Choctaw, Inc. v. Campbell-Cherry-Harrison

• Decision Date: 04 October 2007
• Docket Number: No. 2006-CA-01621-SCT.,2006-CA-01621-SCT.
• Parties: CHOCTAW, INC., et al. v. CAMPBELL-CHERRY-HARRISON-DAVIS AND DOVE.
• Court: Mississippi Supreme Court

965 So.2d 1041

CHOCTAW, INC., et al. v. CAMPBELL-CHERRY-HARRISON-DAVIS AND DOVE.

No. 2006-CA-01621-SCT.

Supreme Court of Mississippi.

October 4, 2007.

Fred Krutz, Edwin S. Gault, Jr., Daniel J. Mulholland, Brian Barry Hannula, Jackson, Ronald G. Peresich, W. Mark Edwards, Randi Peresich Mueller, Johanna Malbrough McMullan, Biloxi, attorneys for appellants.

Dewitt T. Hicks, Jr., William Thomas Cooper, Columbus, Steve McConnico, attorneys for appellees.

Before WALLER, P.J., EASLEY and CARLSON, JJ.

EASLEY, Justice, for the Court.

PROCEDURAL HISTORY AND FACTS

¶ 1. On December 30, 2002, Campbell-Cherry-Harrison-Davis-Dove, P.C., (CCHDD), a Texas law firm, filed its original complaints in Baldwin, et al. v. Graco Enterprises, Inc., et al., Cause No.2002-429, on behalf of 247 plaintiffs, and Prince, et al. v. Pearl River Sand & Gravel Co., Inc., et al., Cause No.2002-430, on behalf of 4,200 plaintiffs, collectively the "CCHDD Plaintiffs," in the Circuit Court of Noxubee County, Mississippi, against 131 unrelated defendants for alleged personal injuries suffered by the CCHDD Plaintiffs' exposure to silica. The lawsuits were filed in the circuit court by the CCHDD Plaintiffs' Mississippi counsel, William H. Liston, Esq., Liston & Lancaster.¹ Amended complaints were filed in the circuit court on March 24, 2003, by Attorney Liston.

¶ 2. The CCHDD Plaintiffs' cases were subsequently, successfully removed by the Defendants to the United States District Court for the Southern District of Mississippi. Thereafter, the cases were removed by the United States District Court for the Southern District of Mississippi to the United District Court for the Southern District of Texas, which was handling a multi-district litigation (MDL) docket for silicosis claims, the Honorable Janis Graham Jack, District Court Judge, presiding. The Plaintiffs who were removed to the MDL federal court, including the CCHDD Plaintiffs, objected to the removal based on an alleged lack of subject matter jurisdiction. Judge Jack reserved ruling on the lack of subject matter jurisdiction claim, allowing some initial discovery as to the Plaintiffs' claims and jurisdiction.

¶ 3. After conducting a lengthy evidentiary hearing, Judge Jack concluded that she lacked jurisdiction over most of the lawsuits, including all of the CCHDD Plaintiffs, that had been filed in state court and removed to the MDL federal court. See In re Silica Products Liability Litigation, 398 F.Supp.2d 563 (S.D.Tex.2005). Before Judge Jack remanded the CCHDD Plaintiffs to the Mississippi state court on June 30, 2005, for lack of subject matter jurisdiction, she criticized the opinions supporting the silicosis claims, despite her admitted lack of subject matter jurisdiction to render any ruling as to the cases except to remand.

¶ 4. Once the CCHDD Plaintiffs were remanded to Mississippi state court, CCHDD, on October 14, 2005, filed a motion for determination of status pursuant to this Court's holding in Harold's Auto Parts, Inc. v. Mangialardi, 889 So.2d 493 (Miss.2004). CCHDD sought the Court's guidance regarding the then-recent changes in the law as to venue and joinder after Mangialardi. (The CCHDD Plaintiffs filed suit before Mangialardi was decided by this Court.) CCHDD requested guidance on how to handle the severance and transfer of the Plaintiffs' claims. By agreement between the parties, on an ore tenus motion to the trial court, most of the Plaintiffs' claims against the Defendants were dismissed without prejudice and each party agreed to bear its own costs.² The agreed order was entered by the Circuit Court of Noxubee County on December 14, 2005. The agreed order specifically stated:

IT IS, THEREFORE, ORDERED AND ADJUDGED that all Defendants be and the same are hereby dismissed without prejudice as to the claims of the Plaintiffs listed in the attached Exhibit "A," with each party to bear its own costs.

(Emphasis added).

¶ 5. Despite the agreement to bear their own costs, some of the 131 defendants, on December 19, 2005, filed motions for sanctions in the Circuit Court of Noxubee County, alleging that CCHDD frivolously filed the two suits.³ The Defendants sought sanctions pursuant to the Litigation Accountability Act of 1988, Mississippi Code Annotation Section 11-55-1, et seq. The substance of the Defendants' allegations was that the CCHDD Plaintiffs lacked any diagnoses to sustain their claims of silica-related disease, and the medical reports submitted by CCHDD were, in effect, a sham. CCHDD filed its response to the allegations. A hearing on the motions for sanctions was held on March 26, 2006, by the circuit court, the Honorable Lee J. Howard, presiding. The circuit court reserved its ruling at the hearing, subsequently entering an order denying the motions for sanctions. On July 17, 2006, the circuit court entered its orders denying the Defendants' motions for sanctions "in its entirety."

