Union National Life Ins. Co. v. Crosby

• Decision Date: 12 February 2004
• Docket Number: No. 2002-IA-01751-SCT.,2002-IA-01751-SCT.
• Citation: 870 So.2d 1175
• Parties: UNION NATIONAL LIFE INSURANCE COMPANY; United Insurance Company of America; Union National Fire Insurance Company; Roland Stewart; Eugene Thomas ("Pete") Furline; and Charles Stewart v. Jacqueline CROSBY; Pearlie Hendricks; David Hendricks, Jr.; Calvin Lawrence; Johnnie M. Owens; Kandice Owens; Minnie Owens; Mary Turner; and Shannon S. Wallace.
• Court: Mississippi Supreme Court

870 So.2d 1175

UNION NATIONAL LIFE INSURANCE COMPANY; United Insurance Company of America; Union National Fire Insurance Company; Roland Stewart; Eugene Thomas ("Pete") Furline; and Charles Stewart v. Jacqueline CROSBY; Pearlie Hendricks; David Hendricks, Jr.; Calvin Lawrence; Johnnie M. Owens; Kandice Owens; Minnie Owens; Mary Turner; and Shannon S. Wallace.

No. 2002-IA-01751-SCT.

Supreme Court of Mississippi.

February 12, 2004.

Rehearing Denied April 29, 2004.

Samuel Ernest Linton Anderson, Arthur F. Jernigan, Staci Bozant O'Neal, William C. Brabec, Charles E. Griffin, Jackson, John M. Deakle, Hattiesburg, R. Christopher Wood, attorneys for appellants.

Subrina Latreace Cooper, Hattiesburg, Janet L. Sims, Guthrie T. Abbott, Oxford, John Michael Sims, Heidelberg, Crymes G. Pittman, Jackson, attorneys for appellees.

Before PITTMAN, C.J., WALLER, P.J., and CARLSON, J.

WALLER, Presiding Justice, for the Court.

¶ 1. Jacqueline Crosby and over 350 other plaintiffs ("Crosby") filed suit against Union National Life Insurance Company, United Insurance Company of American, Union National Fire Insurance Company, and their agents Roland Stewart, Eugene Thomas Furline, and Charles Stewart ("Union National"), from whom they had purchased fire, life and/or accident health insurance policies. The suit was filed in the Chancery Court of Covington County, and the chancellor denied Union National's motion to transfer to circuit court. We granted Union National permission to bring this interlocutory appeal. See M.R.A.P. 5. We find that the suit sounds in tort and contract law instead of equity as Crosby contends, and that the chancellor erred when he denied the motion to transfer.

STANDARD OF REVIEW

¶ 2. The standard of review for a ruling on a motion to transfer from chancery court to circuit court, or from circuit court to chancery court, is de novo. Briggs & Stratton Corp. v. Smith, 854 So.2d 1045, 1048 (Miss.2003) (citing United States Fid. & Guar. Co. v. Estate of Francis, 825 So.2d 38, 43-44 (Miss.2002)). Jurisdiction is a question of law, and the Court review questions of law de novo. Briggs & Stratton Corp., 854 So.2d at 1048; Saliba v. Saliba, 753 So.2d 1095, 1098 (Miss.2000); Entergy Miss., Inc. v. Burdette Gin Co., 726 So.2d 1202, 1204-05 (Miss.1998).

DISCUSSION

¶ 3. The complaint, which is entitled "Complaint for Injunction, Accounting and Related Relief," states as follows:

29. This is an action seeking redress for a fraudulent scheme and course of conduct involving deceptive sales practices, unconscionable conduct, overreaching, fraud and deception by the Insurance Defendants relating to the training of their agents; the marketing, sales, and administration of its policies by the Insurance Defendants and by the employees including the Agent Defendants, who wilfully, knowingly, and intentionally participated directly in the tortious acts complained of herein.

Crosby raises the following claims: fraud, fraudulent inducement, breach of duty of good faith and fair dealing, tortious breach of contract, breach of fiduciary duty, assumpsit, unjust enrichment, negligence, gross negligence, multiple violations of the Mississippi Consumer Protection Act, and conversion. Crosby requests relief in the following forms: constructive trust,¹ accounting,² injunctive relief, actual damages and punitive damages.

