Chubb Lloyds Ins. Co. v. Miller County Circuit Court, Third Div.

• Decision Date: 11 March 2010
• Docket Number: No. 09–553.,09–553.
• Parties: CHUBB LLOYDS INSURANCE COMPANY, Chubb Indemnity Insurance Company, Chubb Custom Insurance Company, and Chubb National Insurance Company, Petitioners, v. MILLER COUNTY CIRCUIT COURT, THIRD DIVISION, The Honorable Kirk Johnson, Circuit Judge Presiding, Respondent.
• Court: Arkansas Supreme Court

2010 Ark. 119

361 S.W.3d 809

CHUBB LLOYDS INSURANCE COMPANY, Chubb Indemnity Insurance Company, Chubb Custom Insurance Company, and Chubb National Insurance Company, Petitioners,

v.MILLER COUNTY CIRCUIT COURT, THIRD DIVISION, The Honorable Kirk Johnson, Circuit Judge Presiding, Respondent.

No. 09–553.

Supreme Court of Arkansas.

March 11, 2010.

Jackson Walker L.L.P., by: David T. Moran and Christopher A. Thompson, and Law Office of Amy Freedman, by: Amy Freedman, for petitioners.

Wilson, Engstrom, Corum & Coulter, Little Rock, by: Stephen Engstrom and Shirley Jones, Keil & Goodson, by: John C. Goodson and Matt Keil, Nix, Patterson & Roach, L.L.P., by: C. Cary Patterson and Brady Paddock, and Whitten, Nelson, McGuire, Terry & Roselius, by: Jason E. Roselius, for respondent.

ELANA CUNNINGHAM WILLS, Justice.

Chubb Lloyds Insurance Company of Texas, Chubb Indemnity Company, Chubb Custom Insurance Company, and Chubb National Insurance Company (Chubb) petition this court to issue a writ of prohibition to prevent the Miller County Circuit Court from exercising jurisdiction in a case styled Evelyn Chivers v. State Farm Fire, et al., No. 04–294–3. Alternatively, Chubb petitions the court to issue a writ of certiorari. The class-action complaint filed by Evelyn Chivers and other plaintiffs (Chivers) alleges that several groups of insurance companies, including Chubb, engaged in a conspiracy resulting in fraud, constructive fraud, and unjust enrichment, based on the companies' failure to disclose or pay “general contractors' profit and overhead” in connection with certain insurance claims. Chubb contends that Chivers lacks standing and, therefore, the Miller County Circuit Court lacks subject-matter jurisdiction of the action.¹ Specifically, Chubb presents an issue of first impression for this court in its assertion that amendment 80, § 6(A) to the Arkansas Constitution limits the jurisdiction of circuit courts to “justiciable” matters, and that an action is not justiciable if there is a lack of standing.

This petition follows an order issued by the circuit court on April 28, 2009, deferring Chubb's motion to dismiss the plaintiffs' complaint under Ark. R. Civ. P. 12(b)(1) for lack of subject-matter jurisdiction. Chubb filed its motion to dismiss following the voluntary dismissal of the only named plaintiff who had an insurance policy with Chubb, or had been a customer of Chubb. In its motion to dismiss, Chubb asserted that the circuit court lacked subject-matter jurisdiction following the dismissal of the “sole alleged insured of the Chubb Defendants.” Chivers filed an “Objection to Chubb's Motion to Dismiss Plaintiff's Third Amended Class Complaint for Lack of Subject Matter Jurisdiction,” requesting that the circuit court defer or deny the motion to dismiss as premature pending class certification. In its April 28, 2009 order, the circuit court determined that Arkansas law establishes that an assertion of a party's lack of standing is a defense, not a jurisdictional issue. The circuit court further found that a review of the issue of the plaintiffs' standing would require consideration of the merits of their claims, and that it could not “engage in [a] merits determination prior to class certification.” Accordingly, the circuit court granted Chivers's motion to defer Chubb's motion to dismiss the action. This petition followed.

Asserting that a “writ of prohibition or certiorari is proper relief for this extraordinary situation,” Chubb contends that “amendment 80 to the [Arkansas] Constitution changed the Arkansas law of subject-matter jurisdiction to require that a plaintiff [must] have standing.” Chubb specifically cites a section of amendment 80 providing that, “Circuit courts are established as the trial courts of all justiciable matters not otherwise assigned pursuant to this Constitution.” Ark. Const. amend. 80, § 6(A). Chubb argues that standing is a “justiciable element” under Amendment 80, and, therefore, the circuit court lacks subject-matter jurisdiction over Chubb due to the voluntary dismissal of the sole named plaintiff who had a Chubb insurance policy or had been a customer of Chubb in the putative class-action suit. Chubb also contends that the complaint's conspiracy allegations are not sufficient to confer standing, and that because the circuit court is wholly without jurisdiction, relief in the form of a writ of prohibition or certiorari is the only adequate remedy.

