Copiah Medical Associates v. Mississippi Baptist Health Systems, No. 2001-IA-01536-SCT (MS 5/6/2004)
| Decision Date | 06 May 2004 |
| Docket Number | No. 2001-IA-01536-SCT.,2001-IA-01536-SCT. |
| Parties | COPIAH MEDICAL ASSOCIATES v. MISSISSIPPI BAPTIST HEALTH SYSTEMS. |
| Court | Mississippi Supreme Court |
ATTORNEYS FOR APPELLANT: JAMES D. SHANNON, ELISE BERRY MUNN, KELLEY M. BERRY, RENEE C. HARRISON, HOLMES S. ADAMS, TODD INMAN WOODS, DAVID A. RUEFF, JR., OLEN C. BRYANT, JR.
ATTORNEYS FOR APPELLEE: MICHAEL B. WALLACE, D. COLLIER GRAHAM, ROBERT O. ALLEN.
BEFORE SMITH, C.J., COBB, P.J., AND CARLSON, J.
CARLSON, JUSTICE, FOR THE COURT:
¶1 This case involves the question of whether the Copiah County Chancery Court or the Copiah County Circuit Court is the more appropriate forum to decide the underlying breach of contract claim. We authorized this interlocutory appeal after the Specially-Appointed Chancellor, Honorable J. Larry Buffington, denied a motion to transfer this case to the Copiah County Circuit Court or, alternatively, to dismiss or stay the proceedings pending resolution of a previously filed action in the Copiah County Circuit Court. See M.R.A.P. 5. We find that the suit unquestionably sounds in contract law instead of equity and that the chancellor erred when he denied the motion to transfer.
FACTS AND PROCEEDINGS
¶2 Copiah Medical Associates ("Copiah") is a Mississippi general partnership consisting of practicing medical physicians operating in two Copiah County clinics, one in Hazlehurst and the other in Crystal Springs. Mississippi Baptist Health Systems ("Baptist") is a Mississippi not-for-profit corporation engaged in the business of heath care. Baptist controls a for-profit subsidiary, Health Care Economics, P.A. ("HCE") which manages medical practices and medical clinics. (At times, Baptist and HCE will collectively be referred to as Baptist.) Copiah and Baptist entered into a non-binding Letter of Intent on December 8, 1998, which led to the execution of five additional documents on April 21, 1999. These documents included: (1) a Management and Consulting Services Agreement ("Management Agreement"); (2) a Net Lease Agreement where Copiah would lease a proposed new Hazlehurst clinic from Baptist; (3) an Adoption Agreement, which activated specific provisions of the Letter of Intent where Baptist agreed to buy the land and pay the cost of construction of the new facilities; and (4) and (5) two Net Leases where Copiah leased the two existing buildings in Hazlehurst and Crystal Springs from Baptist.
¶3 On July 17, 2000, HCE notified Copiah that a partial audit revealed evidence of over-billing of Medicare and Medicaid. Baptist asserted that it had attempted to persuade Copiah to cooperate in an audit to determine the extent of any over-billing. No audit occurred, and Baptist thus determined that Copiah was in breach of § 14 of the Management Agreement. As a result, on December 14, 2000, Baptist submitted to Copiah a letter terminating the Management Agreement effective December 31, 2000. On December 15, 2000, Copiah filed a breach of contract suit against Baptist and HCE in the Circuit Court of Copiah County. On January 26, 2001, Copiah moved to amend the Complaint to add counts of breach of good faith and fair dealing, breach of fiduciary duties, and requested punitive damages and attorneys fees. The amendment also deleted the request for specific performance which was contained in the original complaint.
¶4 On February 2, 2001, Copiah notified Baptist and HCE that it repudiated the Net Leases on the basis that the leases were void because of Baptist's illegal termination of the Management Agreement. On February 6, 2001, Baptist then filed suit in the Chancery Court of Copiah County against Copiah seeking specific performance of the Net Lease regarding the new Hazlehurst facility.
¶5 Immediately thereafter, on February 14, 2001, Copiah moved to amend the circuit court complaint adding a declaratory action that the Net Lease was void. Copiah also moved to amend, changing the request for specific performance to a request for damages. After a hearing on February 26, 2001, the circuit court granted Copiah's motion to amend and denied Baptist's motion to dismiss or, alternatively, to transfer the case to Copiah County Chancery Court.
