USF&G Insurance Company of Mississippi v. George K. Walls ( 2000 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2002-IA-00185-SCT
USF&G INSURANCE COMPANY OF MISSISSIPPI
v.
GEORGE K. WALLS AND ROXIE ANN WELLS
ON MOTION FOR REHEARING
DATE OF JUDGMENT: 05/16/2000
TRIAL JUDGE: HON. PERCY L. LYNCHARD, JR.
COURT FROM WHICH APPEALED: PANOLA COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: LUTHER T. MUNFORD
FRED L. BANKS, JR.
JANE E. TUCKER
ATTORNEYS FOR APPELLEES: RICHARD T. PHILLIPS
THOMAS ALAN WOMBLE
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: REVERSED AND REMANDED TO THE
CIRCUIT COURT OF PANOLA COUNTY-
09/15/2005
MOTION FOR REHEARING FILED: 06/17/2005
MANDATE ISSUED:
EN BANC.
GRAVES, JUSTICE, FOR THE COURT:
¶1. The motion for rehearing is granted. The prior opinion is withdrawn, and this opinion
is substituted therefor.
¶2. Roxie Ann Wells and George K. Walls were in a car wreck. Roxie sued George, whose
insurer was USF&G Insurance Company of Mississippi. USF&G paid Roxie $22,632.50 for
the loss of her 1995 Chrysler Concorde, since George had rear-ended her with his 1991 GMC
pickup. This claim was paid before any personal injury claim of Roxie was examined.
¶3. Then Roxie attempted to recover from USF&G for her injuries. She was informed that
George’s policy had a single limit coverage of only $25,000 per accident–or just a little over
two thousand dollars coverage left for that one accident. Roxie argued that the coverage was
deficient under Mississippi statutory levels, and in a novel move, George agreed with her.
Roxie dismissed her complaint against George, and together the two filed suit in chancery
court against USF&G. However, we do not have before us today a complicated question of
policy limits and insurance law. Instead, in their suit Roxie and George invoked an ancient
Mississippi doctrine that has long been disfavored.
¶4. Roxie and George filed suit in the Chancery Court of Panola County not just on behalf
of themselves, but also “on behalf of a clearly ascertainable class of others similarly situated.”
This “class” allegedly consisted of USF&G insureds and those who were injured by USF&G
insureds. The title of the complaint called it a “Class Action Complaint for Equitable and
Injunctive Relief and Actual and Punitive Damages.”
¶5. USF&G objected to the complaint and moved to dismiss, arguing that class actions
could not exist under Mississippi law. Despite its objections, the chancellor denied the
motion and certified the plaintiff class. We granted USF&G’s petition for interlocutory
appeal, see M.R.A.P. 5, which asks one question: does Mississippi recognize “equitable class
actions” in chancery, despite an omission of Rule 23 from our Rules of Civil Procedure?
After a review of the history of the law, we answer that question in the negative.
DISCUSSION
2
¶6. “Mississippi is one of only three states that never adopted Rule 23 as a part of their state
rules of civil procedure.” Richard T. Phillips, Class Action & Joinder in Mississippi, 71
Miss. L.J. 447, 453 (2001) (“Phillips”). “The other states which have no Rule 23 state court
class actions, Virginia and New Hampshire, both expressly recognize ‘equitable class actions’
. . . in consumer litigation.” Id. at 453 n.14. It has been theorized that Mississippi coped with
the absence of a codified Rule 23 in three ways: “(1) the mass aggregation of individual claims
under Rules 20 and 42 of the Rules of Civil Procedure, (2) the ‘ancient equitable remedy’ of
the ‘equitable class action’ and (3) where all else fails, the prosecution of select individual
cases for punitive damages.” Phillips, at 455.
¶7. It sounds a bit irrational to speak of Mississippi’s “adoption” of Rule 23 after remarking
how Mississippi does not have class actions. Yet a rule was adopted—after a fashion. When
the Rules of Civil Procedure went into effect on January 1, 1982, they read (and still read):
Rule 23. Class actions. [Omitted].
Rule 23.1. Derivative actions by shareholders. [Omitted].
