Coleman & Coleman Enters., Inc. v. Waller Funeral Home, No. 2011–CA–00697–SCT.

• Court: United States State Supreme Court of Mississippi
• Citation: 106 So.3d 309
• Docket Number: No. 2011–CA–00697–SCT.
• Parties: COLEMAN & COLEMAN ENTERPRISES, INC., d/b/a Coleman Funeral Home, Kenny G. Coleman and Kenny G. Coleman, Jr. v. WALLER FUNERAL HOME.
• Decision Date: 07 February 2013

106 So.3d 309

COLEMAN & COLEMAN ENTERPRISES, INC., d/b/a Coleman Funeral Home, Kenny G. Coleman and Kenny G. Coleman, Jr.
v.
WALLER FUNERAL HOME.

No. 2011–CA–00697–SCT.

Supreme Court of Mississippi.

Nov. 15, 2012.
Rehearing Denied Feb. 7, 2013.

[106 So.3d 311]

J. Hale Freeland, Oxford, M. Reed Martz, attorneys for appellants.

J. Cal Mayo, Jr., Oxford, Paul Bowie Watkins, Jr., attorneys for appellee.

Before DICKINSON, P.J., LAMAR and KITCHENS, JJ.

KITCHENS, Justice, for the Court:

¶ 1. This case concerns whether preneed contracts for funeral services were unilaterally transferable by customers from the original service provider, Waller Funeral Home (Waller), to another service provider, Coleman Funeral Home (Coleman).

[106 So.3d 312]

Customers who had contracted with Waller had prepaid the costs of their funeral services and merchandise, and Waller had placed their money in a trust maintained by the Mississippi Funeral Directors Association (hereinafter “the Trust”). Coleman, along with Aubrey Parham, who previously had contracted with Waller for prepaid funeral services, filed a declaratory action asking the trial court to find that the prepaid funeral services contracts issued by Waller to its customers were unilaterally transferable by those customers to Coleman. Waller filed a counterclaim that alleged tortious interference with its contracts, false advertising, and defamation.¹ Waller argued in its motion for partial summary judgment, and the trial court agreed, that the contracts were valid, enforceable, irrevocable and nontransferable, and, thus, granted Waller's motion. At trial, the jury was instructed accordingly.

¶ 2. Ultimately, the jury found in favor of Waller on all issues presented at trial and awarded both actual and punitive damages. Post-trial, upon the motion of Coleman, the circuit court reduced the punitive damages to $0 due to Coleman's representation to the court that it had a negative net worth. Waller was awarded attorneys' fees. Both parties have appealed the trial court's final judgment.

¶ 3. We find that the trial court erred in allowing Waller to adduce speculative evidence about its alleged damages (future lost profits) for its contracting customers who are living, for whom no goods or services have been provided, on behalf of whom no payment from the Trust has been made to Coleman, and whose preneed funeral services contracts with Waller were found to be valid, binding, and nontransferable. Accordingly, we remand for a new trial on damages.

Facts and Procedural History

¶ 4. Waller and Coleman both operate funeral homes in Lafayette County, Mississippi. Waller opened in 1977, while Coleman opened its funeral home in 2004. Waller offered customers a preneed funeral trust program, which permitted them to make decisions regarding their desired funeral services and merchandise. The purpose of these preneed contracts was to fix the price of funeral services and merchandise, so the customer could avoid the risk of inflation. Waller placed any payment received from customers into the Trust. Over the years, Waller used three different contract forms for its preneed trust contracts. Form 3 was used before 1997. Form 2 was used from 1997 to 2002. Form 1 was used after 2002 and was subject to approval by the Office of the Secretary of State.

¶ 5. Upon its opening in 2004, Coleman advertised that it would perform funeral services for customers who previously had entered into preneed funeral contracts with other providers. One such consumer was Aubrey Parham, who sought to have his funeral services contract (entitled “Pre–Need Funeral Service Contract”), which he had entered into with Waller, transferred to Coleman. Waller issued a cease and desist letter to Coleman threatening a lawsuit for tortious interference with a contract, due to Coleman's advertisements that stated Coleman would honor contracts with other funeral homes and due to Coleman's having told Parham that it would honor his contract with Waller.

¶ 6. On or about May 18, 2005, Aubrey Parham died.² At the request of Parham's

[106 So.3d 313]

family, Coleman performed the funeral. The estate made requests for the refund of the prepaid funds, but Waller refused to release the funds from the Trust to the Estate. In the First Amended Complaint, the Parham estate alleged that a refusal to release the prepaid funds that had been held in trust for the purpose of funeral services constituted a conversion on the part of Waller and had caused the estate to suffer unnecessary attorney fees and other damages. Moreover, the complaint sought a declaratory judgment finding that Mississippi Code Sections 75–63–51 to 75–63–81 are unconstitutional, that customers may legally transfer their preneed contract forms to other providers, that Coleman had not engaged in tortious interference with a contract, that the Waller contracts contained a revocation clause, that (alternatively) the Waller contracts were contracts of adhesion and thus, void or voidable, and that the Waller contracts were ambiguous. Coleman also sought preliminary and permanent injunctions restraining and prohibiting Waller from filing suit against Coleman and requiring Waller to turn over the funds owed the Parham estate. Eventually, prior to trial, the Parham estate was paid funds out of the Trust, and thereafter, the estate paid Coleman for services rendered.