¶6 Copiah moved the chancery court to transfer Baptist's lawsuit to circuit court on March 5, 2001. On March 19, 2001, Baptist filed an answer in the circuit court and counterclaimed for an accounting. Then, on March 22, 2001, Copiah again moved to amend the complaint in circuit court to add the lease claim and a breach of contract concerning the Management Agreement. On the same date, Baptist filed in the chancery court action its Opposition To Motion to Transfer [to Circuit Court]. Copiah filed its responsive pleading to the chancery court case on April 20, 2001, and asserted as a defense that Baptist's illegal termination of the Management Agreement voided the Net Lease and that as a result, Copiah was discharged from its obligations. Baptist then filed an Answer and Affirmative Defenses in the circuit court case.
¶7 On May 2, 2001, Chancellor Buffington was appointed by this Court as Special Chancellor after Chancellor Edward Patten, Jr., for the Fifteenth Chancery Court District recused himself. On July 3, 2001, Baptist filed in the chancery court action a motion for judgment on the pleadings, seeking a permanent injunction requiring Copiah to occupy the new Hazlehurst clinic and liquidated damages at a rate of $513.25 per day since May 2, 2001, with costs and attorney's fees. The circuit court granted Copiah's motion for trial setting on July 16, 2001, scheduling trial for November 26, 2001.
¶8 On August 30, 2001, Copiah filed in the chancery court an amended motion to transfer and a request for alternative relief including dismissal or stay pending resolution of the circuit court matter. After an August 30, 2001 hearing, Special Chancellor Buffington subsequently entered an order denying all requested relief, and setting the case for trial on October 19, 2001. Prior to the entry of the order, Copiah requested reconsideration. The reconsideration was denied by order dated September 18, 2001. These last two orders are at issue in this interlocutory appeal.
¶9 Copiah states the issue on appeal as: "Whether, as a matter of law, the special chancellor erred when he denied the transfer of the parallel action to circuit court, or in the alternative, in not staying the chancery action until trial on the pending circuit court action." Copiah's argument is two-prong: (1) that Baptist's claims in chancery court are compulsory counterclaims to Copiah's first-filed circuit court action, and (2) that the circuit court is the more appropriate forum to hear all claims. Claiming that Copiah "has approached the problem backwards," Baptist restates the issues as follows:
1. Whether § 162 of the Constitution precludes transfer to circuit court of a complaint which, like Baptist's, states a claim within the jurisdiction of the chancery court.
2. Whether the chancery court acquired priority jurisdiction over claims regarding the Net Lease which could not be divested by subsequent proceedings in circuit court.
3. Whether Baptist's claim for specific performance of the Net Lease was a compulsory counterclaim in Copiah's circuit court action concerning the separate Management and Consulting Services Agreement, particularly where the Net Lease expressly provided that it would survive the termination of the latter agreement.
DISCUSSION
¶10 Jurisdiction is a question of law which this Court reviews de novo. Briggs & Stratton Corp. v. Smith, 854 So.2d 1045, 1048 (¶ 9) (Miss. 2003). An order concerning a motion to transfer from chancery court to circuit court involves a question of jurisdiction and, therefore, is reviewed de novo. Id. at 1048 (¶ 9) (citing United States Fid. & Guar. Co. v. Estate of Francis, 825 So.2d 38 (Miss. 2002)).
¶11 The first issue this Court must decide is whether the chancery court complaint states a claim within the jurisdiction of the chancery court. The Mississippi Constitution of 1890, Article 6, § 159, limits the jurisdiction of chancery courts to the following areas: (a) all matters in equity; (b) divorce and alimony; (c) matters testamentary and of administration; (d) minor's business; (e) cases of idiocy, lunacy, and persons of unsound mind; and (f) all cases of which the said court had jurisdiction under the laws in force when the Constitution was put in operation. "All causes that may be brought in the chancery court whereof the circuit court has exclusive jurisdiction shall be transferred to the circuit court." Id. § 162.
¶12 In the case sub judice, Baptist filed its "Complaint For Specific Performance and Damages" in the chancery court. According to the complaint, the parties entered into a "Net Lease Agreement" and accompanying amendments whereby Baptist agreed to build a medical facility and Copiah agreed to lease the 12,500 square foot facility for fifteen years at a rental rate of $15.00 per gross square feet. Baptist further alleged that Copiah repudiated and abandoned the lease. In Count I, Baptist sought an order of specific performance against Copiah. In Count II, Baptist sought compensatory damages.
¶13 Raised as an affirmative defense to the complaint, Copiah asserted that the chancery court case included the same issues arising from the same circumstances as alleged in the circuit court case. Eight days after Baptist filed the chancery court action, Copiah moved to amend its circuit court complaint to include a request for declaratory judgment that the Net Lease was void as a result of Baptist's breach of the Management Agreement. The circuit court granted that motion on March 1, 2001, and the amended complaint was filed on March 22, 2001.
¶14 Baptist asserts that the case should remain in...
To continue reading
Request your trial