John A. Brown v. Collections, Inc. , 188 So. 3d 1171 ( 2016 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2015-CA-00029-SCT
JOHN A. BROWN
v.
COLLECTIONS, INC. AS AUTHORIZED AGENT
AND REPRESENTATIVE OF MEMORIAL
HOSPITAL AT GULFPORT
DATE OF JUDGMENT: 12/30/2014
TRIAL JUDGE: HON. MICHAEL H. WARD
COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: L. CHRISTOPHER BREARD
ATTORNEYS FOR APPELLEE: WILLIAM V. WESTBROOK, III
DAVID C. FRAZIER
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: APPEAL DISMISSED - 02/25/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE RANDOLPH, P.J., KING AND MAXWELL, JJ.
MAXWELL, JUSTICE, FOR THE COURT:
¶1. A collection company, acting on behalf of a hospital, sued John Brown in Harrison
County Court. The lawsuit stemmed from Brown’s nonpayment for medical services.
Though Brown initially answered, claiming entitlement to a set-off, he later tried to amend
his answer to add a recoupment defense aimed at whittling down his amount owed. The
county court judge denied the amendment, but she certified the judgment as final and
appealable under Mississippi Rule of Civil Procedure 54(b). This was done, as the judge put
it, “so the Mississippi Supreme Court may . . . address this issue, if Mr. Brown so chooses.”
But instead of seeking the intended review by the supreme court, Brown opted for a different
route. He chose to file his appeal in circuit court, which affirmed the county court judgment
and also entered a Rule 54(b) certification.
¶2. After review, we find several jurisdictional snags with Brown’s case. First, the county
court’s judgment did not decide a “claim” between two parties. Thus, the Rule 54(b)
certification is invalid. Second, recoupment is a defense under Mississippi law. And rulings
on defenses are not appropriate for final-judgment entries under Rule 54(b). But perhaps
most important is the third jurisdictional hill—that appeals from interlocutory judgments of
a county court must be filed with the supreme court, not the circuit court.
¶3. Because we lack a final, appealable judgment and face an improper interlocutory
appeal, we must dismiss for lack of jurisdiction.1
Facts and Procedural History
I. Background
¶4. Memorial Hospital at Gulfport treated Brown for stroke-like symptoms on August 21
and 22, 2008. Brown incurred charges of $45,074.05 in medical expenses, which he agreed
to pay. But instead of paying his medical bills, when he received his insurance check from
Blue Cross/Blue Shield, he cashed it and kept the money. Brown’s failure to pay Memorial
prompted the hospital to assign Brown’s account to Collections, Inc., a third-party collection
1
Because we lack jurisdiction, we do not reach the merits of the other issues Brown
raises.
2
agency.
II. Initial Pleadings
¶5. On November 5, 2010, Collections sued Brown for his nonpayment. On March 22,
2011, Brown filed an answer asserting a set-off defense. About six months later, Brown filed
an affidavit, alleging for the first time negligent and intentional misconduct by Memorial.
III. Brown’s Motion to Amend Answer to Add Recoupment Defense
¶6. On December 13, 2011, Brown filed a motion for leave to file an amended answer.
His proposed amendment was to add a recoupment defense based on: (1) alleged medical
malpractice of Memorial’s treating doctors; and (2) a tort claim against a Memorial billing
employee, who supposedly threatened to report Brown to the IRS for converting the Blue
Cross check to his personal use.
IV. County Court’s Judgment
¶7. On January 7, 2013, the county court entered what it called a “partial final judgment.”
The only issue addressed was Brown’s request to amend his answer to add recoupment-based
defenses. The judge found these defenses were “time-barred under notice of claim
provisions and substantive statutes of limitations of the MTCA and MMRTA.” After
denying the amendment, the county court certified its ruling as final under Rule 54(b).