¶ 7. Waller filed its Answer, Affirmative Defenses and Counterclaim on August 15, 2005, against Coleman, and Kenny G. Coleman and Kenny G. (“Glen”) Coleman Jr. (collectively Coleman), alleging that Coleman intentionally had interfered with existing contractual relationships between Waller and its customers, and that Coleman had engaged in false, deceptive, and misleading advertising. Waller maintained in its counterclaim that Coleman had knowledge of the irrevocable nature of its contracts, but targeted Waller's customers despite this knowledge. In its complaint, Waller asked for not less than $100,000 in compensatory damages, not less than $100,000 in punitive damages, reasonable attorney fees and expenses, and preliminary and permanent injunctive relief. ³

¶ 8. Waller filed a motion for partial summary judgment based on its argument that the contracts were valid, irrevocable, nontransferable, and enforceable. Based on the pleadings filed by the parties and a hearing on the matter, the trial court granted partial summary judgment on this issue based on its finding that no genuine issues of material fact existed as to whether the contracts entered into by Waller and its customers for funeral services were valid and enforceable agreements that could not be transferred by the purchaser to another funeral service provider without Waller's consent. In so doing, the court noted that the contracts lacked a revocation clause, and, furthermore, in some instances clearly stated they were irrevocable.⁴

¶ 9. Trial commenced on January 31, 2011, and the only remaining issues were those contained in Waller's counterclaim. Ultimately, the jury awarded Waller $55,000 in compensatory damages and $25,000 in punitive damages. Post-trial,

[106 So.3d 314]

Coleman filed a motion to amend the verdict and reduce the award of punitive damages, which the trial court granted, based on its finding that Coleman had a net worth of -$78,112 and that, consistent with Mississippi Code Section 11–1–65(3)(a), the punitive damages must be set at $0. Additionally, the trial court made a finding that Waller was entitled to $100,083.77 in attorneys' fees and that the fees Waller requested were reasonable under McKee v. McKee, 418 So.2d 764 (Miss.1982), and Mississippi Rule of Professional Conduct 1.5. Aggrieved by the jury's verdict and trial court's award of attorneys' fees to Waller, Coleman filed the instant direct appeal. Waller filed the instant cross-appeal.

Discussion On Direct Appeal
I. Whether the trial court erred in granting Waller partial summary judgment and in instructing the jury that the consumers' preneed funeral services contracts ⁵ with Waller were nontransferable to another service provider.

¶ 10. Coleman asks this Court to reverse the jury verdict and render judgment in its favor based on its contention that the contracts at issue could be transferred unilaterally by customers to a substitute provider. Alternatively, Coleman contends this Court should reverse and remand for a new trial to allow a jury to decide this issue. In reviewing a trial court's grant or denial of summary judgment, our well-established standard of review is de novo. One South, Inc. v. Hollowell, 963 So.2d 1156, 1160 (Miss.2007) (citing Hubbard v. Wansley, 954 So.2d 951, 956 (Miss.2007)). Likewise, the interpretation of a contract is a question of law that this Court reviews de novo. Cherokee Ins. Co. v. Babin, 37 So.3d 45, 48 (Miss.2010) (citing Warwick v. Gautier Util. Dist., 738 So.2d 212, 215 (Miss.1999); Miss. State Highway Comm'n v. Patterson Enters., Ltd., 627 So.2d 261, 263 (Miss.1993)).

¶ 11. Coleman makes several arguments for the first time on appeal that it failed to make in support of its response in opposition to Waller's motion for summary judgment and/or its own counter-motion for summary judgment, including: (1) Waller was not a party to the contract, but simply the trustee's agent who accepted consumers' funds to be held in trust for the benefit of those consumers; (2) Waller's contracts are impermissible restraints on trade under the Sherman Act; ⁶ (3) industry standards dictate that preneed funeral service contracts are portable in nature and allow the consumer to choose another service provider at any time; and (4) the amendment to the Mississippi Preneed Cemetery and Funeral Registration Act, effective July 1, 2012,⁷ recognizes the portability of preneed services contracts; thus, it is evidence of the legislative intent to make preneed funeral services contracts transferable. SeeMiss.Code Ann. § 75–63–63 (Supp.2012). These arguments were never...