American Bankers Ins. Co. of Florida v. Alexander, No. 98-IA-00046-SCT

• Decision Date: 01 February 2001
• Docket Number: No. 98-IA-00046-SCT, No. 97-IA-01271.
• Citation: 818 So.2d 1073
• Parties: AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA and American Bankers Insurance Group, Inc. ("American Bankers") v. Belinda ALEXANDER, et al. American Bankers Insurance Company of Florida and American Bankers Insurance Group, Inc. ("American Bankers") v. Louella Allen, et al.
• Court: Mississippi Supreme Court

818 So.2d 1073

AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA and American Bankers Insurance Group, Inc. ("American Bankers") v. Belinda ALEXANDER, et al.

American Bankers Insurance Company of Florida and American Bankers Insurance Group, Inc. ("American Bankers") v. Louella Allen, et al.

Nos. 98-IA-00046-SCT, 97-IA-01271.

Supreme Court of Mississippi.

February 1, 2001.

Dorrance Aultman, Hattiesburg, William C. Brabec, Robert M. Frey, W. Scott Welch, III, James W. Craig, Jackson, Markham R. Leventhal, Franklin G. Bart, Attorneys for appellant.

Forrest Marvin Morris, III, Anthony Sakalarios, John M. Deakle, Hattiesburg, John Michael Sims, Heidelberg, William R. Couch, Tatum Turner, Attorneys for appellees.

EN BANC.

McRAE, P.J., for the Court:

¶ 1. This interlocutory appeal is the consolidation of five cases from four separate counties, Jones, Jasper, Claiborne, and Jefferson, joined under Rule 20 of the M.R.C.P. and involving approximately 1,371 plaintiffs as follows:

Clark v. Fidelity Financial Services, Inc., Case No. 97-3-33 (Jones County) 387 Plaintiffs Allen v. Fidelty Financial Services, Inc., Case No. 97-3-36 (Jones County) 349 Plaintiffs Adams v. Fidelity Financial Services, Inc., Case No. 97-0045 (Jasper County) 365 Plaintiffs B. Alexander v. Fidelity Financial Services, Inc., Case No. 97-0190 (Claiborne County) 81 Plaintiffs C. Alexander v. Fidelity Financial Services, Inc., Case No. 97-0061 (Jefferson County) 189 Plaintiffs¹

Each case involves identical issues and has multiple plaintiffs. On June 10, 1998, the trial court in Belinda Alexander, et al. v. Fidelity Financial Services, Inc., et al., No. 97-0190 (Claiborne County) and Charles Alexander, et al. v. Fidelity Financial Services, Inc., et al., No. 97-0061 (Jefferson County) entered an order denying American Bankers' motion to dismiss filed in both of these cases which was denied on October 17, 1997.

¶ 2. From this order, American Bankers filed a motion for writ of mandamus which was subsequently granted by this Court and by order dated October 19,1998, this Court consolidated this interlocutory appeal with another interlocutory appeal filed in Louella Allen, et al. v. Fidelity Financial Services, Inc., et al., No. 97-3-36 (Jones County) which involves the exact same issues. Three separate trial judges have ruled similarly in these cases.

¶ 3. After consideration, we find that joinder of the plaintiffs' claims are proper pursuant to Rule 20 of the Mississippi Rules of Civil Procedure.² The alleged claims arise out of the same series of transactions or occurrences and satisfy the commonality requirement of Rule 20 with respect to common issues of fact and law. We also find that the plaintiffs' causes of action are not preempted by the filed rate doctrine. This case is not a rate case, but as set out in the amended complaints they are combination of contract, tort and statutory actions brought under the laws of Mississippi. All of these causes of action are founded in common law and are not preempted by state statutes. Lastly, the original and amended complaints filed by the plaintiffs adequately set forth causes of action sounding in fraud. For the reasons set forth below, this Court affirms the trial court's ruling on American Bankers' motion to sever and allow joinder.

I.

¶ 4. The plaintiffs allege breach of the duty of good faith and fair dealing implied in every contract in Mississippi and breach of fiduciary duties owed by American Bankers and Fidelity. They claim that American Bankers and Fidelity entered into a scheme to defraud its customers by placing insurance premiums on Fidelity's borrowers at premium rates which were substantially higher than Fidelity could have obtained from a neutral source. They contend that while American Bankers filed certain rates with the Mississippi Insurance Commission, it consciously ignored the rates and its own corporate guidelines in order to charge the maximum rate for premiums regardless of whether the guidelines written by American Bankers had been met. Generally, the plaintiffs allege that they were force placed into a collateral protection insurance policy underwritten by American Bankers.³ While the plaintiffs do not complain of the fact that they were force placed, they do contend that they were the victims of a hidden scheme that was applied to each plaintiff, regardless of their individual circumstances.

¶ 5. Using Rule 20, American Bankers filed motions for summary judgment and motions to dismiss in the cases below alleging that the plaintiffs in those cases were improperly joined pursuant to Rule 20 of the Mississippi Rules of Civil Procedure and were barred from bringing causes of action by the filed rate doctrine.