This court discussed the standard of review for a writ of prohibition in Ulmer v. Circuit Court of Polk County, 366 Ark. 212, 215–16, 234 S.W.3d 290, 293–94 (2006), stating as follows:

It is well settled that a writ of prohibition is an extraordinary writ that is only appropriate when the lower court is wholly without jurisdiction. Ouachita R.R., Inc. v. Circuit Court of Union County, 361 Ark. 333, 206 S.W.3d 811 (2005); Monroe Auto Equip. Co. v. Partlow, 311 Ark. 633, 846 S.W.2d 637 (1993). Jurisdiction is the power of the court to hear and determine the subject matter in controversy between the parties. Conner v. Simes, 355 Ark. 422, 139 S.W.3d 476 (2003); State v. Circuit Court of Lincoln County, 336 Ark. 122, 984 S.W.2d 412 (1999). In Conner, we thoroughly explained our standard of review for a writ of prohibition and stated:

The writ is appropriate only when there is no other remedy, such as an appeal, available. Prohibition is a proper remedy when the jurisdiction of the trial court depends upon a legal rather than a factual question. This court confines its review to the pleadings in the case. Moreover, prohibition is never issued to prohibit a trial court from erroneously exercising its jurisdiction. Additionally, a writ of prohibition is not the appropriate remedy for the denial of a motion to dismiss.

355 Ark. at 425–426, 139 S.W.3d at 478 (citations omitted). Moreover, “writs of prohibition are prerogative writs, extremely narrow in scope and operation; they are to be used with great caution and forbearance. They should issue only in cases of extreme necessity.” Monroe Auto Equip. Co., 311 Ark. at 636, 846 S.W.2d at 639 (citation omitted).

“Only a claimant who has a personal stake in the outcome of a controversy has standing.” Pulaski Cnty. v. Ark. Democrat–Gazette, Inc., 371 Ark. 217, 220, 264 S.W.3d 465, 467 (2007). Historically, this court has never treated standing as a matter of subject-matter jurisdiction—regardless of whether the cases were decided before or after amendment 80.

For example, in National Security Fire & Casualty Co. v. Poskey, 309 Ark. 206, 828 S.W.2d 836 (1992), this court addressed a petition for a writ of prohibition after the trial court denied a motion to dismiss based on a lack of standing, subject-matter jurisdiction, and failure to state a claim upon which relief could be granted. We denied the petition and explained that

[o]rdinarily, a petition for a writ of prohibition is not the proper remedy for the failure of a trial court to grant a motion to dismiss. A writ of prohibition is an extraordinary writ and is only granted when the lower court is wholly without jurisdiction, there are no disputed facts, there is no adequate remedy otherwise, and the writ is clearly warranted. There is no doubt that a circuit court has proper subject matter jurisdiction to hear a declaratory judgment action concerning insurance coverage. The propriety of hearing such a case, especially when it appears that no cause of action exists or that not all the parties to the insurance contract have been made parties to the suit, is a distinctly different issue and one that is not addressed by a writ of prohibition, for the writ is issued only to prevent a court from exceeding its jurisdiction, rather than to prevent it from erroneously exercising its jurisdiction.

Poskey, 309 Ark. at 207, 828 S.W.2d at 837–38 (citations omitted).

Similarly, in Pulaski County v. Carriage Creek Property Owners Improvement District No. 639, 319 Ark. 12, 888 S.W.2d 652 (1994), the appellant argued for the first time on appeal that the circuit court lacked subject-matter jurisdiction because the appellee did not have standing. Noting that the appellant “equates lack of standing with lack of jurisdiction but cites no authority supporting that position,” this court refused to address the question, holding as follows:

As we stated in Arkansas State Bd. of Educ. v. Magnolia Sch. Dist. No. 14, 298 Ark. 603, 769 S.W.2d 419 (1989), we are unaware of any authority in this Court holding that lack of standing deprives a court of jurisdiction. See also State v. Houpt, 302 Ark. 188, 788 S.W.2d 239 (1990). If the issue were one of jurisdiction of the subject matter, we would address it despite the fact that it was not raised before the Trial Court. As it is not such an issue, we decline to address it for the first time on appeal. See Truhe v. Grimes, 318 Ark. 117, 884 S.W.2d 255 (1994); City of Hot Springs Ad. & Promotion Comm'n v. Cole, 317 Ark. 269, 878 S.W.2d 371 (1994).

Pulaski Cnty. v. Carriage Creek Prop. Owners Improvement Dist. No. 639, 319 Ark. at 14, 888 S.W.2d at 653; see also Ark. Game & Fish Comm'n v. Murders, 327 Ark. 426, 428, 938 S.W.2d 854, 855, n. 1 (1997) (refusing to address a challenge to subject-matter jurisdiction based on a lack of standing that was raised for the first time on appeal, because a “lack of standing does not deprive a court of jurisdiction,” citing Carriage Creek, supra ).

Post- Yamendment 80 decisions reflect this same principle; a lack of standing does not deprive a circuit court of subject-matter jurisdiction. In Ulmer, supra, the petitioners sought a writ of prohibition, arguing that because the plaintiff had not completed the requirements for appointment as a special administratrix prior to filing suit, she “did not have standing or authority to sue at the time the complaint was filed and, therefore, the circuit court lacked subject-matter jurisdiction.” Id. at 214, 234 S.W.3d at 293. We ...