie Don Ware’s will directed that shares of three closely held corporations be distributed by his estate to a testamentary trust. When his widow, Carolyn, filed to close the estate and distribute the shares as directed, Frankie’s son, Richard, filed an objection arguing that the corporate bylaws required that the shares be offered first to the corporation before transfer. Carolyn responded that Richard lacked standing to object. Richard took the position that he had standing in his capacity as trustee of the testamentary trust. The chancellor agreed with Richard, and Carolyn appealed.

In Estate of Ware v. Ware, decided March 1, 2018, the MSSC reversed and remanded, holding that Richard did not have standing. Justice Randolph penned the opinion for a unanimous court:

¶16. Carolyn argues that Richard’s objection to the closing of the estate is a shareholder derivative action, and therefore Richard lacked standing to object. Despite Carolyn’s raising this issue throughout the proceedings, the trial court declined to address Richard’s standing.

¶17. “Standing is a jurisdictional issue.” Hotboxxx, LLC v. City of Gulfport, 154 So. 3d 21, 27 (Miss. 2015) (citations omitted). Therefore, “it may be raised by the Court sua sponte or by any party at any time, and the standard of review is de novo.” Id.

¶18. Carolyn cites Bruno v. Southeastern Services, Inc., 385 So. 2d 620, 622 (Miss. 1980), in which this Court adopted the rule

that an action to redress injuries to a corporation, whether arising in contract or in tort cannot be maintained by a stockholder in his own name, but must be brought by the corporation because the action belongs to the corporation and not the individual stockholders whose rights are merely derivative. The rule applies even though the complaining stockholder owns all or substantially all of the stock of the corporation.

¶19. Richard argues that his claim is not a shareholder derivative claim, but rather, an objection to the administration of the estate. Richard argues that because he is named a trustee of the trust created by Frankie’s will, he has standing to object to the closing of Frankie’s estate. Thus, Richard argues that Carolyn’s standing argument, as it applies to shareholder derivative actions, is inapplicable. Notably, Richard cites no authority for his position that his title of trustee confers upon him standing to object to the administration of an estate. Regardless, his argument is without merit. Richard is attempting to prevent assets from being distributed to the trust. “A trustee shall take reasonable steps to enforce claims of the trust and to defend claims against the trust.” Miss. Code Ann. § 91-8-811(a) (Rev. 2013) (emphasis added). Richard’s title of trustee alone is insufficient to confer standing unless he is enforcing claims on behalf of the Frankie Ware Family Trust or is defending claims against the family trust. Id.

¶20. In order to address standing, the Court must determine whether Richard “had the right to participate in this cause of action.” City of Picayune v. Southern Reg’l Corp., 916 So. 2d 510, 519-520 (Miss. 2005). “Fundamental to this review” is what body of law applies to the dispute. Id. Accordingly, whether Richard’s action is indeed a shareholder derivative action will determine what law applies, and in turn, determine Richard’s standing.

¶21. “[I]n determining whether the action belongs to the corporation or the individual, the focus of the inquiry is whether the corporation or the individual suffered injury.” Scafidi v. Hille, 180 So. 3d 634, 647 (Miss. 2015) (quoting Mathis v. ERA Franchise Sys., Inc., 25 So. 3d 298, 303 (Miss. 2009)). “The action is derivative if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock or property without any severance or distribution among individual shareholders, or if it seeks to recover assets for the corporation or to prevent the dissipation of its assets.” Id. Richard’s objection to the closing of Frankie’s estate is, in reality, a shareholder derivative claim. Richard was seeking solely to enforce a putative corporate right. As such, the law applying to shareholder derivative actions must apply. See City of Picayune, 916 So. 2d at 519-520 (holding that “different standing requirements are accorded to different areas of the law,” and finding that because corporate law applied to the action, citizens did not have standing to challenge actions by a corporation).

