More Dispatches from the Farthest Outposts of Civilization

September 19, 2014 § Leave a comment

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When Can a Chancellor Award Punitive Damages?

September 18, 2014 § 2 Comments

Bar-Til entered into a contract as a subcontractor to do some work for Superior Asphalt on Pull-A-Part’s property. Problems arose with some environmental regulations that required some change orders. As the work expanded, so did the bills, and Superior quit paying the invoices.

Bar-Til sued Superior for breach of contract, breach of covenant of fair dealing, and breach of fiduciary duty. Bar-Til included Pull-A-Part on the basis that it had been unjustly enriched by Bar-Til’s uncompensated effort. When the trial was in its third day, Bar-Til moved to amend its complaint to allege bad faith, seeking punitive damages from Superior. The chancellor granted the motion, but clarified that only the issue of whether punitive damages would be an issue was before the court. He said that Bar-Til could “offer the proof of punitive damages when we decide if that’s going to be an issue.”

At the conclusion of trial, the chancellor found for Bar-Til on the breach of contract issue, and added that Bar-Til was even entitled to recover on a quantum meruit basis. The chancellor found that Bar-Til failed to prove that Superior acted in bad faith or breached a fiduciary duty, and so failed to prove entitlement to punitive damages. Since no punitive damages were due, attorney’s fees were denied. The judge also found that Bar-Til had failed to prove any of its claims against Pull-A-Part.

Bar-Til appealed on the chancellor’s denial of punitive damages, charging that the denial was in error, as was the chancellor’s refusal to hold a separate hearing on punitive damages.

In the COA case of Bar-Til, Inc. vs. Superior Asphalt, Inc. and Pull-A-Part, LLC, decided August 26, 2014, Judge Carlton spelled out the parameters for chancery judges considering whether to award punitive damages:

¶14. Our caselaw provides that “[t]he award of punitive damages, along with the amount of such, are within the discretion of the trier of fact.” Hurst v. Sw. Miss. Legal Servs. Corp., 708 So. 2d 1347, 1350 (¶6) (Miss. 1998) (citation omitted). In contract cases, “[p]unitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton[,] or reckless disregard for the safety of others, or committed actual fraud.” Miss. Code. Ann. § 11-1-65(1)(a) (Supp. 2013). In determining the propriety of punitive damages, a chancellor “decides whether, under the totality of the circumstances and viewing the defendant’s conduct in the aggregate, a reasonable, hypothetical trier of fact could find either malice or gross neglect/reckless disregard.” Ciba-Geigy Corp. v. Murphree, 653 So. 2d 857, 863 (Miss. 1994) (citations omitted).

*   *   *

¶19. We now turn to a review of the statutory law and caselaw applicable to punitive damages. In discussing whether an award of punitive damages is proper, Mississippi Code Annotated section 11-1-65(1)(b)-(c) (Supp. 2013) provides:

In any action in which the claimant seeks an award of punitive damages, the trier of fact shall first determine whether compensatory damages are to be awarded and in what amount, before addressing any issues related to punitive damages.

If, but only if, an award of compensatory damages has been made against a party, the court shall promptly commence an evidentiary hearing to determine whether punitive damages may be considered by the same trier of fact.

¶20. The Mississippi Supreme Court has also provided the following guidance:

Mississippi law does not favor punitive damages; they are considered an extraordinary remedy and are allowed with caution and within narrow limits. Punitive damages should be awarded in addition to actual or compensatory damages where the violation of a right or the actual damages sustained, import insult, fraud, or oppression and not merely injuries, but injuries inflicted in the spirit of wanton disregard for the rights of others. In other words, there must be some element of aggression or some coloring of insult, malice[,] or gross negligence, evincing ruthless disregard for the rights of others, so as to take the case out of the ordinary rule.

. . . This Court has held that punitive damages are recoverable in breach of contract cases where the breach results from an intentional wrong and when there has been a showing of malice or gross/reckless disregard for the rights of others. Punitive damages are only appropriate in the most egregious cases so as to discourage similar conduct and should only be awarded in cases where the actions are extreme.