¶8. The certification was attempted because the issue of the interlocutory nature of any
potential appeal was apparent and openly discussed by Brown, Collections, and the county
court judge. The hope was to have the supreme court review the decision, or as Brown’s
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lawyer pitched it, he “just want[ed] to get [his] case heard by the appellate court.” The
county court judge believed adding a Rule 54(b) certification would help secure appellate
review and remove the uncertainty of the supreme court’s acceptance of the typical
discretionary interlocutory appeal. Thus, in dismissing what she believed was a time-barred
defense or claim, the county court judge “certified” her ruling “for appeal purposes” under
Rule 54(b). She specifically described her reason for doing this was “so that the Mississippi
Supreme Court may . . . address this issue, if [Brown] so chooses.” (Emphasis added).2
V. Circuit Court’s Judgment
¶9. But rather than appealing the supposed “partial final judgement” to this court—as was
the next intended procedural step contemplated in Brown, Collections, and the county court
judge’s discussion—Brown instead appealed to the circuit court. And the circuit court’s de
novo review led to the circuit judge also finding Brown’s recoupment defense was both time-
barred and procedurally barred, prompting the circuit judge to affirm the county court’s
denial of Brown’s motion to amend his answer. Just as the county court did, the circuit judge
also expressly found no just reason for delay and directed entry of a final judgment under
Rule 54(b). On December 31, 2014, Brown appealed from the circuit court to this court.
2
At the county court hearing, counsel for Collections suggested “[w]e want to try to
get the [s]upreme [c]ourt to answer this question[.]” And the county court judge likewise
insisted “[t]hat’s what we want.” (Emphasis added.) The notice of appeal from county court
was addressed to the supreme court. So it was clearly intended this court would look at the
denial of the recoupment defense.
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Discussion
I. Rule 54(b)
¶10. Collections argues both the county court’s and circuit court’s Rule 54(b) certifications
were invalid and we lack jurisdiction. We agree and find not only do we lack jurisdiction,
but so did the circuit court.
A. The Final-Judgment Rule and its Exception Under Rule 54(b)
¶11. “Generally, only final judgments are appealable.” M.W.F. v. D.D.F., 926 So. 2d 897,
899 (¶4) (Miss. 2006). A final, appealable judgment “adjudicates the merits of the
controversy and settles all issues as to all the parties[] and requires no further action by the
trial court.” In re Estate of Lewis, 135 So. 3d 202, 205 (¶14) (Miss. Ct. App. 2014) (quoting
Maurer v. Boyd, 111 So. 3d 690, 693 (¶11) (Miss. Ct. App. 2013)); see also M.R.C.P. 54
cmt. (“A judgment is the final determination of an action and thus has the effect of
terminating the litigation.”). When all issues in a case or claims against all parties are not
resolved in a judgment, no appeal of right can be taken. Id. (citing Thompson v. True
Temper Sports, Inc., 74 So. 3d 936, 938 (¶6) (Miss. Ct. App. 2011)).
¶12. But an exception to the final-judgment rule is found in Rule 54(b). Ne. Mental
Health Mental Retardation Comm’n v. Cleveland, 126 So. 3d 1020, 1023 (¶13) (Miss. Ct.
App. 2013) (citing Harris v. Waters, 40 So. 3d 657, 658 (¶3) (Miss. Ct. App. 2010)). Under
this rule, if “more than one claim for relief is presented in an action, whether as a claim,
counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the
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court may direct the entry of a final judgment as to one or more but fewer than all of the
claims or parties[.]” M.R.C.P. 54(b). This can only be done if the trial judge expressly
determines—(1) there is “no just reason for delay” and (2) “directs the entry of the
judgment.” M.R.C.P. 54(b). The reason behind Rule 54(b) is to “avoid the possible injustice
of a delay in entering judgment on a distinctly separate claim or as to fewer than all of the
parties until the final adjudication of the entire case by making an immediate appeal
available.” Cleveland, 126 So. 3d at 1023 (¶13) (emphasis in original).