¶22. In Mississippi, a shareholder may not institute a derivative suit unless certain statutory conditions are met. 3 Miss. Practice Encyclopedia of Miss. Law § 22:210 (2d ed. 2017). Mississippi Code Section 79-4-7.41(1) (Rev. 2013) provides that a shareholder may not commence a derivative suit unless he or she was a shareholder at the time of the act or omission in question. Mississippi Code Section 79-4-7.41(2) requires that the shareholder fairly and adequately represent the interests of the corporation. Furthermore, Mississippi Code Section 79-4-7.42 (Rev. 2013) requires the complaining shareholder to make a written demand upon the corporation or appropriate officers prior to commencing the proceeding, and section two of that statute requires ninety days to elapse after the written notice, unless the corporation earlier rejects the demand, or unless irreparable injury to the corporation would result by waiting for the ninety-day period to elapse. Finally, our caselaw requires that the corporation is made a party to the derivative action. See Bruno, 385 So. 2d at 622 (“The corporation is an indispensable party” to a shareholder derivative action); see also Fairchild v. Keyes, 448 So. 2d 292, 294 (Miss. 1984) ([T]he corporation is an indispensable party to
a suit brought to protect its interest . . . .”).

¶23. “The rationale for these procedural prerequisites has to do with the corporation’s status as a creature of the State.” 3 Miss. Practice Encyclopedia Miss. Law § 22:210 (2d ed. 2017). “Since the corporation is a separate entity, the shareholder has no legal interest in any of its property.” Id. These conditions “avoid multiple lawsuits, preserve creditors’ rights since any recovery will belong to the corporation, and provide for any recovery to benefit all shareholders.” Id.

¶24. Richard failed to satisfy the statutory conditions required of shareholder derivative actions. Notwithstanding, Richard argues that, even if his action is considered a shareholder derivative action, the chancery court has discretion to disregard the procedural prerequisites and treat the claim as a direct action if it makes certain findings under the Derouen doctrine. Derouen v. Murray, 604 So. 2d 1086, 1091 n.2 (Miss. 1992). The trial court declined to address the question of whether Richard’s action was a shareholder derivative action, and never made any findings under Derouen. In Derouen, this Court did not overrule Bruno, but stated in a footnote that [i]n the case of a closely held corporation . . . , the [chancery] court in its discretion may treat an action raising derivative claims as a direct action, exempt it from those restrictions and defenses applicable only to derivative actions, and order individual recovery, if it finds that to do so will not (i) unfairly expose the corporation or the defendants to a multiplicity of actions, (ii) materially prejudice the interests of creditors of the corporation, or (iii) interfere with a fair distribution of the recovery among all interested persons. Derouen, 385 So. 2d at 622. This Court later interpreted the Derouen doctrine to hold “that in derivative suits involving closely held corporations, the trial court may award damages on an individual basis, provided certain safeguards are met.” Investor Res. Servs., Inc. v. Cato, 15 So. 3d 412, 424 (Miss. 2009). Indeed, the facts of Derouen involved a shareholder
seeking individual recovery for his fifty-percent equity interest in proceeds from the business. Derouen, 604 So. 2d at 1089-90.

¶25. Here, Richard is not seeking individual recovery or individual damages. Rather, he has brought an action to enforce corporate bylaws. The Derouen doctrine does not apply because Richard does not seek individual recovery, but rather seeks to redress alleged wrongs to the three corporations.

¶26. The holding in Bruno applies in this case. Richard lacked standing to bring suit because the right belongs to the three corporations. It is of no consequence that Richard owns half of the shares of stock, as Bruno explicitly applies to closely held corporations, where “the complaining stockholder owns all or substantially all of the stock of the corporation.” Bruno, 385 So. 2d at 622. Accordingly, Richard lacked standing under Bruno to assert a claim individually on behalf of the corporations.


  • Although shareholder derivative actions are something you won’t read about much on this blog, it’s worth giving some thought to how the rules of corporation law intersect with chancery matters, particularly estates and divorce. I can conjure up a fair number of scenarios where the holding in this case could apply.
  • “Standing is a jurisdictional issue” that may jump up and bite you at any point in the litigation. Even the judge may raise it.