¶ 6. The Defendants now appeal to this Court. This Court granted the parties' agreed motion to consolidate the cases for appeal. The dispositive issue that we address on appeal is: whether the trial court erred in denying the Defendants' motions for sanctions against CCHDD under the Litigation Accountability Act of 1988.⁴ The Defendants also, alternatively, raise the issue of whether the trial court erred in finding that the record was well-developed and not allowing additional discovery regarding the motions for sanctions.

DISCUSSION

I.

¶ 7. "Miss.Code Ann. § 11-55-3(a) provides that a claim is without substantial justification when it is `frivolous, groundless in fact or in law, or vexatious, as determined by the court.'"⁵ Scruggs v. Saterfiel, 693 So.2d 924, 927 (Miss.1997). This Court examines whether a claim is frivolous as follows:

To determine whether a claim is frivolous pursuant to the statute, this Court looks to the definition of "frivolous" found in M.R.C.P. 11. Leaf River Forest Products, Inc. v. Deakle, 661 So.2d 188, 197 (Miss.1995). For purposes of Rule 11, a claim is frivolous "only when, objectively speaking, the pleader or movant has no hope of success." Stevens v. Lake, 615 So.2d 1177, 1184 (Miss. 1993), quoting Tricon Metals & Services, Inc. v. Topp, 537 So.2d 1331, 1335 (Miss. 1989); Smith v. Malouf, 597 So.2d 1299, 1303 (Miss.1992) (applying Rule 11 definition to Litigation Accountability Act context). "Though a case may be weak or `light-headed,' that is not sufficient to label it frivolous." Deakle, 661 So.2d at 195; Nichols v. Munn, 565 So.2d 1132, 1137 (Miss.1990).

Wilson v. Greyhound Bus Lines, 830 So.2d 1151, 1159 (Miss.2002) (quoting Scruggs, 693 So.2d at 927) (emphasis added). Thus, sanctions are not justified if the plaintiff had some hope of success when the claim was filed. Bean v. Broussard, 587 So.2d 908, 912 (Miss.1991); see Wilson, 830 So.2d at 1159. "To deem a question of law `frivolous, groundless in fact or in law, or vexatious' merely because there is no existing Mississippi law on the subject would have a chilling effect on all litigation involving questions of first impression." Scruggs, 693 So.2d at 927 (emphasis added).

¶ 8. "The imposition of sanctions raises a question of law, the standard of review of which is de novo." In re Estate of Ladner v. Ladner, 909 So.2d 1051, 1055 (Miss.2004) (citing Amiker v. Drugs For Less, Inc., 796 So.2d 942, 945-46 (Miss. 2001)). However, this Court has also held, "When reviewing a decision regarding the imposition of sanctions pursuant to the Litigation Accountability Act, this Court is limited to consideration of whether the trial court abused its discretion." Scruggs, 693 So.2d at 927 (citing Deakle, 661 So.2d at 197; Jackson County School Board v. Osborn, 605 So.2d 731, 735 (Miss. 1992)) (emphasis added).⁶

¶ 9. Mississippi Code Annotated Section 11-55-5(1)-(3) (2007) provides in pertinent part:

Assessment of attorney fees and costs against attorney or party for meritless action, claim or defense, unwarranted delay, or unnecessary proceedings[:]

(1) Except as otherwise provided in this chapter, in any civil action commenced or appealed in any court of record in this state, the court shall award, as part of its judgment and in addition to any other costs otherwise assessed, reasonable attorney's fees and costs against any party or attorney if the court, upon the motion of any party or on its own motion, finds that an attorney or party brought an action, or asserted any claim or defense, that is without substantial justification, or that the action, or any claim or defense asserted, was interposed for delay or harassment, or if it finds that an attorney or party unnecessarily expanded the proceedings by other improper conduct including, but not limited to, abuse of discovery procedures available under the Mississippi Rules of Civil Procedure.

(2) No attorney's fees or costs shall be assessed if a voluntary dismissal is filed as to any action, claim or defense within a reasonable time after the attorney or party filing the action, claim or defense knows or reasonably should have known that it would not prevail on the action claim or defense.⁷

(3) When a court determines reasonable attorney's fees or costs should be assessed, it shall assess the payment against the offending attorneys or parties, or both, and in its discretion may allocate the payment among them, as it determines most just, and may assess the full amount or any portion to any offending attorney or party.

¶ 10. The Defendants argue that CCHDD's screening process was a device designed to generate unfounded claims. CCHDD contends that its screening process was well-established and that it is a mechanism that has been used for years in the field of mass torts, citing Findley v. Trustees of the Manville Personal Injury Settlement Trust (In re Joint Eastern & Southern Districts Asbestos Litigation), 237 F.Supp.2d 297, 309 (D.N.Y.2002) ("Claimants today are diagnosed largely through plaintiff-lawyer arranged mass...