RAS Family Partners, LP v. Onnam Biloxi, LLC ( 2006 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2006-IA-00976-SCT
RAS FAMILY PARTNERS, LP AND RAY A. SIMS
v.
ONNAM BILOXI, LLC
DATE OF JUDGMENT: 05/22/2006
TRIAL JUDGE: HON. JAMES B. PERSONS
COURT FROM WHICH APPEALED: HARRISON COUNTY CHANCERY COURT,
SECOND JUDICIAL DISTRICT
ATTORNEY FOR APPELLANTS: LAWRENCE CARY GUNN
ATTORNEYS FOR APPELLEE: MEGAN MARTHINE BARBER CONNER
JOHN G. CORLEW
KATHERINE A. SMITH
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: REVERSED AND REMANDED - 11/15/2007
.
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
CONSOLIDATED WITH
NO. 2006-IA-01414-SCT
ONNAM BILOXI, LLC
v.
RAS FAMILY PARTNERS, LP AND RAY A. SIMS
DATE OF JUDGMENT: 08/28/2006
TRIAL JUDGE: HON. STEPHEN B. SIMPSON
COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT,
SECOND JUDICIAL DISTRICT
ATTORNEYS FOR APPELLANT: JOHN G. CORLEW
MEGAN MARTHINE BARBER CONNER
KATHERINE A. SMITH
ATTORNEY FOR APPELLEES: LAWRENCE CARY GUNN
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED AND REMANDED - 11/15/2007
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE DIAZ, P.J., CARLSON AND RANDOLPH, JJ.
DIAZ, PRESIDING JUSTICE, FOR THE COURT:
¶1. The dispute in these consolidated cases centers around an agreement between Onnam
Biloxi, LLC, RAS Family Partners, LP, and Ray A. Sims. This Court is asked to determine
whether jurisdiction is proper in either chancery or circuit court. Finding that jurisdiction
was proper in circuit court, we affirm the circuit court’s order denying the motion to transfer
and reverse the chancery court’s order denying same.
FACTS
¶2. RAS Family Partners, LP, agreed to lease ten acres of land on the Biloxi Bay to
Onnam Biloxi, LLC, for casino development. Ray A. Sims is the managing partner of RAS,
and he also contracted with Onnam to sell his shares of stock in another corporation that
owns land adjacent to the proposed casino development. Both the lease and stock sale
agreements were subject to certain contingencies, which included approval of the site by the
Mississippi Gaming Commission; obtaining a gaming license and other necessary permits;
approval of the building plan by the City of Biloxi; a hazardous substances inspection; and
the negotiation of a tidelands lease.
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¶3. The closing of the lease and stock sale was to take place on September 30, 2005. On
August 29, 2005, Hurricane Katrina devastated the Gulf Coast region, impeding the
conditions precedent to the agreements. In a letter dated November 1, 2005, RAS and Sims
notified Onnam that “[a]ll agreements between RAS Family Partners and Onnnam Biloxi
[had] expired by their own terms.”
¶4. On November 30, 2005, Onnam filed suit in federal court against RAS and Sims.
RAS then filed a separate suit against Onnam in the Circuit Court of Harrison County on
December 27, 2005, seeking a declaratory judgment that the contracts were no longer binding
as well as damages for breach of contract and malicious filing of a lis pendens notice. RAS
amended its circuit court complaint to include Sims as a plaintiff on February 27, 2006.
¶5. Onnam’s federal suit was dismissed on January 24, 2006, pursuant to a provision in
the lease agreement, which designated state court as the chosen forum. Onnam then filed suit
that same day against RAS and Sims in the Chancery Court of Harrison County, seeking
specific performance of the lease agreement and damages from Sims for breach of the stock
sale agreement.
¶6. Onnam filed a motion in the circuit court action to transfer to chancery court, while
RAS and Sims filed a motion in the chancery court action to transfer to circuit court. Both
motions were denied, and this Court granted both of the interlocutory appeals that followed.
¶7. The parties ask us to determine the appropriate jurisdiction, specifically whether the
circuit court has priority jurisdiction.
STANDARD OF REVIEW
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¶8. Jurisdiction is a question of law which this Court reviews de novo. Trustmark Nat’l
Bank v. Johnson, 865 So. 2d 1148, 1150 (Miss. 2004). We use this same standard of review
when examining a ruling on a motion to transfer from chancery court to circuit court, or vice-
versa. ERA Franchise Systems, Inc. v. Mathis, 931 So. 2d 1278, 1280 (Miss. 2006).
DISCUSSION
¶9. RAS and Sims argue that the circuit court has priority jurisdiction because they were
the first to file suit. Onnam, on the other hand, argues that the chancery court has proper
jurisdiction because (1) the suit involves a purely equitable matter which properly belongs
in chancery court, and (2) priority jurisdiction, even if applicable, does not preclude the
circuit court from considering a motion to transfer.
¶10. “The principle of priority jurisdiction presupposes that the first court in which suit is
filed is a court of competent jurisdiction.” Harrison County Dev. Comm'n v. Daniels Real
Estate, Inc., 880 So. 2d 272, 276 (Miss. 2004), overruled on other grounds by City of
Jackson v. Estate of Stewart, 908 So. 2d 703, 711 (Miss. 2005). Accordingly, we address
the issues in the following order: (1) whether the circuit court could have subject matter
jurisdiction over the case at all; and (2) if so, we then determine priority jurisdiction by
examining in which court the suit was first filed.