Rule 23.2. Actions relating to unincorporated associations. [Omitted]
¶8. The numbering is a byproduct of the patterning of the Mississippi Rules of Civil
Procedure after the Federal Rules of Civil Procedure, which do have class actions. See Owens
v. Thomae, 759 So. 2d 1117, 1121 n.2 (Miss. 1999). The comment to Mississippi Rule 23 was
meant to convey our reluctance to adopt the elaborate mechanisms of the class action, since
“[f]ew procedural devices have been the subject of more widespread criticism and more
3
sustained attack—and equally spirited defense—than practice under Federal Rule 23 and its
state counterparts.” Miss. R. Civ. P. 23 cmt.1
¶9. Yet the comment was ambiguous. The first sentence reads: “[c]lass action practice is
not being introduced into Mississippi trial courts at this time.” (emphasis added). For it is a
matter of fact and law that “class actions were recognized in Mississippi as a matter of general
equity jurisdiction long before adoption of the Mississippi Rules of Civil Procedure,” so no
introduction was necessary. Phillips, at 455 (emphasis added). See also Marx v. Broom, 632
So. 2d 1315, 1322 (Miss. 1994) (noting that “[p]rior to the enactment of the Rules of Civil
Procedure, this Court recognized the possibility of class action suits as a matter of general
equity jurisdiction in chancery court under limited circumstances”). This has long been
accepted. The “lawyer’s bible” of chancery practice in Mississippi, Mississippi Chancery
2
Practice, details the ambiguity. “It was not necessary to introduce class action, as it already
existed.” Griffith, Mississippi Chancery Practice, § 130 (2000) (“Griffith”) (emphasis
added).
1
The Mississippi Rules of Civil Procedure were themselves the subject of “sustained attack”
and “spirited defense” in their adoption phase. The Rules were adopted unilaterally by a majority of the
Supreme Court over the wishes of the legislature. William H. Page, Constitutionalism and Judicial
Rulemaking: Lessons from the Crisis in Mississippi, 3 Miss. C.L. Rev. 1, 6-7 (1982). The furious
“legislature immediately began to consider a proposal to remove the pro-Rules justices” in February of
1982, “using a near-forgotten provision of the state constitution.” Id. at 6-7. The matter died down
after a few months, with no justice removed from office. Id. at 7-9. The justices were Chief Justice
Neville Patterson, Presiding Justice L.A. Smith, Jr., and Justices Robert P. Sugg, Armis Hawkins, and
Harry G. Walker; Presiding Justice Stokes V. Robertson, who was the sixth Justice who concurred in
the majority opinion, had retired at the end of the previous year. Dennis Camire, Senators introduce
measure to fire chief justice and 4 associates, CLARION-LEDGER, Jan. 15, 1982, at A3.
2
“Judge Griffith’s excellent work,” Mississippi Chancery Practice, was termed the “‘lawyer’s
bible’” in Johnson v. Brewer, 427 So. 2d 118, 124 (Miss. 1983).
4
¶10. Furthermore, “[t]he Mississippi Code has long provided and still provides for costs in
class action suits in the Mississippi chancery courts.” Phillips, at 458 (emphasis added); see
also Griffith, at § 130 (“[p]rovision is made for costs in class actions”). Miss. Code Ann.
§ 11-53-37 (Rev. 2002) , adopted in 1948, specifies:
Where a party hereafter institutes a suit for the benefit of himself and all
others similarly situated, and thereby there is in such suit recovered or
preserved property or a fund for the common benefit, the chancery court may
make an allowance to such party of the reasonable costs incurred, which costs
shall include the necessary disbursements, and reasonable solicitor's fees, out
of the property recovered or preserved for the common benefit.
(emphases added). Section 11-53-37 presents a conflict with Rule 23.
¶11. Three commentators have noted the statute’s existence and simply relied upon the
section as evidence that Mississippi has class action suits at equity. See Geoffrey P. Miller
& Lori S. Singer, Nonpecuniary Class Action Settlements, 60 Law & Contemp. Probs. 97,
146 (1997) (under the table “State Rules,” showing that Mississippi “[r]ecognizes [a] common
fund by statute,” citing to Section 11-53-37); Phillips, at 458; Kurt A. Schwarz, Note, Due
Process and Equitable Relief in State Multistate Class Actions after Phillips Petroleum Co.
v. Shutts, 68 Tex. L. Rev. 415, 450 n.84 (1989) (offering that while “Mississippi has no formal
rule [pertaining to class actions] . . . section 11-53-37 permits costs and attorneys’ fees in
successful class suits”).