Warren v. Derivaux, 996 So. 2d 729, 738 (¶¶27-28) (Miss. 2008) (internal citations and quotation marks omitted).

¶21. As our precedent reflects, some underlying basis, such as actual malice or fraud, must exist for an award of punitive damages before a chancellor will hold a second hearing on the issue of such damages. See Miss. Code. Ann. § 11-1-65(1) (Supp. 2013). In the present case, the chancellor found no merit to Bar-Til’s claim that Superior’s conduct justified an award of punitive damages. As reflected in his order and final judgment, the chancellor found that Bar-Til failed to provide the requisite evidentiary basis to support an award of punitive damages.

That’s a pretty nifty survey of the law of punitive damages, and it illustrates how exceptional and infrequent such awards are.

The COA swept aside Bar-Til’s claim about the failure to hold a separate hearing based on the chancellor’s conclusion that punitive damages were not warranted.

 

When Should a Temporary Administrator be Appointed?

September 17, 2014 § Leave a comment

MCA 91-7-53 allows the court in a will contest, on filing of a petition by an interested person, to appoint a temporary administrator if necessary to protect the rights of the parties.

In the case of Parker v. Benoist, decided August 28, 2014, the MSSC was confronted with the question whether the chancellor should have appointed a temporary administrator in a will contest. We talked about this case previously in connection with in terrorem clauses.

Bronwyn Parker filed a contest in connection with the will of her father, B.D. Benoist. She also filed a motion to remove her brother, William, from his position as executor, claiming that he had appropriated most of B.D.’s assets for himself through undue influence before B.D.’s death, and that he had unduly influenced his father in the making of the will being contested. She contended that a previous will, executed in 1998, was her father’s true, valid will. Because William was defending the will from which he benefited, and which Bronwyn argued should be set aside, William should be removed as fiduciary.

The chancellor overruled Bronwyn’s motion, finding that there were factual issues which were “strongly disputed between the parties,” and that “[t]here [wa]s no uncontested evidence for the Court to remove William D. Benoist as the Executor of the Last Will and Testament of Billy Dean ‘B.D.’ Benoist.”

Bronwyn appealed, charging that it was error for the trial judge to refuse to remove William.

The MSSC affirmed on the point. Justice Kitchens wrote for the court:

¶26. “[W]henever a last will and testament shall be contested, the chancery court or chancellor in vacation, on petition of any interested person, may appoint a temporary administrator if it shall appear necessary for the protection of the rights of the parties. . . .” Miss. Code Ann. § 91-7-53 (Rev. 2013). Chancellors have wide discretion in appointing a new executor in a will contest, and this Court “should not reverse his action unless there is clear evidence of abuse of that discretion.” Sandifer v. Sandifer, 237 Miss. 464, 469, 115 So.2d 46, 48 (1959). On appeal, Bronwyn essentially reiterates the facts that she believes necessitated a finding by the chancellor that a new executor should be appointed–substantial gifts from B.D. to William before B.D.’s death and William’s mismanagement and depletion of estate assets after B.D.’s death. She argues that, because the jury found that William was in a confidential relationship with B.D., there was a presumption of undue influence.

¶27. We find that the chancellor did not abuse his discretion in denying Bronwyn’s petition to remove William as executor. The chancellor considered all of the arguments Bronwyn has made on appeal and determined that the circumstances did not warrant the appointment of a new executor. We cannot say the chancellor was manifestly wrong or that he abused his discretion. We are slightly troubled, however, by the wording of the chancellor’s order denying Bronwyn’s petition. The chancellor stated that there was no “uncontested evidence” that would justify removing William as the executor. It is not required that there be uncontested evidence to justify the removal of an executor. All that is required is that the chancellor determine, in his or her discretion, that it is necessary to remove the current executor to protect the rights of the parties to the will contest. See Miss. Code Ann. § 91-7-53 (Rev. 2013). “Nowhere does the statute say that before he may appoint a temporary administrator he must find that the executor named in the will is disqualified or has been guilty of misconduct in office.” Sandifer, 115 So. 2d at 47-48. We clarify that chancellors enjoy wide discretion in granting or denying requests to remove an executor, and that a party is not required to present “uncontested evidence” to succeed in such a petition. Bronwyn’s claim of error on this issue, however, is without merit.

