McGee v. Comprehensive Radiology Servs., PLLC
| Decision Date | 09 June 2022 |
| Docket Number | 2021-CA-00666-SCT |
| Citation | 340 So.3d 328 |
| Parties | Karen Rees MCGEE v. COMPREHENSIVE RADIOLOGY SERVICES, PLLC |
| Court | Mississippi Supreme Court |
ATTORNEYS FOR APPELLANT: WILLIAM J. LITTLE, JR., WILLIAM JARRETT LITTLE, Gulfport
ATTORNEY FOR APPELLEE: J. ROBERT RAMSAY
BEFORE KING, P.J., MAXWELL AND GRIFFIS, JJ.
MAXWELL, JUSTICE, FOR THE COURT:
¶1. Karen McGee was the president of a collections agency. When her company ran into financial trouble, she directed her business administrator to delay remitting the money it had collected for Comprehensive Radiology Services, PLLC. Meanwhile, the agency still billed for—and received commissions on—the money collected. When McGee's scheme was finally discovered, her company had withheld almost $800,000 of Comprehensive Radiology's money. McGee was sued for conversion and fraud. And the chancellor found her individually and personally liable to the radiology group for $785,549.71.
¶2. Because the record supports the chancellor's finding McGee converted $785,549.71 of Comprehensive Radiology's funds, we affirm. On appeal, McGee argues she could not have committed conversion because, as a matter of Mississippi law, funds collected and deposited into a bank account cannot be the subject of conversion. But this is not so. While the tort of conversion cannot be used to recover a mere debt, it can be used to recover identifiable money belonging to the plaintiff. And that is what happened in this case. The money McGee's company collected for Comprehensive Radiology was identifiable and undeniably belonged to the radiology group. So Comprehesive Radiology's funds were the proper subject of a conversion claim. McGee's company had no right to keep this money to cover its own expenses but instead was obligated to remit it at the end of the month in which it was collected. By directing her employee to delay remittance of Comprehensive Radiology's money, McGee committed conversion and is thus liable to Comprehensive Radiology for $785,549.71.
Background Facts & Procedural History
¶3. McGee was the president of Network Services, Inc. Network Services collected accounts receivable for third parties in exchange for a commission. One of their larger clients was Comprehensive Radiology, a radiology group in Hattiesburg, Mississippi.
¶4. While McGee testified that Network Services would simply deduct its commission from the funds collected for many of its clients, that was not the agreement between Network Services and Comprehensive Radiology. Instead, according to the contract between Network Services and Comprehensive Radiology, Network Services was obligated to remit to Comprehensive Radiology at the end of each month all money collected for the radiology group that month. And based on the amount collected, Comprehensive Radiology was, in turn, to pay Network Services a commission within ten days.1
¶5. What this looked like practically is as follows: Network Services would deposit any money it collected for Comprehensive Radiology—as well as its other clients—into a bank account at Trustmark Bank, which the company referred to as the "escrow" account.2 Network Services’ long-time business administrator, Lakesia Carter, testified3 that each month she would issue a check from the Trustmark escrow account to Comprehensive Radiology for the exact amount collected. This check was delivered to Comprehensive Radiology in Hattiesburg.
¶6. Each month, Network Services also prepared a separate commission statement for Comprehensive Radiology. This statement, essentially a bill, was emailed to Comprehensive Radiology's business manager, Mike Villonga, who worked remotely from Florida. Based on this statement, Villonga would write Network Services a commission check, which Network Services would deposit into its separate operating account at BancorpSouth.
¶7. According to Carter, in the early 2010s, Network Services’ expenses began to exceed its income. These expenses included payroll for McGee and her daughter. They also included thousands of dollars in monthly rent for a commercial building that McGee and her sister owned individually.
¶8. When Carter brought the company's shortfall to McGee's attention, McGee directed Carter to delay remitting to Comprehensive Radiology the money Network Services collected on its behalf. McGee also directed Carter to transfer money from the Trustmark escrow account to the BancorpSouth operating account.