¶13. But when contemplating certifying final judgments, trial judges must carefully
consider whether the particular issue decided is eligible for certification. For an order or
judgment to qualify for Rule 54(b) finality, the case must include: (1) either multiple claims,
multiple parties, or both; and (2) either one or more but fewer than all claims must have been
decided or all rights and liabilities of at least one party must have been adjudicated.
Cleveland, 126 So. 3d at 1024 (¶14). This is why Rule 54(b) can only be invoked “in a
relatively select group of cases and applied to an even more limited category of decisions.”
Id. Excluded from certification are decisions that leave “a portion of the claim pending as
to all defendants.” Id.B. Invalidity of Rule 54(b) Certification
i. County Court’s Judgment Did Not Decide a Claim
¶14. To determine the validity of the Rule 54(b) certification, we focus on what was
actually decided. And our review shows the county court’s “partial final judgment” did not
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decide a claim between two parties. Instead, it merely decided an issue concerning a
defense—the finding that Brown could not add a recoupment defense to his answer. Indeed,
Collections’s claim for Brown’s unpaid medical bills is still pending in the county court.
Because the county court’s decision did not adjudicate an actual claim, its order is not within
that “limited category of decisions” in which Rule 54(b) may be applied. Id. Thus, the Rule
54(b) certification was invalid.
ii. Recoupment Is a Defense
¶15. A second reason the attempted Rule 54(b) certification is invalid is because
recoupment is a defense. Even Brown insists this is not a case about set-off or a
counterclaim. Rather, he repeatedly highlights the central issue is recoupment—emphasizing
it is a defense in both his briefs and argument.3 Brown is correct in that regard.
“[R]ecoupment is in the nature of a defense arising out of some feature of the transaction
upon which the plaintiff’s action is grounded.” Bull v. U.S., 295 U.S. 247, 262, 55 S. Ct.
695, 79 L. Ed. 1421 (1935) (emphasis added). In the absence of a statute, “recoupment is
purely a defensive claim, and cannot be used offensively in the law courts[.]” Sterling
Prods. Co. v. Watkins-Gray Lumber Co., 131 Miss. 145, 315 (1923).
iii. Rule 54(b) is Not Proper for Adjudication of Defenses
¶16. The problem with the county court judge’s handling of the denial of the defense is that
3
Brown maintains: “Clearly this was a case of recoupment used for defensive
purposes only[.]” (Emphasis added.)
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rulings addressing defenses are not appropriate for certifying entries of final judgments under
Rule 54(b).4 See 10 Charles A. Wright, Arthur R. Miller, & Edward H. Cooper, Federal
Practice & Procedure § 2655 n.9 (2d ed. 2008). Federal precedent has guided this court in
assessing Rule 54(b) certified judgments. See Cox v. Howard, Weil, Labouisse, Friedrichs,
Inc., 512 So. 2d 897, 900-01 (Miss. 1987). And federal courts do not allow Rule 54(b)
certifications when the only issue addressed by the judge in a multi-claim or multi-party case
is a defense. Indeed, the Fourth Circuit has called this legal principle against certifying
partial judgements of rulings on defenses “as well settled as anything can be.” Flynn &
Emrich Co. v. Greenwood, 242 F. 2d 737, 741 (4th Cir. 1957). While a Rule 54(b) appeal
can be taken from a judgment on one of a number of claims upon proper judicial
certification, “the judgment must finally dispose of a claim and not merely adjudicate a
defense to a claim. . . . [R]ule 54(b) does not authorize appeal from a judgment with respect
4
Federal Rule of Civil Procedure 54(b) is almost identical to Mississippi’s Rule 54(b).
The federal rules states:
When an action presents more than one claim for relief – whether as a claim,
counterclaim, crossclaim, or third-party claim – or when multiple parties are
involved, the court may direct entry of a final judgment as to one or more, but
fewer than all, claims or parties only if the court expressly determines that
there is no just reason for delay. Otherwise, any order or other decision,
however designated, that adjudicates fewer than all the claims or the rights and
liabilities of fewer than all the parties does not end the action as to any of the
claims or parties and may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and liabilities.