How Others See Us

March 9, 2018 § Leave a comment

Message I received recently from a County Court Judge in a far-flung corner of Mississippi:

We were overbooked this morning and I had to borrow a chancery courtroom. As soon as I walked over the threshold, my rules of evidence spontaneously burst into flames. What gives?!?

Who can argue with that? It’s happened to many a chancellor.

Alimony and Loss of Income

March 7, 2018 § Leave a comment

When Charles and Lajuana Easterling were divorced in 2013, the judgment incorporated their property-settlement agreement under which Charles agreed to pay Lajuana $2,500 a month in periodic alimony. He also agreed to pay the monthly note on the former marital residence, which Lajuana continued to occupy.

At the time of the divorce Charles worked offshore as a tool pusher. He later remarried and had two stepchildren and an adopted child by his second wife.

In 2015, Charles’s employment  was terminated for reasons beyond his control. His efforts to file other employment in the oil industry were unsuccessful. He filed a petition for modification asking the court to eliminate the alimony obligation, and there was a temporary agreement reducing his alimony to $600 a month. He quit making the mortgage payment, forcing Lajuana to pay it herself.

At the time of the final hearing in May, 2016, Charles still reportedly had no income. He did have $400,000 in a securities account, an annuity, real property, vehicles, and other assets. He claimed living expenses of $7,574.56 a month. He said that he made up the deficit by increasing credit-card debt.

Following a hearing, the chancellor reduced Charles’s alimony obligation to $1,500 per month. Charles filed a motion for rehearing charging that the court should have terminated, not reduced, alimony. The chancellor denied the motion and Charles appealed.

In Easterling v. Easterling, a February 20, 2018, decision, the COA appealed. Judge Griffis wrote for a unanimous court:

¶11. Here, the chancellor’s final judgment found that Charles’s “decrease in income from his loss of employment was not anticipated at the time of the divorce and is a material change in circumstances[, but] . . . the loss of employment does not justify a termination of alimony[.]” After which, the chancellor considered the Armstrong factors to determine the proper amount of alimony. See Holcombe, 813 So. 2d at 703-04 (¶12).

¶12. “Personal bills cannot be used as a factor to reduce support payments.” Hardin v. Grantham, 201 So. 3d 511, 515 (¶15) (Miss. Ct. App. 2016). Since the divorce, Charles has acquired a new home and land, and has remarried and adopted one child and has two stepchildren. The law is clear that the claim of the divorced wife under an alimony award on the ex-husband’s earnings takes precedence over that of a second wife. De Marco v. De Marco, 199 Miss. 165, 167, 24 So. 2d 358, 359 (1946). The obligations to the first wife also take precedence over any obligations the ex-husband may have as the result of children with his new wife. James v. James, 724 So. 2d 1098, 1104 (¶22) (Miss. Ct. App. 1998). As a result, Charles’s post-divorce personal bills and remarriage cannot be used as factors to reduce his support payments. See Hardin, 201 So. 3d at 515 (¶15).

¶13. Further, the chancellor considered the Armstrong factors and concluded that Charles had not missed any payments on his monthly financial obligations since the divorce. Despite having been fired and claiming that he was in financial jeopardy because of his alimony obligation, all of his debts were current and there was no risk of foreclosure or repossession at the time of the hearing. Charles argues that he was current on all of his debts only because he took on additional credit-card debt through cash advances in order to make the payments. However, “simply alleging, as does [Charles], that one is subsisting on borrowed funds does not show with the required particularity that he is unable to pay.” Varner v. Varner, 666 So. 2d 493, 497 (Miss. 1995).

¶14. At the time of trial, Charles held more than $400,000 in stocks and an annuity, along with real property, vehicles, and other assets. Here he argues that he will run out of money within four years if he is forced to pay $1,500 a month in alimony, $120 a month in mortgage payments— including retroactive payments on each—and his reported $7,574.56 in monthly expenses. If this were the case, at that rate without any other income, Charles would be rendered destitute regardless of the court-required support payments.