¶12. The original version of the Encyclopedia of Mississippi Law also “recognized that in
limited circumstances, class action suits might be possible within the general equity
jurisdiction of the chancery court.” J. Jackson, M. Miller, R. Morton, and J. Matheny, Civil
5
Procedure, in 2 Ency. of Miss. Law § 13:59 (J. Jackson & M. Miller eds. 2001).3 It is also
written that “[g]enerally . . . the class action remains an available remedy only in chancery[,]
from whence it sprang.” T. Jackson Lyons, Corporations, in 3 Ency. of Miss. Law § 22:222
(J. Jackson & M. Miller eds. 2001) (citing Griffith).
¶13. The conflict between the absence of class actions in Mississippi and Section 11-53-37
has also not gone unnoticed in jurisprudence outside of our court.4 When the Fifth Circuit
considered a class action challenge to Mississippi’s procedures for involuntary commitment
of adults to state mental institutions, it examined in dicta the existence—or lack thereof—of
class actions under state law. See Chancery Clerk of Chickasaw County, Miss. v.
Wallace, 646 F.2d 151, 155 (5th Cir. 1981). Speaking of class actions, the district court
noted that “‘[t]here is no way to get that kind of suit into the state courts.’” Id. at 155 n.8. ¶14.
Yet the Fifth Circuit pointed to Section 11-53-37 as evidence there might be class actions,
since the statute “allow[s] Mississippi courts to award attorney's fees from the common fund
generated in a class suit.” Id. That court also offered Section 75-24-15(4) as evidence that
class actions might exist; that statute provides that “[n]othing in this chapter shall be construed
to permit any class action or suit, but every private action must be maintained in the name of
and for the sole use and benefit of the individual person.” The Fifth Circuit argued that a
“provision expressly prohibiting consumer class actions . . . [would] thereby imply[]
3
The cumulative update of the Mississippi Practice Series notes that Booth erases the class action
at equity.
4
Whatever the impact of the statute, it has been expressly held not to apply to attorneys’ fees in
public service litigation under the so-called “private attorney general rule.” Fordice v. Thomas, 649 So.
2d 835, 845 (Miss. 1995), overruled on other grounds by USPCI of Miss. Inc. v. State ex rel.
McGowan, 688 So. 2d 783 (Miss. 1997).
6
availability of the class action mechanism.” Wallace, 646 F.2d at 155 n.8 (emphasis added).
The ancient maxim of “expressio unius est exclusio alterius” was thus quietly evoked—which
acknowledges the inference that items not mentioned are excluded by deliberate choice, not
inadvertence.
¶15. That court also held that “Mississippi Supreme Court decisions lend support to this
assessment,” pointing to an older line of cases rejecting the certification of classes, but not
the conception of class actions. Id. The Fifth Circuit’s opinion and all the cases it relied upon
were reported before Mississippi’s adoption of the Rules of Civil Procedure.
¶16. Rule 81(f) of the Mississippi Rules of Civil Procedure provides that “[i]n applying these
rules to any proceedings to which they are applicable, the terminology of any statute which
also applies shall, if inconsistent with these rules, be taken to mean the analogous device or
procedure proper under these rules.” Section 11-53-37 uses terminology—class action
suits at equity—which is inconsistent with the omitted Rule 23.
¶17. Rule 81 dictates that any inconsistency be resolved in favor of the “analogous device
or procedure proper under these rules,” but there is no analogous device. There is a
contradiction; on one side stands our established case law, which recognized class actions at
equity, and our statute, which provides for costs in class actions suits. On the other side stands
our Rules of Civil Procedure, which omit class actions, and our recent jurisprudence, which
do not recognize class actions at equity.