F.R.C.P. 54(b).
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to a mere affirmative defense.” Id. (emphasis added).
¶17. Likewise, in the Second Circuit, where there is merely a defense adjudication to a
claim and not multiple claims in the case, a Rule 54(b) appeal is improper, justifying
dismissal. U.S. Plywood Corp. v. Hudson Lumber Co., 210 F. 2d 462, 463 (2d Cir. 1954).
The Fifth Circuit has similarly held that Rule 54(b) certification is only appropriate when a
claim—defined as a “cause of action”—has been adjudicated. Exxon Corp. v. Oxxford
Clothes, Inc., 109 F. 3d 1069, 1070 (5th Cir. 1997). But it is improper for use when merely
dismissing defenses. Id.5 The Eighth Circuit has quipped that the appealability of an order
striking a defense from an answer has “consistently been rejected on the ground that it
‘would seem as nearly interlocutory as any pleading ruling can ever be.’” Hennepin Cty. v.
Aetna Cas. and Sur. Co., 587 F. 2d 945, 946 (8th Cir. 1978).
¶18. This bulk of authority makes clear there was no final, appealable judgment. Because
the county court’s order dealt solely with the recoupment defense, its Rule 54(b) certification
was invalid. And since the county court’s order was the subject of the circuit-court appeal,
the circuit court also lacked jurisdiction to enter its judgment—a judgment that is
interlocutory in its own right.
¶19. For these reasons, we too lack jurisdiction and must dismiss Brown’s appeal.
II. County Court’s Order Was Interlocutory
5
See also Smith v. Benedict, 279 F. 2d 211, 213 (7th Cir. 1960) (defining a claim as
a “cause of action” for purposes of Rule 54(b) and holding a judgment on a defense only is
not within Rule 54(b)).
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¶20. There is yet another reason we lack jurisdiction, Brown’s interlocutory appeal was
noticed to and handled by the wrong court.
¶21. Because interlocutory appeals from county court can only be made to this court—not
to the circuit court—the only procedure available to Brown was an interlocutory appeal to
the supreme court. We do recognize Mississippi statutory law instructs “[n]o appeals . . .
shall be taken from any interlocutory order of the county court.” See Miss. Code Ann. § 11-
51-79 (Rev. 2012). But our existing court-enacted rules say otherwise.
¶22. Unlike Section 11-51-79, the Uniform Rules of Circuit and County Court Practice
provide a mechanism for interlocutory appeals to this court. See URCCC 4.06 (“[a]n appeal
from an interlocutory order in county court may be sought in the Supreme Court as provided
in Rule 5 of the Mississippi Rules of Appellate Procedure.”6 (Emphasis added.) So there is
6
Under Mississippi Rule of Appellate Procedure 5:
(a) An appeal from an interlocutory order may be sought if a substantial basis
exists for a difference of opinion on a question of law as to which appellate
resolution may:
(1) Materially advance the termination of the litigation and avoid exceptional
expense to the parties; or
(2) Protect a party from substantial and irreparable injury; or
(3) Resolve an issue of general importance in the administration of justice.
Appeal from such an order may be sought by filing a petition for permission
to appeal with the clerk of the Supreme Court within 21 days after the entry of
such order in the trial court with proof of service on the trial judge and all
other parties to the action in the trial court.
M.R.A.P. 5
10
obviously a conflict between the statute and the rule-based interlocutory appeal procedure.
When such a conflict exists, our court’s rules trump statutory law. Stevens v. Lake, 615 So.
2d 1177, 1183 (Miss. 1993) (“statutes that conflict with rules adopted by the Court are
void”).
¶23. The procedures of M.R.A.P. 5 are specifically cited in URCCC 4.06. These
procedures govern interlocutory appeals from county court. Under M.R.A.P. 5(a), a party
desiring an interlocutory appeal may seek trial-court certification that one of the prescribed
reasons for permitting the appeal exists. M.R.A.P. 5(a)(1)-(3). Once certification is given,
a petition for permission to appeal then must be filed with the Supreme Court clerk within
twenty-one days after entry of the interlocutory order. M.R.A.P. 5(a).