¶9. In both February and March 2011, Network Services did not remit the money it collected for Comprehensive Radiology. But Network Services still sent Villonga a monthly collection report and received commissions on the amounts it represented it had collected on behalf of the radiology group. Network Services finally remitted February's collections in April 2011 and the March collections in May 2011. Network Services continued to fall further and further behind in payments. By 2014, Network Services was more than a year behind in remitting the collections to the radiology group. In other words, instead of remitting the money collected at the end of each month—as the contract required—Network Services was remitting each month the amount collected thirteen months earlier. Network Services persisted in these late payments for several years. For example, in May 2017, Network Services remitted to Comprehensive Radiology the amount collected in April 2016.
¶10. All the while, Network Services sent monthly collections reports. But these reports were based on the real-time collections, and Network Services continued to receive commissions tied to the amounts collected—and not the amounts untimely remitted. During this same time period, Network Services continued to pay McGee, her daughter, and her sister.
¶11. By the time Comprehensive Radiology discovered the discrepancies between collections and remittances in May 2018, Network Services was behind in turning over approximately $800,000 in Comprehensive Radiology collections. When Comprehensive Radiology confronted McGee, she immediately acknowledged what happened. In a letter from McGee to Comprehensive Radiology, McGee apologized "for having failed your trust in my company and for the major delinquency in remitting your payments." McGee proposed a payment plan. According to her plan, Network Services would pay Comprehensive Radiology its money over the course of four years.
¶12. In July 2018, Comprehensive Radiology sued Network Services and McGee individually to recover the alleged $811,140.53 Network Services collected between April 2017 through March 2018 but did not remit to Comprehensive Radiology. The action was filed in the Chancery Court of Forrest County. The complaint sought injunctive relief and breach of contract damages against Network Services. It also alleged tort claims of conversion and fraud against Network Services and McGee. Network Services filed for bankruptcy, staying the case against it. But Comprehensive Radiology proceeded with its conversion and fraud claims against McGee individually.
¶13. A bench trial was held in November 2020. At the conclusion, the chancellor ruled that McGee was individually liable to Comprehensive Radiology for $785,549.71. Specifically, the chancellor found McGee had committed both conversion and fraud.
¶14. Regarding conversion, McGee had admitted Network Services owed Comprehensive Radiology approximately $811,000, which had been deposited into the Trustmark account—an account McGee described as an escrow account. But these funds were never the property of Network Services. The contract between Network Services and Comprehensive Radiology specified that Network Services would remit all collections to Comprehensive Radiology monthly. Yet, at McGee's direction, Carter did not remit these funds. Instead, she transferred them to Network Services’ operating account at BancorpSouth. In turn, these funds were used to pay McGee, her daughter, and her sister. The chancellor concluded McGee's actions constituted conversion—that is, "an intent to exercise dominion or control over goods, which is inconsistent with the true owner's right." Walker v. Brown , 501 So. 2d 358, 361 (Miss. 1987) (citing Miss. Motor Fin., Inc. v. Thomas , 246 Miss. 14, 149 So. 2d 20 (1963) ).
¶15. Regarding fraud, the chancellor found McGee made false representations to Comprehensive Radiology—namely, the monthly collection reports—on which Comprehensive Radiology relied to pay commissions to its detriment. At the same time Network Services was reporting to Comprehensive Radiology the amount it had collected that month, McGee was directing Carter not to remit that amount to Comprehensive Radiology. She directed Carter instead to divert those funds to Network Services’ operating account. For example, in January 2017, Network Services reported that it had collected $88,227.81 for Comprehensive Radiology, for which the radiology group promptly paid Network Services a $23,265.02 commission. But Network Services only remitted $54,546.31—the amount Network Services had collected for Comprehensive Radiology thirteen months earlier in December 2015. The chancellor found this to be fraud.
¶16. McGee timely appealed the final judgment against her, asserting three claims:
¶17. To the extent McGee challenges the chancellor's factual findings, this Court will not disturb those findings "unless manifestly wrong or clearly erroneous." Consol. Pipe & Supply Co. v. Colter , 735 So. 2d 958, 961 (Miss. 1999) (citing Denson v. George , 642 So. 2d 909, 913 (Miss. 1994) ). But we review the questions of law she raises de novo. Id.
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