II.

¶ 6. The official comment to Rule 20 describes its purpose as:

The general philosophy of the joinder provisions of these Rules is to allow virtually unlimited joinder at the pleading stage but to give the Court discretion to shape the trial to the necessities of the particular case.

M.R.C.P. 20 cmt.

¶ 7. In First Investors Corp. v. Rayner, 738 So.2d 228 (Miss.1999), this Court stated that Rules 20 and 42 give trial courts "broad discretion" in determining when and how claims are tried. Id. at 238. Therefore, for purposes of this appeal, this Court reviews the trial court judge's actions under an abuse of discretion standard. Federal appellate courts identify the appropriate standard of review as whether the trial judge abused his discretion when allowing or denying joinder. Bobby Kitchens, Inc. v. Mississippi Ins. Guar. Ass'n, 560 So.2d 129, 135 (Miss. 1989). See Fenton v. Freedman, 748 F.2d 1358, 1361 (9th Cir.1984); Saval v. BL Ltd., 710 F.2d 1027, 1031 (4th Cir.1983).

III.

1. WHETHER THE JOINDER OF THE APPELLEES PURSUANT TO RULE 20 OF THE MISSISSIPPI RULES OF CIVIL PROCEDURE IS IMPROPER AND VIOLATES AMERICAN BANKERS' CONSTITUTIONAL RIGHT TO A FAIR TRIAL.

A. WHETHER PLAINTIFFS' CLAIMS ARISE OUT OF THE SAME TRANSACTION OR SERIES OF TRANSACTIONS.

¶ 8. American Bankers argues that joinder under Rule 20 is improper. Rule 20 provides in pertinent part that:

All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences, and if any question of law or fact common to all these persons will arise in the action....

¶ 9. American Bankers claim that the same transaction requirement of Rule 20 "demands more than the bare allegation that all plaintiffs are victims of a fraudulent scheme perpetrated by one or more defendants; there must be some indication that each plaintiff has been induced to act by the same misrepresentation." Insolia v. Philip Morris, Inc. 186 F.R.D. 547, 549 (W.D.Wis.1999).

¶ 10. The Insolia case involved the claims of three former smokers and their spouses against several cigarette manufacturers and trade organizations. The court refused to allow a joinder, pointing out that each plaintiffs claim arose out of a unique set of facts and circumstances and "the only thread holding these disparate factual scenarios together is the allegations of an industry-wide conspiracy...." Id. at 550.

¶ 11. American Bankers also points to the case of Grayson v. K-Mart Corp., 849 F.Supp. 785 (N.D.Ga.1994) in which 11 plaintiffs who worked as managers at various K-Mart stores sued for age discrimination and emotional distress. In that case the court held that the plaintiffs were misjoined. Also, in Alvarez v. Armour Pharm., 1997 WL 566373, 1997 U.S. Dist. Lexis 13668 (N.D.Ill. Sept. 8, 1997), 47 plaintiffs joined in the original complaint and then later 200 additional plaintiffs and two related cases attempted to join. The court held that joinder of the plaintiffs violated Rule 20 and that each plaintiff should file a separate case. Id.

¶ 12. The plaintiffs argue that joinder was proper because the coverages which were force placed on each individual plaintiff were exactly the same and that the total premiums charged to each plaintiff varied according to the outstanding loan balance. There was only one master policy covering all plaintiffs. The insurance certificate issued to each plaintiff was identical and provided coverage under the one master policy providing the same single interest coverage on each of the plaintiffs' loans. The decision as to what coverage would be force placed on Fidelity's customers was not one made on a case-by-case basis. Rather, the plaintiffs argue that as early as 1986 the decision was made by American Bankers and Fidelity to force place this coverage upon Fidelity's customers.⁴ They claim that there is nothing unique or individual about American Bankers' treatment of any of the plaintiffs other than the actual amount of the premiums charged. Any differences that arise are due to the simple fact that some of the plaintiffs' loans were more than others and the premiums were based upon the outstanding loan balance at the time of force placement. Plaintiffs contend that these are not separate disparate acts which require a separate lawsuit for each plaintiff and are beyond mere allegations as to industry-wide corruption.

¶ 13. Plaintiffs rebut American Bankers' claims that numerous federal court cases have determined that such industry-wide allegations of conspiracy to defraud consumers did not meet the Rule 20 requirement by citing cases similar to the one at hand in which joinder was proper when the complaint arose out of the same transaction or occurrence. Jolley v. Welch, 904 F.2d 988, 990 (5th Cir.1990) (suit by investors against a broker and his employer relating to different investment services provided to the plaintiffs over a period of years); Nor-Tex Agencies, Inc. v. Jones, 482 F.2d 1093 (5th Cir.1973) (The Fifth Circuit applied the "logical relationship" test, holding that if there is a logical relationship between the operative facts— such as a...