I. Whether the Circuit Court is a Court of Competent Jurisdiction.
¶11. Generally speaking, circuit courts are courts of law and chancery courts are courts of
equity. See Miss. Const. art. 6, § 159 (granting chancery courts jurisdiction over “all matters
in equity”); 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”).
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However, chancery courts are courts of limited jurisdiction, while circuit courts are courts
of general jurisdiction. IP Timberlands Operating Co. v. Denmiss Corp., 726 So. 2d 96, 112
(Miss. 1998) (citing Hall v. Corbin, 478 So. 2d 253 (Miss. 1985)). Therefore, “if one issue
is properly before the circuit court it has jurisdiction to decide all issues.” Id. at 111. 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. Durant v.
Humphreys County Mem’l Hosp./Extended Care Facility, 587 So. 2d 244, 250 (Miss.
1991); Hood v. Dept. of Wildlife Conservation, 571 So. 2d 263, 266 (Miss. 1990). If the
complaint seeks legal relief, even in combination with equitable relief, the circuit court can
have proper subject matter jurisdiction. IP Timberlands Operating Co., 726 So. 2d at 111.
¶12. RAS’s and Sims’s complaint seeks a declaratory judgment that the contracts are no
longer binding as well as damages for breach of contract and malicious filing of a lis pendens
notice. The request for declaratory judgment does not affect our analysis as declaratory
judgments are “jurisdictionally neutral.” Burnette v. Hartford Underwriters Ins. Co., 770
So. 2d 948, 952 (Miss. 2000). Breach of contract actions, on the other hand, are better suited
for circuit court. Southern Leisure Homes, Inc. v. Hardin, 742 So.2d 1088, 1089 (Miss.
1999).
¶13. The complaint also requests damages for the alleged breach of contract and malicious
filing. While chancery courts may certainly award legal and punitive damages as long as
chancery jurisdiction has attached, damages are traditionally considered a legal remedy. Id.
at 1090. Because the complaint seeks legal remedies, the circuit court is a court of competent
jurisdiction.
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¶14. Onnam counters that the paramount claim is the equitable remedy of specific
performance, and therefore, the case properly belongs in chancery court. As discussed
above, the complaint clearly seeks legal remedies. Additionally, Onnam stipulated to the
circuit court’s jurisdiction in its answer and cross-complaint, acknowledging that “[t]his
Court has jurisdiction of the parties and subject matter.” Finally, Onnam’s cross-complaint,
which is nearly identical to its complaint filed with the chancery court, seeks a legal remedy
in the form of damages for breach of contract. This argument is therefore without merit.
II. Whether the Circuit Court has Priority Jurisdiction.
¶15. Because the circuit court is a court of competent jurisdiction, we next determine
whether the circuit court has priority jurisdiction.
¶16. The “first to file” or “race to the courthouse” rule is well-established in Mississippi
case law: “[w]here two suits between the same parties over the same controversy are brought
in courts of concurrent jurisdiction, the court which first acquires jurisdiction retains
jurisdiction over the whole controversy to the exclusion or abatement of the second suit.”
Scruggs, Millette, Bozeman & Dent, P.A. v. Merkel & Cocke, P.A., 804 So. 2d 1000, 1006
(Miss. 2001) (quoting In re Petition of Beggiani, 519 So. 2d 1208, 1210 (Miss. 1988)). To
determine which court first acquired jurisdiction, we look at “the date the initial pleading is
filed, provided process issues in due course.” Scruggs, 804 So. 2d at 1006 (quoting
Huffman v. Griffin, 337 So. 2d 715 (Miss. 1976)).
¶17. The circuit court complaint was filed on December 27, 2005, and the chancery court
complaint was filed on January 24, 2006. Because the chancery complaint was filed nearly
a month after the first pleading in circuit court, the circuit court has priority jurisdiction.
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¶18. The chancellor found that priority jurisdiction did not apply because: (1) the
summonses were served on the same date; and (2) Sims was not a party to the circuit court
action until after the chancery action had been filed. These facts are of no matter. First,
priority jurisdiction attaches as long as process issues “in due course.” Id. The summons for
the circuit court action was served January 26, 2006, and thus, service of process was
accomplished within the 120-day time frame required under Mississippi Rule of Civil
Procedure 4(h). Second, Sims was added as a party through an amended complaint which
was filed before a responsive pleading was served. Under Mississippi Rule of Civil
Procedure 15(c) this amendment relates back to the date of the original complaint.
CONCLUSION
¶19. Because the case was filed first in the circuit court, and because the circuit court is a
court of competent jurisdiction, this case properly belongs in that court. The chancery
court’s order denying the motion to transfer is reversed, and Case Number 2006-IA-00976-
SCT is remanded to the chancery court with directions to transfer that case to the Harrison
County Circuit Court, Second Judicial District. The circuit court’s order denying the motion
to transfer is affirmed, and Case Number 2006-IA-01414-SCT is remanded to the circuit
court for further proceedings consistent with this opinion.
¶20. NO. 2006-IA-00976-SCT: REVERSED AND REMANDED. NO. 2006-IA-01414-
SCT: AFFIRMED AND REMANDED.
SMITH, C.J., WALLER, P.J., EASLEY, CARLSON, GRAVES, RANDOLPH
AND LAMAR, JJ., CONCUR. DICKINSON, J., NOT PARTICIPATING.
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