Judicial Whiplash

July 29, 2014 § 3 Comments

Sometimes looking from one appellate court decision to another the swivelling between them can produce symptoms akin to whiplash. That happens, especially, when one tries to pick a path in that nebulous and shadowy border country between the jurisdiction of chancery and circuit court.

In the COA case of In the Matter of the Last Will and Testament of Hardin: Rainbow Ranch, Inc. v. Hardin, decided July 22, 2014, the chancellor dismissed some of the plaintiff’s claims without prejudice, finding that he should pursue them in a law court. The COA reversed. Here is how Judge Griffis laid it out:

¶20. John cross-appealed the dismissal without prejudice of his claims for damages against Charles and James based upon theories of fraud, conversion, breach of fiduciary duty, unjust enrichment, and the imposition of a constructive trust, and for punitive damages. At the initial hearing, the chancellor stated the issues outside of the dissolution were “circuit court matters,” and that the parties could “take that to Judge Lackey’s court and talk to him about that.” John maintains that because these claims are directly related to the underlying dispute between the parties, the chancellor abused his discretion in dismissing these claims and suggesting that the claims be pursued in circuit court. We agree and find the chancery court’s dismissal in error.

¶21. In Cuevas v. Kellum, 12 So. 3d 1154 (Miss. Ct. App. 2009), our Court addressed a similar situation. Margaret Kellum sought to dissolve her partnership with Denise Cuevas, and Cuevas filed a separate complaint, requesting injunctive relief and asserting, among other claims, a breach of fiduciary duty. Id. at 1155-56 (¶¶1-3). However, in the dissolution of the partnership, Cuevas’s individual claims were never resolved. Id. at 1157 (¶12). On appeal, Kellum argued that the chancery court did not have jurisdiction to address Cuevas’s claims. Id. at (¶14). However, this Court noted that if the complaint provides “an independent basis for equity jurisdiction, our chancery courts may hear and adjudge law claims.”Id. at (¶15) (quoting Issaquena Warren Counties Land Co. v. Warren Cnty., 996 So. 2d 747, 751 (¶10) (Miss. 2008)). “In such circumstances, the legal claims lie within the pendent jurisdiction of the chancery court.” Id. Therefore, we reversed the chancellor’s judgment and remanded “to allow evidence to be presented on the remaining claims.” Id. at 1158 (¶15). More recently, we reiterated this stance:

It has long been settled in this state, as one of the pre-eminent principles of equity procedure, that the [c]hancery [c]ourt having taken jurisdiction on any one ground of equity, will thereupon proceed in the one suit to a complete adjudication and settlement of every one of all the several disputed questions materially involved in the entire transaction, awarding by a single comprehensive decree all appropriate remedies, legal as well as equitable, although all the other questions involved would otherwise be purely of legal cognizance; and in this state, the rule goes even to the extent that if the ground of equity fail under the proof, the cause may still be retained to a complete final decree on the remaining issues although the latter present legal subjects only and the decree would cover only legal rights and grant none but legal remedies  – that having taken jurisdiction the power of the court to administer full relief is limited by nothing but justice itself. Knights’ Piping Inc. v. Knight , 123 So. 3d 451, 455-56 (¶13) (Miss. Ct. App. 2012) (quoting Derr Plantation Inc. v. Swarek, 14 So. 3d 711, 718 (¶16) (Miss. 2009)).

¶22. Accordingly, we find that the chancery court had jurisdiction over John’s remaining claims, and we reverse the chancery court’s dismissal and remand for further proceedings. We express no opinion as to the validity of these claims.

This was  litigation that arose in the context of an estate, so I can certainly see how chancery would be the most appropriate forum. And I am not going to quibble with an appellate court decision that recognizes the sweeping power of chancery court to address issues properly placed before it. That just seems to make good sense.

