RE/Max Real Estate Partners v. Lindsley

• Citation: 840 So.2d 709
• Decision Date: 20 March 2003
• Docket Number: No. 2001-IA-00639-SCT.,2001-IA-00639-SCT.
• Parties: RE/MAX REAL ESTATE PARTNERS, INC., Re-Max Real Estate Partners, and Judith H. Corts v. Pamela LINDSLEY.
• Court: Mississippi Supreme Court

840 So.2d 709

RE/MAX REAL ESTATE PARTNERS, INC., Re-Max Real Estate Partners, and Judith H. Corts v. Pamela LINDSLEY.

No. 2001-IA-00639-SCT.

Supreme Court of Mississippi.

March 20, 2003.

Kristen A. Horton, Ridgeland, G. Todd Burwell, Jackson, for appellants.

Jack W. Land, Michael K. Randolph, Joe D. Stevens, Hattiesburg, for appellee.

EN BANC.

DIAZ, Justice, for the Court:

¶ 1. At issue here is whether a chancellor abused his discretion in refusing to transfer this case to circuit court. Pamela Lindsley (Lindsley) sued Re/Max Real Estate Partners, Inc., Re-Max Real Estate Partners, and Judith H. Corts (defendants) in chancery court seeking damages for breach of contract, cancellation of contract, accounting of funds, and other relief. Lindsley alleged that the defendants breached a duty to her by failing to instruct and supervise their agent in such a way as to prevent a breach of fiduciary responsibilities. Defendants filed a motion to transfer to circuit court, alleging the chancery court lacked subject matter jurisdiction. The chancellor denied that motion. This Court granted the defendants' petition for interlocutory appeal by permission. See M.R.A.P. 5. Finding the chancellor's retention of this matter proper, we now affirm and remand.

FACTS

¶ 2. In February 1998, Lindsley entered into a listing agreement with Re-Max Real Estate Partners (Re-Max) for sale of Lot 39 in the Fieldstone Subdivision in Lamar County, Mississippi. Debbie Wheat (Wheat) was listed as salesperson. Lindsley had previously purchased Lot 39 for $19,000.00.

¶ 3. During the period of the sales contract for Lot 39, Lindsley and Wheat were involved in other joint real estate ventures. Lindsley alleges that she loaned Wheat $15,000 and that Wheat used the money for personal reasons. In her petition, Lindsley seeks to recover this money, inter alia, from Re-Max.

¶ 4. In May 1998, Lindsley needed money to finish building a house on the lot for sale. Lindsley alleges that Wheat represented to her that Wheat could obtain funds to complete the construction if Lindsley would transfer title to Lot 39 to Wheat. Lindsley alleges that she complied and then Wheat, without her consent, borrowed $100,000.00 against the title to the property, paid $19,000.00 to Lindsley, and, without Lindsley's knowledge, retained $81,000.00 for her own personal use.

¶ 5. Some time later, Lindsley demanded that Wheat reconvey title of the lot to her and learned of the additional $81,000 incumbrance. Wheat has failed to repay the $15,000 loan, the $81,000 loan, or to pay the bank the interest on the $81,000 loan. The bank has foreclosed on the property.

¶ 6. Lindsley allegedly hired an accountant to trace the money Wheat borrowed, but the accountant could not complete his investigation because certain information was not available to him.

¶ 7. In February 2001, Lindsley filed suit against the defendants in Lamar County Chancery Court seeking damages for breach of contract, cancellation of contract, accounting of funds, and other relief. Lindsley specifically alleges that defendants breached their duty to Lindsley to "instruct and supervise Wheat in such a way as to prevent a breach of the fiduciary responsibilities" owed to Lindsley by Wheat and defendants.

¶ 8. In March 2001, defendants filed their motion to transfer to circuit court alleging the chancery court does not have subject matter jurisdiction. The chancery court denied that motion, and defendants sought permission to file an interlocutory appeal. In April 2001, the chancery court denied this request. In November 2001, this Court granted defendants' petition for interlocutory appeal by permission.

DISCUSSION

¶ 9. Defendants cite the following issue on interlocutory appeal:

I. WHETHER THE CHANCERY COURT ERRED IN DENYING DEFENDANTS' MOTION TO TRANSFER TO CIRCUIT COURT.

¶ 10. Whether a trial court has jurisdiction over the subject matter of a claim is a question of law and subject to de novo review by this Court. Burch v. Land Partners, L.P., 784 So.2d 925, 927 (Miss. 2001).

¶ 11. Lindsley's chancery court complaint alleges (1) that defendants breached their duty to Lindsley by failing to instruct and supervise a third party; (2) that defendants' failure to instruct and supervise constitutes gross negligence and/or intentional conduct entitling Lindsley to punitive damages; (3) that defendants breached a listing agreement entered into by the parties; and (4) that Lindsley is entitled to an accounting. Defendants argue that, with the exception of (4), these claims are legal in nature, not equitable. Therefore, they insist that circuit court, rather than chancery, is the proper forum for this dispute.