¶15. At the hearing, Charles could make his obligatory alimony payments to Lajuana, whose living expenses and needs have remained unchanged since the divorce. The supreme court has held:

[i]n property and financial matters between the divorcing spouses themselves, there is no question that, absent fraud or overreaching, the parties should be allowed broad latitude. When the parties have reached [an] agreement and the chancery court has approved it, we ought to enforce it and take as dim a view of efforts to modify it, as we ordinarily do when persons seek relief from their improvident contracts. Weathersby v. Weathersby, 693 So. 2d 1348, 1351 (Miss. 1997) (quoting Bell v. Bell, 572 So. 2d 841, 844 (Miss. 1990)).

¶16. “[T]he chancellor has substantial discretion in reaching a decision that [she] finds equitable and fair to both parties.” Seale v. Seale, 863 So. 2d 996, 999 (¶14) (Miss. Ct. App. 2004). The chancellor determined that Lajuana had been substantially dependent upon both her disability payments and the alimony payments from Charles since the divorce to meet her monthly living expenses. Her financial situation has not changed. As a result of Charles’s material change in circumstances, the chancellor concluded that a $1,000 reduction in his alimony obligation was warranted. We find the chancellor’s reduction in the amount of the alimony was neither manifest error nor an abuse of discretion. The chancellor’s judgment is affirmed.

It seems a harsh rule when viewed from the payer’s perspective, but the chancellor’s job is to find a solution that is “equitable and fair to both parties.” At ¶10, the court noted that, “When analyzing [the Armstrong] factors and ‘deciding whether to modify periodic alimony,’ chancellors should ‘compar[e] the relative positions of the parties at the time of the request for modification in relation to their positions at the time of the divorce decree.’ Steiner v. Steiner, 788 So. 2d 771, 776 (¶16)(Miss. 2001)(citations omitted).”

The only other thing to which I would call your attention is that there was “no record or written order” documenting the temporary proceeding, per ¶4. That’s just asking for trouble. Here the parties agreed to what had transpired, but absent an agreement it could have been dicey, particularly for Charles, who had reduced his alimony and quit paying the mortgage note. Had Lajuana denied any agreement, Charles might have a big arrearage judgment and may have had his modification case bounced for unclean hands. Make sure you get an order; better yet, make a record and get an order entered.

Trial Factors aka “Checklists”

March 6, 2018 § Leave a comment

The MSSC threw down the gauntlet in 1983 in Albright v. Albright, mandating that trial judges must make findings of fact as to certain specific factors when making an award of child custody.

Since then, the number of factor-driven cases has multiplied. There are 13 now, by my count.

I call it “Trial by checklist” because you can reduce every list of factors to a convenient checklist that you can use at trial. I suggest you copy these checklists and have them handy in your trial materials. Build the outline of your client’s case around them. In your trial preparation design your discovery to make sure that you will have proof at trial to support findings on the factors applicable in your case. Subpoena the witnesses who will provide the proof you need. Present the evidence at trial that will support the judge’s findings.

If you don’t put on proof to support findings of fact by the chancellor, your case will fail, and you will have wasted your time, the court’s time, your client’s money. You will have lost your client’s case and embarrassed yourself personally, professionally, and, perhaps, financially.

If the judge fails to address the applicable factors in his or her findings of fact, file a timely R59 motion asking the judge to do that, because failure to make findings with respect to the applicable factors is cause for remand  — an expensive do-over. But remember — and this is critically important — if you did not put the proof in the record at trial to support those findings, all the R59 motions in the world will not cure that defect.

Here is an updated list of links to the checklists I’ve posted:

Attorney’s fees.

Attorney’s fees in an estate.

Adverse possession.

Child custody.

Child Support.

Grandparent visitation.

Equitable distribution.

Income tax dependency exemption.

Modification of child support.

Periodic and rehabilitative alimony.

Lump sum alimony.

Separate maintenance.

I try to remind folks twice a year about the importance of using checklists in making your cases.