But consider this language from the MSSC in the case of Union National Life Ins. Co. v. Crosby, 870 So.2d 1175, 1182 (Miss. 2004):

¶ 21. The Mississippi Constitution, Article 3, § 31 provides in part that the “right of trial by jury shall remain inviolate,” and it is apparent that Union National’s right to a jury trial would be infringed upon if this case were heard in chancery court. Southern Leisure, 742 So.2d at 1090. In “[c]hancery court, with some few statutory exceptions, the right to jury is purely within the discretion of the *1182 chancellor, and if one is empaneled, its findings are totally advisory.” Louisville & Nashville R.R. v. Hasty, 360 So.2d 925, 927 (Miss.1978) (quoting McLean v. Green, 352 So.2d 1312, 1314 (Miss.1977)).

¶ 22. The public policy in favor of a plaintiff being able to choose his or her forum does not outweigh Union National’s constitutional right to a jury trial.

¶ 23. A realistic and pragmatic review of the complaint leads us to the conclusion that this is a lawsuit that should be in circuit court, not chancery court.

¶ 24. “[I]t is more appropriate for a circuit court to hear equity claims than it is for a chancery court to hear actions at law since circuit courts have general jurisdiction but chancery courts enjoy only limited jurisdiction.” Southern Leisure, 742 So.2d at 1090 (quoting McDonald’s Corp. v. Robinson Indus., Inc., 592 So.2d 927, 934 (Miss.1991)).

¶ 25. The record clearly shows that each and every one of Crosby’s claims, even the equitable claims of unjust enrichment and constructive trust, arise from the sale and alleged breach of an insurance contract. Crosby contends that the complaint does not arise from the sale and alleged breach of an insurance contract; rather, she claims that the complaint arises from the sales, administration and service of the insurance contract. This argument ignores the fact that, unless there was a contractual relationship between Union National and Crosby, she would have no claims arising from the sales, administration and service of the insurance policy. Rights and duties arising from an insurance policy are construed according to the laws of contract. Miss. Farm Bureau Cas. Ins. Co. v. Britt, 826 So.2d 1261, 1265–66 (Miss.2002). The alleged mismanagement and misappropriation of premium money concerns Crosby’s contractual duty to pay for the insurance policy and Union National to provide her coverage.

The court held that the case should be tried in circuit court.

Now, get your ice pack ready. This is from the MSSC in Derr Plantation, Inc. v. Swarek, 14 So.3d 711, 714 (Miss. 2009):

¶ 9. Under the Mississippi Constitution of 1890, circuit courts are courts of general jurisdiction, while chancery courts have limited jurisdiction over “all matters in equity” and other designated matters. See Miss. Const. art. 6 § 156 (granting circuit courts “original jurisdiction in all matters civil and criminal in this state not vested by this Constitution in some other court”); Miss. Const. art. 6 § 159, § 160, § 161. The constitution contains complementary provisions for the transfer of cases commenced in the wrong forum. Miss. Const. art. 6 § 157 (“[a]ll causes that may be brought in the circuit court whereof the chancery court has exclusive jurisdiction shall be transferred to the chancery court”); Miss. Const. art. 6 § 162 (“[a]ll causes that may be brought in the chancery court whereof the circuit court has exclusive jurisdiction shall be transferred to the circuit court”).

¶ 10. The jurisdiction of the chancery court is a question of subject matter jurisdiction that may be raised by either party at any time. Burnette v. Hartford Underwriters Ins. Co., 770 So.2d 948, 951 (Miss.2000). However, this Court is prohibited by the Mississippi Constitution from reversing on this issue after a final judgment. Id. (citing Miss. Const. art. 6 § 147). A party aggrieved by the trial court’s grant or denial of a motion to transfer may seek relief by pursuing an interlocutory appeal, as DPI has done here. Id.