¶24. From our review, we find, even if the county court’s attempted Rule 54(b)
certification sufficed to express the judge’s reason for allowing the appeal, Brown’s failure
to notice his appeal to this court within twenty-one days is not subject to waiver. M.R.A.P.
2(a)(1),7 2(c).8
¶25. The county court’s interlocutory order was entered on January 3, 2013. So Brown had
twenty-one days from that date to petition for permission for an interlocutory appeal. But he
7
See M.R.A.P. 2 (“An appeal shall be dismissed if the notice of appeal was not timely
filed.”).
8
See M.R.A.P. 2 (“[I]n civil cases the time for taking an appeal as provided in Rules
4 or 5 may not be extended.”).
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failed to do so,9 which is another reason we lack jurisdiction. See Thompson, 74 So. 3d at
939 (¶11).10
¶26. Still, Brown insists his filing a notice of appeal in circuit court—though admittedly
improper—should be overlooked by this court. As support, he cites Bowling v. Madison
County Board of Supervisors, 724 So. 2d 431, 441-42 (Miss. Ct. App. 1998) (quoting Miss.
Code Ann. § 11-3-5). But Bowling had nothing to do with an interlocutory appeal. Rather,
the court of appeals held an appeal to the supreme court from a board decision “shall not be
dismissed for want of jurisdiction” based on a “defect in the application for appeal.” Id. at
441 (¶47) (quoting Miss. Code Ann. § 11-3-5). He also cites Adams v. Mississippi State Oil
and Gas Board, 854 So. 2d 7, 9 (¶10) (Miss. Ct. App. 2003). In Adams, the court of appeals
held filing a notice of appeal with the wrong entity—the chancery court, not the oil and gas
board—was sufficient to preserve the substantive issues for judicial review. Id. at 10 (¶12).
¶27. However, neither Bowling nor Adams dealt with improper Rule 54(b) certifications.
Nor did either case address interlocutory appeals, which are discretionary, require compliance
with M.R.A.P. 5, and are not automatically granted. To the contrary, we have previously
held interlocutory appeals from county court to circuit court are impermissible. Sliman v.
9
Collections did seek an interlocutory appeal, which a three-member motions panel
of this court denied.
10
“An interlocutory order is only appealable if the Mississippi Supreme Court grants
permission under Rule 5 of the Mississippi Rules of Appellate Procedure.” See Thompson,
74 So. 3d at 939 (¶11). In Thompson, because the appealing party “neither sought nor was
afforded permission under Rule 5 to proceed with an interlocutory appeal, [the appeal was
dismissed] for lack of jurisdiction.” Id.12
Nguyen, 22 So. 3d 1173 (¶1) (Miss. 2009). When such an appeal is wrongly granted, both
the circuit court and, later if appealed, this court, lack jurisdiction. Id. In Sliman, we
vacated the circuit court’s judgment and remanded the case to county court for a new trial.
Id.
¶28. We find the same result applies here. What Brown should have done is seek
permission from this court to file an interlocutory appeal. Because he did not, we face an
appeal from an order the circuit court lacked jurisdiction to enter. For this reason, we too
lack jurisdiction.
¶29. As we did in Sliman, we vacate the circuit court’s judgment for lack of jurisdiction.
We also dismiss this appeal for lack of jurisdiction and remand the case to the Harrison
County Court.
¶30. THE JUDGMENT OF THE HARRISON COUNTY CIRCUIT COURT IS
VACATED AND THIS APPEAL IS DISMISSED FOR LACK OF JURISDICTION.
WALLER, C.J., DICKINSON AND RANDOLPH, P.JJ., KITCHENS, KING,
COLEMAN AND BEAM, JJ., CONCUR. LAMAR, J., CONCURS IN PART AND IN
RESULT WITHOUT SEPARATE WRITTEN OPINION.
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