¶18. Our modern jurisprudence—that is, after the 1982 adoption of the Rules–has apparently
not been clear enough to alert practitioners and the bench that class actions no longer exist at
equity. In Marx we upheld a trial court decision that “there was no class action available in
7
this case.” 632 So. 2d at 1322 (emphasis added). Since “the lower court made specific,
supportable findings that the requirements for a class action were not met,” the claim was
barred “[e]ven if this basis [for the claim] was available.” Id. (emphases added). We also
noted that while we once “recognized the possibility of class action suits as a matter of general
equity jurisdiction in chancery court under limited circumstances,” that was “[p]rior to the
enactment of the Rules of Civil Procedure.” Id. (emphasis added).
¶19. Nearly a decade later we were even more definitive. Am. Bankers Ins. Co. of Fla. v.
Booth, 830 So. 2d 1205, 1209 (Miss. 2002), perceived “equitable class action[s] in chancery
court” as more a legal “experiment” attempted by ambitious lawyers than an established legal
fact in Mississippi. Through a review of cases, we determined that this “Court did not look
with favor on class actions and allowed them only under rare circumstances,” most notably
where “‘plaintiffs sought injunctive or other equitable relief in chancery court against
governmental entities.’” Id. at 1211 (quoting Guthrie T. Abbott & Pope Mallette,
Complex/Mass Tort Litigation in State Courts in Mississippi, 63 Miss. L.J. 363, 393
(1994)). The cause of action was rejected, since class actions at equity “ not” survive “the
did
adoption of the Rules.” Id. (emphasis added). However, neither Marx nor Booth considered
Section 11-53-37.
¶20. Section 11-53-37 is simply a relic from the time when class actions at equity were
permitted in chancery court. While this is problematic, this “Court [should be] mindful that
it has the exclusive power to make rules of practice, procedure[,] and evidence.” Claypool v.
Mladineo, 724 So. 2d 373, 388-89 (Miss. 1998) (emphasis added).
¶21. The conflict in Claypool is illustrative. At issue in that case was whether the Legislature
8
could enact statutes that created privileges that might “impede both the discovery portions of
the Mississippi Rules of Civil Procedure and the privileges enumerated in the Mississippi
Rules of Evidence.” Id. at 377. The Court held that “where the Legislature enacts a statute
creating a privilege it should be upheld, unless it conflicts with either the Mississippi Rules
of Civil Procedure or the Mississippi Rules of Evidence.” Id. at 388-89.
The case at hand.
¶22. Section 11-53-37 explains how attorney’s fees would be awarded in class actions in
chancery. The only issue it directly addresses is the awarding of attorney fees if there was an
equitable class action. If and when we choose to adopt a class action rule, Section 11-53-37
will become operable again, as it was decades ago. It serves no function at this moment in time
because there are no class actions under the Mississippi Rules of Civil Procedure, whether in
circuit or chancery court. There is no direct conflict between the omission of Rule 23 and the
Mississippi Code because Section 11-53-37 only provides for attorney’s fees if there is a
class action.
¶23. At best, this statute raises an inference of the existence of class actions. However, an
inference is not tantamount to a class action provision. Our Rules of Civil Procedure “apply
to all civil proceedings” in circuit and chancery court. M.R.C.P. 81 (emphasis added);
M.R.C.P. 1. Since there is no rule or statute which expressly or impliedly provides for class
actions, we are compelled to conclude that they are not permitted in any legal proceedings in
our state courts. Thus, the chancery court erred in concluding otherwise.
9
CONCLUSION
¶24. This Court has the exclusive power to make rules of practice, procedure, and evidence.
Accordingly, as we have not made a rule which provides for class actions, they are not a part
of Mississippi practice–chancery, circuit, or otherwise. We reverse the judgment of the
chancery court denying USF&G’s motion to dismiss and certifying the plaintiff class, and we
remand this case as an individual case to the Circuit Court of Panola County for further
proceedings consistent with this opinion.
¶25. REVERSED AND REMANDED TO THE CIRCUIT COURT OF PANOLA
COUNTY.
SMITH, C.J., WALLER AND COBB, P.JJ., CARLSON, DICKINSON AND
RANDOLPH, JJ., CONCUR. EASLEY, J., CONCURS IN RESULT ONLY. DIAZ, J.,
NOT PARTICIPATING.
10