¶ 11. “To determine whether a court has subject matter jurisdiction, we look to the face of the complaint, examining the nature of the controversy and the relief sought.” RAS Family Partners, 968 So.2d at 928 (citing Durant v. Humphreys Mem’l Hosp./Extended Care Facility, 587 So.2d 244, 250 (Miss.1991)). The reviewing court must look to the substance, not the form, of a claim to determine whether that claim is legal or equitable. Copiah Med. Assocs. v. Miss. Baptist Health Sys., 898 So.2d 656, 661 (Miss.2005). We have consistently held that if it appears from the face of a well-pleaded complaint that an independent basis for equity jurisdiction exists, our chancery courts may hear and adjudge law claims. RE/Max Real Estate Partners, Inc., v. Lindsley, 840 So.2d 709, 711-12 (Miss.2003); Tillotson v. Anders, 551 So.2d 212, 213 (Miss.1989) (citing Penrod Drilling Co. v. Bounds, 433 So.2d 916 (Miss.1983); Burnett v. Bass, 152 Miss. 517, 521, 120 So. 456 (1929)). In that circumstance, the legal claims lie within the pendent jurisdiction of the chancery court. Tillotson, 551 So.2d at 213. As long as the chancery court’s equity jurisdiction has attached, the chancery court has discretion to award legal and punitive damages. RE/Max Real Estate Partners, Inc., 840 So.2d at 712 (citing S. Leisure Homes v. Hardin, 742 So.2d 1088, 1090 (Miss.1999)).

¶ 12. Conversely, “if the complaint seeks legal relief, even in combination with equitable relief, the circuit court can have proper subject matter jurisdiction.” RAS Family Partners, 968 So.2d at 928 (citing IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96, 111 (Miss.1998)). In fact, if there is some doubt as to whether a case is within the jurisdiction of the chancery court, the case is better tried in circuit court because “it is more appropriate for a circuit court to hear equity claims than it is for a chancery court to hear actions at law since circuit courts have general jurisdiction but chancery courts enjoy only limited jurisdiction.” Burnette, 770 So.2d at 952 (quoting McDonald’s Corp. v. Robinson Indus., Inc., 592 So.2d 927, 934 (Miss.1991)). This Court also has cited the constitutional right to a jury trial as a reason for resolving doubtful cases in favor of circuit court jurisdiction. Burnette, 770 So.2d at 952; S. Leisure Homes, 742 So.2d at 1090. Nonetheless, a party cannot, by invoking the right to a jury trial, secure a transfer to circuit court of a case properly within the chancery court’s jurisdiction. See Issaquena Warren Counties Land Co., LLC, 996 So.2d at 751.

¶ 13. The Swareks argue that the transfer to circuit court was appropriate because the substance of their complaint was breach of contract, a claim properly heard in circuit court. It is true that in several recent cases, this Court determined that the chancery court lacked jurisdiction over a breach-of-contract case, and that the circuit court had exclusive jurisdiction. See Tyson Breeders, Inc. v. Harrison, 940 So.2d 230, 234 (Miss.2006) (claim for breach of a contract for Tyson to provide Harrison with flocks of breeder hens); ERA Franchise Sys., Inc. v. Mathis, 931 So.2d 1278, 1283-84 (Miss.2006) (primary claims for various breaches of a contract governing the parties’ business relationship); Copiah Med. Assocs., 898 So.2d at 661 (claims of breach of contract and for specific performance of a lease agreement); Union Nat’l Life Ins. Co. v. Crosby, 870 So.2d 1175, 1182 (Miss.2004) (various claims of fraud and bad faith breach of insurance contracts); Burnette, 770 So.2d at 952 (claims of bad-faith breach of an insurance contract). Each of these cases involved a breach-of-contract claim for which damages, a legal remedy, was the appropriate remedy. See Tyson Breeders, 940 So.2d at 234 quoting Roberts v. Spence, 209 So.2d 623, 626 (Miss.1968) (“ordinarily a court of equity will not attempt to enforce a contract by specific performance where the parties have an adequate remedy at law to recover damages growing out of a party’s failure to carry out a contract’s terms”).

¶ 14. In Tyson Breeders, we were careful to distinguish cases involving a “unique matter such as real estate where specific performance is a particularly appropriate remedy.” Id.; see also Copiah Med. Assocs., 898 So.2d at 660 (citing Osborne v. Bullins, 549 So.2d 1337, 1340 (Miss.1989) (recognizing specific performance as a traditional remedy for breach of a land-sale contract, especially for a seller’s breach)). In Copiah, we determined that a lease agreement for continued occupancy and use of the premises for a specific period of time for a specific purpose was not subject to the equitable remedy of specific performance, because that remedy would require periodic court supervision. Id. at 660-61 (citing Sec. Builders, Inc. v. Sw. Drug Co., 244 Miss. 877, 885-86, 147 So.2d 635, 639 (1962)). Because specific performance was not an available remedy for the breach, we held that the case was appropriately transferred from the chancery court to the circuit court. Id. at 661. We distinguished the case from Osborne, which had recognized specific performance as a remedy for a breach of a land-sale contract. Id. at 660 (citing Osborne, 549 So.2d at 1340).