¶ 12. The chancery court has "full jurisdiction in all the matters and cases expressly conferred upon it by the constitution." Miss.Code Ann. § 9-5-81 (Rev. 2002). The Mississippi Constitution grants the chancery court concurrent jurisdiction with the circuit court over

suits on bonds of fiduciaries and public officers for failure to account for money or property received, or wasted or lost by neglect or failure to collect, and of suits involving inquiry into matters of mutual accounts; but if the plaintiff brings suit in the circuit court, that the court may, on application of the defendant, transfer the cause to the chancery court, if it appear that the accounts to be investigated are mutual and complicated.

Miss. Const. art. 6, § 161.

¶ 13. Chancery courts have historically had jurisdiction over suits for accounting. Tillotson v. Anders, 551 So.2d 212, 213 (Miss.1989). It is well established that, where there is in a case one issue of exclusive equity cognizance, such an issue can bring the entire case within subject matter jurisdiction of the chancery court and that court may proceed to adjudicate all legal issues as well. Thompson v. First Miss. Nat'l. Bank, 427 So.2d 973, 975 (Miss.1983). Furthermore, chancery courts have the discretion to award legal and even punitive damages as long as the chancery court's jurisdiction has attached. Southern Leisure Homes, Inc. v. Hardin, 742 So.2d 1088, 1090 (Miss.1999).

¶ 14. However, "[t]he circuit court should be wary of attempts to camouflage as a complicated accounting what is in essence an action at law for breach of contract." Thompson, 427 So.2d at 976, citing Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). This Court has indicated that, in cases in which some doubt exists as to whether a complaint is legal or equitable in nature, the better practice is to try the case in circuit court. Southern Leisure Homes, 742 So.2d at 1090. Southern Leisure Homes also noted that "[i]t is more appropriate for a circuit court to hear equity claims than it is for a chancery court to hear actions at law since circuit courts have general jurisdiction but chancery courts enjoy only limited jurisdiction." Id.

¶ 15. In light of the foregoing, this Court's duty in this case is to determine whether there is an actual need for an equitable accounting in this case. If there is, the chancery court is within its authority to retain the entire case, including the legal claims for damages.

¶ 16. There are three factors to consider when deciding whether a court of equity has jurisdiction over matters of account, (1) the need of discovery, (2) the complicated character of the accounts, and (3) the existence of a fiduciary or trust relation. Henry v. Donovan, 148 Miss. 278, 114 So. 482, 484 (1927).

¶ 17. Defendants argue that Lindsley has "disclosed no facts that would establish that the accounts relating to the financial activity of Lot 39 is in any way complicated" and that there is no evidence left "undiscovered" by interrogatories, depositions, and requests for production of documents. They also point out that Lindsley is quite capable of determining how much money she alleges she is owed, as she has enumerated her damages in her complaint against them and her complaint against Debbie Wheat individually. They argue that Lindsley has made an accounting claim for the sole purpose of attempting to have chancery court jurisdiction attach and deprive them of their right to a jury trial.

¶ 18. Lindsley, however, claims that she "has not been able to ascertain how much interest has accrued on the money that was borrowed by Wheat using Lot 39 as collateral. An accounting is sought by Lindsley to determine where the loaned money is, how it has been used or distributed, whether any of the misappropriated money is in the form of proceeds as cash or otherwise." Lindsley also asserts that the accounting is "the basis by which the other claims pursued by Lindsley may be measured."

¶ 19. Lindsley further argues that defendants owed her a fiduciary duty under the Real Estate License Law and Rules and Regulations, which hold that:

It shall be the duty of the responsible broker to instruct the licensees licensed under that broker in the fundamentals of real estate practice, ethics of the profession and in Mississippi Real Estate License Law and to exercise supervision of their real estate activities for which a license is required.

Code Miss. R., Real Estate Commission, Rule IV A. 1 (2002) (enacted pursuant to Miss.Code Ann. § 73-35-15). Also, according to Code Miss. R., Real Estate Commission, Rule IV E.2(g), the agent must "provide a full accounting of any money or goods coming into the agent's possession which belong to the principal or other parties."

¶ 20. Though it is true, as defendants assert, that the right to a jury trial shall remain inviolate, this right is not absolute. Our Constitution vests concurrent jurisdiction between chancery and circuit courts in matters regarding accounts; however, chancery is the preferred court to hear this type of matter. See Crowe v. Smith, 603 So.2d 301, 307-08 (Miss.1992)

(Chancery court holds authority to hear case for an accounting). Moreover, the rules pertaining to jury trial have no effect in...