Brown v. Collections, Inc.

Decision Date25 February 2016
Docket NumberNo. 2015–CA–00029–SCT.,2015–CA–00029–SCT.
Citation188 So.3d 1171
Parties John A. BROWN v. COLLECTIONS, INC. as Authorized Agent and Representative of Memorial Hospital at Gulfport.
CourtMississippi Supreme Court

L. Christopher Breard, attorney for appellant.

William V. Westbrook, III, David C. Frazier, Pascagoula, attorneys for appellee.

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 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 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.

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 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 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, 95 So. 313, 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 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, &...

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