¶ 15. A claim for specific performance as a remedy for breach of contract is within the equity jurisdiction of the chancery court. Lee v. Coahoma Opportunities, Inc., 485 So.2d 293, 294-95 (Miss.1986). The Swareks’ complaint alleged that DPI had breached an agreement to lease and sell them a large farm, and they claimed that specific performance was the most appropriate remedy due to the unique nature of the real estate and accompanying livestock and farm equipment. Accordingly, they requested that the chancery court order DPI to perform the agreement by delivering the property according to the contract terms. They also requested a preliminary injunction entitling them to immediate possession of the property under the lease.

¶ 16. From our review of the nature of this controversy and the relief sought, it is apparent that the Swareks’ primary claim is for specific performance as a remedy for breach of a real estate contract, an equitable claim. The requested injunctive relief also is within the chancery court’s equity jurisdiction. Issaquena Warren Counties Land Co., 996 So.2d at 751. We are fully cognizant that the Swareks also prayed that the court award them compensatory damages as an alternative to, or in addition to, specific performance. In a suit for specific performance, the court may order specific performance along with damages for the defendant’s delay in performing the contract. McVay v. Castenara, 152 Miss. 106, 112, 119 So. 155, 156 (1928). Or, the court may, in its discretion, reject the plaintiff’s claim that specific performance is the most appropriate remedy and instead award compensatory damages as the entire remedy for the breach. Frierson v. Delta Outdoor, Inc., 794 So.2d 220, 225 (Miss.2001). In a suit for specific performance, the possibility that the chancery court will reject specific performance and instead award compensatory damages does not defeat that court’s equity jurisdiction. This is because:

It has long been settled in this state, as one of the pre-eminent principles of equity procedure, that the Chancery Court having taken jurisdiction on any one ground of equity, will thereupon proceed in the one suit to a complete adjudication and settlement of every one of all the several disputed questions materially involved in the entire transaction, awarding by a single comprehensive decree all appropriate remedies, legal as well as equitable, although all the other questions involved would otherwise be purely of legal cognizance; and in this state, the rule goes even to the extent that if the ground of equity fail under the proof, the cause may still be retained to a complete final decree on the remaining issues although the latter present legal subjects only and the decree would cover only legal rights and grant none but legal remedies,-that having taken jurisdiction the power of the court to administer full relief is limited by nothing but justice itself.

McClendon v. Miss. State Highway Comm’n, 205 Miss. 71, 78, 38 So.2d 325, 327 (1949) (citation omitted).

¶ 17. The Swareks argue that their claim for punitive damages for willful and intentional breach of contract implicated the jurisdiction of the circuit court. We have stated that the fact that punitive damages are sought is a “strong indicator” that the matter is legal, rather than equitable. ERA Franchise Sys., Inc., 931 So.2d at 1282 (citing Crosby, 870 So.2d at 1179). However, the Swarek’s addition of a punitive-damages claim, which is an extraordinary remedy not favored in Mississippi law, Bradfield v. Schwartz, 936 So.2d 931, 936 (Miss.2006), does not outweigh their request for specific performance, which is recognized as a traditional and appropriate remedy for the wrong alleged. Osborne, 549 So.2d at 1340. Moreover, once the equity jurisdiction of the chancery court has attached, the chancery court has the power to award “legal and even punitive damages.” S. Leisure Homes, 742 So.2d at 1090.