To put it in simpler terms: even though the chancellor followed the wrong road map, he arrived at the right destination, so no reversal.

What jumps out from this case is that it is not enough for the executor and the contestant to be pitted against one another in the litigation. Nor is it enough that the executor have a stake in the outcome. You have to convince the chancellor that that removal is necessary to protect the interests of the parties to the litigation. Even then, it is within the chancellor’s discretion, and to reverse his decision on appeal, you must convince the appellate court that he was manifestly wrong or abused his discretion.

MRCP 41(b) in Operation

September 16, 2014 § Leave a comment

The COA’s September 9, 2014, decision in In the Matter of Will of Bowling: Hicks v. Bowling, addresses a dismissal by the trial court of a will contestant’s complaint after she had rested in a bench trial.

The dismissal was per MRCP 41(b), which states, in pertinent part:

… After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and law the plaintiff has shown no right to relief. The court may then render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence …

The defendant, Mark Bowling, moved to dismiss at the conclusion of Paula Hicks’s case in chief, and the chancellor granted the motion. Paula appealed.

Judge Maxwell set out the applicable law:

¶18. In contrast to a motion for a directed verdict under Mississippi Rule of Civil Procedure 50(a), which applies to jury trials and requires the trial judge to view the evidence in the light most favorable to the plaintiff, a Rule 41(b) motion to dismiss differs somewhat. It applies to cases tried by a judge sitting without a jury and requires the judge to view the evidence fairly. Gulfport-Biloxi Reg’l Airport Auth. v. Montclair Travel Agency, Inc., 937 So. 2d 1000, 1004 (¶13) (Miss. Ct. App. 2006) (contrasting Rule 41(b) with Rule 50(a)). When considering a Rule 41(b) motion to dismiss, the judge must deny the motion to dismiss “only if the judge would be obliged to find for the plaintiff if the plaintiff’s evidence were all the evidence offered in the case.” Id. at 1004-05 (¶13) (quoting Stewart v. Merchs. Nat’l Bank, 700 So. 2d 255, 259 (Miss. 1997)).

The standard, then, is for the court to consider the plaintiff’s evidence fairly, and to overrule the motion only if the judge would be compelled to rule in the plaintiff’s favor if her case in chief were all the evidence in the record. The court is not obliged to view the evidence in a light most favorable to the plaintiff, as in jury trials, but only fairly.

The COA went on to find that the chancellor had considered Paula’s evidence fairly, and agreed with the chancellor’s analysis of why she had not met her burden of proof in the case.

The distinction between viewing the evidence in a light most favorable to the plaintiff and viewing it fairly can be major. In the former, the judge must tilt the perspective, so to speak, in the plaintiff’s favor. In the latter, the view is more even-handed. Knowing the distinction and being able to apply it to the facts in your case could mean the difference between winning and losing your case on a R41(b) motion. Keep in mind, though, that nothing can save your case if you have not met your burden of proof. That means using those checklists and proving every applicable factor.

 

The Bite of Draftsmanship

September 15, 2014 § Leave a comment

How you draft your legal instruments can have a huge impact on your clients’ future.

Take, for instance, the parties’ property settlement agreement (PSA) in the case of Aaron v. Aaron, a COA case handed down September 9, 2014. George and Annie Aaron were divorced in 2002 on the ground of irreconcilable differences. At the time, George was employed with the Amory Police Department, and was a participant in PERS. We don’t know from the court’s opinion the exact language of the parties’ agreement, but we know this much from ¶ 1:

As part of the divorce, George agreed to pay Annie one-half of his retirement funds acquired during the marriage. The judgment stated the funds would be transferred through a Qualified Domestic Relations Order (QDRO). At the time the judgment was entered, George was not receiving any retirement benefits. The judgment did not state which party was responsible for entering the QDRO.

