The Equitable Power of the Circuit Court

June 5, 2019 § 1 Comment

When Trustmark Bank foreclosed on Odell and Renodda Dorman’s property, it was discovered that the property description of the Dorman’s 6-acre residence was not included. With that discovery, the Dormans moved back home. The bank filed suit in circuit court for a deficiency judgment, and the Dormans counterclaimed for wrongful foreclosure on their residence. In turn, the bank moved to amend to plead mutual mistake, which the court granted. The bank moved for summary judgment, in the course of which the bank somehow requested reformation of the deed for mutual mistake. The court ordered reformation of the deed and granted summary judgment. The Dormans appealed.

Before we go to the next step, the point needs to be made that reformation of an instrument is a quintessentially equitable process. If you were going to file an original action for reformation, you would file it in chancery court. So was the circuit judge in error by granting equitable relief in this case? The argument that the Dormans made before the COA was that the circuit court lacked subject matter jurisdiction, and so the judgment was void.

In Dorman v. Trustmark, decided May 7, 2019, the COA affirmed on the issue of subject matter jurisdiction. Chief Judge Barnes wrote for the unanimous court:

¶9. Before addressing the substantive issues raised on appeal, we first consider the Dormans’ claim that the circuit court lacked subject-matter jurisdiction. Trustmark’s complaint requested recovery of a deficiency judgment on a loan, which the Dormans acknowledge was properly before the circuit court as a matter of law. However, the circuit court allowed Trustmark to amend its answer to the Dormans’ counterclaim to assert reformation and mutual mistake as a defense. At the motions hearing, the circuit judge questioned whether he had the power to reform the deed, noting: “It’s just I think that the place for that correction is in front of a chancellor.” After briefing by the parties on the issue, the court determined in its final judgment that it had subject-matter jurisdiction over the claims. The Dormans now argue that Trustmark tried to “back door” the issue of reformation by filing the complaint for the deficiency judgment and that the bank “should have sought reformation in chancery court.”

¶10. “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 LP v. Onnam Biloxi LLC, 968 So. 2d 926, 928 (¶11) (Miss. 2007) (emphasis added). “If the complaint seeks legal relief, even in combination with equitable relief, the circuit court can have proper subject[-]matter jurisdiction.” Id. “[E]quitable claims are more appropriately brought before a circuit court when they are connected to a contractual relationship or other claims tied to questions of law.” Era Franchise Sys. Inc. v. Mathis, 931 So. 2d 1278, 1283 (¶14) (Miss. 2006).

¶11. As the court noted, Trustmark’s complaint asserted a legal claim for a deficiency judgment; the issue of mutual mistake later arose as an affirmative defense to the counterclaim. The Mississippi Supreme Court has held that once a circuit court acquires subject-matter jurisdiction of an action at law, “it may hear and adjudicate in that action all claims, including those with an equitable smell, arising out of the same transaction and occurrence as the principal claim.” Hall v. Corbin, 478 So. 2d 253, 255 (Miss. 1985). This includes “other claims (whether asserted by the one or more of the original parties or by new or intervening parties), ancillary or pendent to the original claim,” even if those claims “standing alone may have been beyond the court’s jurisdiction.” Id. Because Trustmark’s equitable claim was raised as a defense to the Dormans’ counterclaim, we find no error in the circuit court’s determination that it had subject-matter jurisdiction of Trustmark’s claim for reformation of the DOT.

The COA reversed the grant of summary judgment because there was a fact issue of mutual mistake and remanded for further proceedings.

Some years ago an attorney told me that he wanted to file a 2-count complaint: Count I for alienation of affection against the defendant and his paramour; and Count II for divorce against the defendant for divorce and related relief. I told him that, if he did I would transfer the case to circuit court; our law is that once a case is transferred it can not be transferred back to the transferring court. We had a good laugh over that. The idea of a circuit judge (and possibly a jury) having to grope their way through a divorce was rife with comedic possibilities. When I mentioned it to a circuit judge, though, he simply smiled and said, “No problem; I would just appoint you as special master to hear the divorce.” That put an end to that.

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§ One Response to The Equitable Power of the Circuit Court

  • Becky Farrell says:

    Belly Laughing out loud Judge !

    On Wed, Jun 5, 2019 at 6:01 AM The Better Chancery Practice Blog wrote:

    > Larry posted: “When Trustmark Bank foreclosed on Odell and Renodda > Dorman’s property, it was discovered that the property description of the > Dorman’s 6-acre residence was not included. With that discovery, the > Dormans moved back home. The bank filed suit in circuit cour” >

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