¶ 18. Having filed an action for specific performance within the chancery court’s jurisdiction, the fact that the Swareks now express a preference for a legal remedy does not divest the chancery court of jurisdiction. In City of Starkville v. 4-County Electric Power Association, 909 So.2d 1094, 1101 (Miss.2005), Starkville argued that the case should have been transferred from chancery court to circuit court because, since the time of its filing, the suit had “become basically a breach of contract suit wherein Starkville seeks to recover compensatory and punitive damages from 4-County for its failure to comply with the terms of the 1963 Agreement.” This Court rejected Starkville’s argument. Id. at 1102. The Court looked to the prayer in the complaint which Starkville itself had filed in chancery court. Id. at 1101. The prayer requested relief that is parallel in many respects to that requested by the Swareks, including: (1) declaring the validity and enforceability of the contract; (2) specific performance of the contract; (3) a temporary and a permanent injunction; (4) actual and punitive damages, and (5) a prayer for general relief. Id. This Court found that the fundamental substance of Starkville’s action was equitable. Id. at 1102. We stated:

When we review Starkville’s complaint in today’s case, we can state with confidence that the relief sought on specific performance of a contract is typically the type of relief to be considered by our chancellors sitting as a court of equity. Additionally, Starkville presumably made a knowing and conscious decision to commence this litigation in chancery court (as opposed to circuit court) when it filed its complaint in 1995. This case has been litigated in chancery court, appealed to this Court, and relitigated in chancery court. As we stated in Rogers [ v. Eaves, 812 So.2d 208, 211-12 (Miss.2002)], because the chancery court had already heard extensive litigation in the case, it was certainly in the best position to hear and resolve the relevant issues in the related case which had been commenced. In fact, in today’s case, the same chancellor has been involved with the litigation of this case since its inception in 1995. Who was in a better position to fairly and correctly decide the issues in this case than the learned chancellor who had presided over all the proceedings in this case from the very beginning?

Id. (citations omitted). As in City of Starkville, the chancery court acquired jurisdiction over the Swareks’ complaint because the fundamental nature of their claim was for the equitable remedy of specific performance; additionally, the chancellor has presided over the matter through discovery and dispositive motions and she is thus well-positioned to fairly and correctly decide the issues to be tried.

¶ 19. The Swareks’ argument that their right to a jury trial would be infringed if this case remained in chancery court does not avail them. [Footnote omitted] The Mississippi Constitution provides that “[t]he right of trial by jury shall remain inviolate.” Miss. Const. art. 3, § 31. “In ‘chancery court, with some few statutory exceptions, the right to jury is purely within the discretion of the chancellor, and if one is empaneled, its findings are totally advisory.’ ” Burnette, 770 So.2d at 952 (quoting Louisville & Nashville R.R. v. Hasty, 360 So.2d 925, 927 (Miss.1978)). However, no jury trial is required by section 31 for cases within the chancery court’s jurisdiction. Re/Max Real Estate Partners, Inc., 840 So.2d at 713. Chancellors historically have had jurisdiction over claims for specific performance of a real estate contract. McVay, 152 Miss. at 112, 119 So. at 156. It may be expected that the chancery court, in adjudicating a request for specific performance, also will be called upon to adjudicate the validity, construction, definiteness or enforceability of the purported contract. See Busching v. Griffin, 542 So.2d 860 (Miss.1989); Hutton v. Hutton, 239 Miss. 217, 119 So.2d 369 (1960); Keene v. Lowenthal, 83 Miss. 204, 35 So. 341 (1903). As we have discussed, the substance of the Swareks’ complaint was for specific performance of a real estate contract. Because this case was within the chancery court’s jurisdiction, the Swareks cannot secure a transfer to circuit court by requesting a jury trial.

If you made it this far, I am sure you will agree with me that, as a lawyer, these cases and the various ones cited give you about a 50-50 chance of being right in selecting whether to proceed in chancery or circuit. And that means you have a 50-50 chance of getting reversed and having a do-over.

Just try not to get whiplash when you get hit from behind.

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§ 3 Responses to Judicial Whiplash

  • Bob Wolford says:

    Great- now we have intra-courthouse forum non conveniens.

  • I was involved in a couple of those cited cases. In the early 2000’s there was some political wrangling over cases that had traditionally involved legal remedies (i.e. car wrecks, contracts, etc.) that were being filed in chancery when equitable claims were included (i.e unjust enrichment, specific performance, etc.). Some folks wanted them in circuit, others claimed they were fine in chancery based on the pleadings. In trying to resolve it, and I firmly believe with some political intertwinings, we came up with the “whiplash” you have explained. Just one more clog in the wheel that makes this profession interesting – and difficult!

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