We also can divine from the opinion that: the language of the PSA did not specify whether Annie was to receive 1/2 of the retirement accumulated during the marriage, or 1/2 of all George’s retirement, a significant portion of which would be earned after the divorce; it did not spell out what consideration would be given to future pay increases on George’s ultimate obligation to Annie; it also did not settle the question whether the payments were intended to be paid out in a lump sum as property settlement or whether they were intended to be paid monthly as benefits were paid out to George, in the nature of alimony.

The legal considerations that remained unaddressed in the parties’ agreement were, at least, the following:

  • PERS takes the position that federal ERISA and Mississippi law do not allow division of PERS benefits by QDRO. The agreement should have provided that it would be divided by payment, unless George left PERS employment and withdrew his account, at which time it would be divided by specified percentages between them.  No mention should have been made of a QDRO vis a vis the PERS benefits. Also, whose responsibility it was to trigger the payment of benefits should have been specified in the agreement.
  • Final calculation of the PERS benefit is based on the highest four years of earnings. Since George was not a retirement age at the time of the divorce (he did not retire until 2011), the parties should have negotiated and included in their agreement how Annie’s 1/2 benefit would be calculated, taking into account the probability of George’s future pay increases.
  • PERS benefits can not be paid out in a lump sum unless the employee leaves PERS employment. As mentioned above, this obvious point should have been addressed in the parties’ agreement. In essence, these parties had no choice but to have Annie’s share paid out over time. That is what the chancellor in Pruitt v. Pruitt tried to do, but was reversed by the COA. The problem, based on Pruitt, seems easy to address in a rational way, but is in reality deceptively difficult to resolve.

Every one of the foregoing deficiencies came back to bite these parties in the proverbial nether regions. Annie brought a contempt action against George because he did not initiate a QDRO, and for her unpaid benefits. George countered that he owed nothing, since PERS could not be divided by QDRO. The chancellor calculated what she concluded was Annie’s portion, and ordered that Annie receive that from George’s retirement payments as paid, and she awarded Annie a judgment with modest interest for the benefits that he had received and not shared with Annie. She died not find George in contempt.

George appealed, raising all of the points above. The COA affirmed.

It would have saved everyone involved a lot of legal fees, costs, aggravation, anxiety, and time if only some more attention and effort had been put into the drafting of the PSA in the first place. Yes, it would have required more time for negotiation and drafting, but it would have settled the issue as early as 2011 without the need for further litigation. It’s called draftsmanship.

 

For Lawyers Reading this Blog

September 12, 2014 § 9 Comments

A few chancellors have told me that lawyers have been citing my blog posts as authority in their arguments. One judge told me (laughingly, thank goodness) that she had stated her understanding of the law, and the lawyer responded, “No, judge, that’s not right; Judge Primeaux says …”

Well, as flattering as that is, let me set things straight.

I am not the authority here. I am merely pointing you to the authority. And what I am posting is my opinion of the authority. You should read the case or statute or rule for yourself, understand how it fits your particular case, and cast your net out for any other authority you can find to help your case. Your opinion may vary from mine.

I am not a legal scholar like Professor Bell, nor is my blog a hornbook. It’s a starting place. A place where you can go to be reminded of something you might have forgotten, or to have something called to your attention that you didn’t know about. From that basic point it’s up to you to turn that into something of benefit to your practice.

My ruminations here are no substitute for the exercise of your own legal skills. Take what I have written and let it lead you in a productive direction, keeping in mind that it will take you only so far until your own legal ability and talent must kick in to formulate the best approach and presentation for your client.

Don’t cite me or my blog as the authority. Cite the authority.

For Laypeople Reading this Blog

September 11, 2014 § 4 Comments

I get comments and even emails from non-lawyers asking legal advice and even questioning the actions of lawyers and judges in cases. Lately there have been plenty. There are several reasons why I don’t respond.

First, and most importantly, MCA 9-1-25 specifically prohibits judges from practicing law. Giving legal advice is the practice of law. Ergo, I can’t do it.

Second, even if I could give legal advice, I would not do it via this vehicle. No lawyer who is competent would give legal advice based on a person’s recitation of facts without asking questions to fill in the gaps, to rule out alternative scenarios, and to test the accuracy of the scenario.

Third, the law is a nuanced thing, with many subtleties. Often there are multiple approaches to take, each with its own risks and advantages. Those variations should be teased out in a thoughtful conversation between attorney and client where the exchange of information and feedback results in a concensus on how to proceed. You can’t do that on a blog.

This blog is designed for lawyers and judges in the hope that it will improve the practice of law in Mississippi’s chancery courts. Lawyers and judges who read this blog know that the information is a mere starting point for research in a given case. It points a direction and suggests an approach.

There is no legitimate substitute for competent legal advice when one is confronted with a legal problem. And, quite often, what appears to be a simple matter can be fraught with unapparent implications that only a lawyer can spell out.

Laypersons are always welcome to read this blog, for what it is worth, but it is not a substitute for the services of a lawyer.

 

Trying to Tie the Chancellor’s Hands

September 10, 2014 § 6 Comments

Lawyers frequently try to add language to PSA’s and agreed judgments to the effect that some event shall constitute a material change in circumstances warranting modification. In essence, it is an attempt to take that issue away from the judge — to tie her hands.

In the case of Frazier v. Frazier, 136 So.3d 1068 (Miss. App. 2013), the parties had agreed to language in a PSA that, if Paul Frazier lost his job, that would constitute a material change in circumstances justifying modification of his obligation. Judge Fair addressed the issue for the court:

¶ 14. The parties did concur in their pleadings and in the transcripts of hearings, which were made part of the record, that the property settlement provided that Paul’s loss of his job would be a “material change in circumstances” justifying, apparently in their minds, a possible modification in his contempt-enforceable obligations for monthly child support. Generally, for a modification of either ordered or contractual child support to be appropriate, there must have been an “unanticipated” change in circumstances of the paying parent that results in inability to honor his obligations toward his children, particularly those obligations he has voluntarily contracted to pay. See Evans v. Evans, 994 So.2d 765, 770 (¶¶ 16–17) (Miss.2008). However, contracts that anticipatorily mandate the effect of material changes in circumstances have been held unconscionable and void by the courts. See Houck v. Ousterhout, 861 So.2d 1000, 1001–02 (¶ 8) (Miss.2003).

In Frazier, the chancellor did not rely on the agreement, but rather made his own independent finding that Paul’s unemployment was a material change in circumstances. That saved the trial court’s ruling from reversal.

You can include language such as that in Frazier in your agreements if you like, but you have to understand, and should so advise your client, that the language is void; not voidable, but void. meaning that it is unenforceable. The proscription has been held to apply not only to child support, but also to alimony and child custody. You simply can’t pre-decide those issue — it’s for the judge to decide.

Child Support Deviation for Daycare

September 9, 2014 § Leave a comment

MCA 43-19-103 is an intriguing statute. For those of you who every now and then look at the Mississippi Code, you will find much there that will assist you in advising your clients in child support cases, whether original or modification.

Section 103 sets out the so-called “deviation criteria” upon which a chancellor may rely in finding that application of the statutory child support guidelines in MCA 43-19-101 would be unjust or inappropriate.

In particular, I want to call to your attention that the Mississippi Legislature in 2012 amended the statute to add subsection (i), which reads as follows:

Payment by the obligee of child care expenses in order that the obligee may seek or retain employment, or because of the disability of the obligee.

This subsection allows the judge to find that the child care expenses for employment or occasioned by disability skew the payee’s expenses to the extent that a deviation upward from the guidelines is justified.

I don’t know about you, but when I practiced I saw many cases where the chancellor awarded strictly guideline child support, which was barely enough to pay the custodial parent’s daycare expenses so that she could work in a low-paying job. There was nothing left over to pay other expenses of the child, which fell on the mother to bear.

The most recent case in which a chancellor’s deviation based on daycare expenses was upheld is Marin v. Stewart, a COA case decided September 24, 2013, about which I previously posted here. My earlier post focused on the point that the chancellor is not required to address each and every deviation factor if she concludes that deviation is appropriate, but only those that apply in the case.

Before you launch off into your next child support case — whether you represent the payor or payee —  study Section 103 and see whether there is anything there that will help your case. As I have said many times here before: when you save your clients money, they love you; and when you cost your clients money, they hate you.

You Can Use Escalation Clauses Once Again

September 8, 2014 § Leave a comment

The landmark case of Tedford v. Dempsey, 437 So.2d 410 (Miss. 1983), is notable primarily as the case that firmly established the age of 21 as the ultimate age of emancipation in Mississippi.

Tedford is also the case that encouraged lawyers and judges to incorporate child support escalation clauses into their PSA’s and judgments. This is the specific language from the opinion:

In the child support provisions of their separation agreements, the parties generally ought to be required to include escalation clauses tied to the parents’ earnings or to the annual inflation rate or to some factored combination of the two. Though under the structure of the irreconcilable differences statute freedom of contract is exalted, there are limits. The statute requires that the chancellor find that “the parties have made adequate and sufficient provision by written agreement for the custody and maintenance of any children….” Tedford, at 419 (citing Miss.Code Ann. § 93–5–2 (Supp.1982). (emphasis added)).
That seems to me to be pretty clear. An escalation clause can be tied either (1) to the parents’ earnings, or (2) to the annual inflation rate, or (3) to some factored combination of the two.
As happens from time to time in Mississippi jurisprudence, however, subsequent cases dealing with escalation clauses morphed the “or” language in Tedford into a mandate that all of the factors must be addressed, with the result that most lawyers and judges gave up entirely trying to incorporate escalation clauses because it was practically impossible to draft one that could successfully pass appellate scrutiny. The key case requiring all of the factors to be taken into account was Bruce v. Bruce, 687 So.2d 1199, 1202 (Miss.1996).
The case of Short v. Short, decided by the MSSC on February 6, 2014, overruled Bruce and the line of cases that required all of the factors to be considered, and returned the law of escalation clauses to its status under Tedford. Justice Pierce’s opinion stated:
¶ 15. For clarity, we overrule Bruce’s interpretation that escalation clauses must be tied to all four factors. Id. We focus on the original language in Tedford providing that escalation clauses should be “… tied to the parents’ earnings or to the annual inflation rate or to some factored combination of the two.” Tedford, 437 So.2d at 419 (emphasis added). We affirm Wing in that the creation of escalation clauses should begin with a consideration of the inflation rate, the noncustodial parent’s increase or decrease in income, the child’s expenses, and the custodial parent’s separate income. Wing, 549 So.2d at 947. However, we are not mandating that escalation clauses be specifically tied to all four factors. Foremost, escalation clauses must adequately and sufficiently provide for the custody and maintenance of the child pursuant to Mississippi Code Section 93–5–2. Tedford, 437 So.2d at 419.
The MSSC reversed the COA’s earlier ruling in the case.
An interesting point in Short was that Mr. Short was seeking, in essence, to use his escalation clause as a de-escalation clause due to a loss in income. You can read the opinion yourself for its reversal of the chancellor’s refusal to grant a downward modification based on the paarticular language in these parties’ agreement. Escalation clauses are, based on Short, modifiable, with the caveat that courts take a dim view of modifying agreements that have previously been approved by a chancellor.
Before you include an escalation provision in your client’s case, carefully weigh its possible impact on the future obligations of your clieent, if you are representing the paying party. If you will study the agreement in Short, you can see, with the benefit of 20-20 hindsight, that perhaps not enough attention was given to the possibility that he might suffer a catastrophic drop in available funds to meet his contractual obligation.
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