¶ 4. The Mississippi Constitution of 1890 limits the jurisdiction of the chancery court to certain specified areas. Specifically, Article 6, § 159 of the Mississippi Constitution provides that:

The chancery court shall have full jurisdiction in the following matters and cases, viz.:

(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;

(f) All cases of which the said court had jurisdiction under the laws in force when this Constitution is put in operation.

Article 6, § 162 of the Mississippi Constitution further provides that "[a]ll causes that may be brought in the chancery court whereof the circuit court has exclusive jurisdiction shall be transferred to the circuit court."

A. Fraud and fraudulent inducement.

¶ 5. Crosby alleges that Union National "targeted low income, unsophisticated, and uneducated segments of the population and developed insurance products for sale to these consumers," that "[t]he [p]olicies were intentionally designed by [Union National] to create the illusion that they would provide valuable yet affordable benefits," when in fact "the premiums charged by [Union National] were exorbitant in relation to the minimal death benefits actually afforded to [Crosby] and the risks caused to [Union National]." Crosby also alleges that the unit premium charges were "expensive," the death benefits were "minimal" and "non-increasing," and the cash value did not "accrue significant[ly]." Finally, she contends that the insureds were "required to continue making premium payments after the premiums exceed[ed] the face value of the [p]olicies or face losing all of their paid premiums without receiving any meaningful corresponding cash value or death benefits."

¶ 6. Crosby seeks actual damages in the amount of the excess premium payments plus accrued interest, funds lost because of wrongful lapse, the sale of worthless policies, and "outright misappropriation of funds," and emotional distress. She also seeks punitive damages for Union National's alleged "willful malicious, intentional misconduct."

¶ 7. Crosby's assertion of chancery court jurisdiction as to her claims of fraud and fraudulent inducement fails: "Although acts of fraud may give rise to actions in equity, it is apparent that [Crosby] seek[s] a legal, rather than an equitable remedy.... Specifically, [Crosby's] complaint seeks ... actual damages and ... punitive damages, and this remedy is clearly legal rather than equitable in nature." Southern Leisure Homes, Inc. v. Hardin, 742 So.2d 1088, 1090 (Miss.1999).

¶ 8. Crosby also seeks an "accounting of all funds which were the subject of overcharging, miscollection, misappropriation, or unconscionably charged and collected" by Union National. This request for an accounting should be viewed as "a mere disguise for what really could be accomplished through discovery." Briggs & Stratton Corp. v. Smith, 854 So.2d 1045, 1049 (Miss.2003). Indeed, all of this information may be obtained through discovery in circuit court. City of Ridgeland v. Fowler, 846 So.2d 210, 214 (Miss.2003).

B. Breach of duty of good faith and fair dealing.

¶ 9. The duty of good faith and fair dealing arises from the existence of a contract between parties. American Bankers' Ins. Co. of Fla. v. Wells, 819 So.2d 1196, 1207 (Miss.2001); see also Cenac v. Murry, 609 So.2d 1257, 1272 (Miss. 1992)

. There is no question that any issue relating to good faith and fair dealing should be heard in circuit court.

C. Tortious breach of contract.

¶ 10. Breach of contract claims are best heard in circuit court. Southern Leisure, 742 So.2d at 1089. "[I]n 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." Id.

D. Breach of fiduciary duty.

¶ 11. A claim of breach of fiduciary duty is "appropriately recognized as an action in tort, not contract." Tyson v. Moore, 613 So.2d 817, 823 (Miss.1992). Regardless of whether it is a cause of action based in tort or in contract, it is impliedly not a matter to be decided by a court of equity.

E. Assumpsit.

¶ 12. "[W]here a party has paid money to another as the consideration for a contract and the contract so made is void and unenforceable, so that the consideration wholly fails, the payor may recover the money back in an action of assumpsit for money had and received." Fuqua v. Joudon, 172 Miss. 11, 158 So. 795 (1935) (citing Milam v. Paxton, 160 Miss. 562, 570, 134 So. 171 (1931).) The action of assumpsit is based in equity. Fuqua, 158 So. at 795.

¶ 13. However, an action of assumpsit lies only after consideration fails and the contract is void and unenforceable. Id. Because the contract herein has not been voided, Crosby's claim for assumpsit is not ripe.

F. Unjust enrichment and constructive trust.

¶ 14. Unjust enrichment is an equitable claim:

Money paid to another by mistake of fact, although such mistake may have been caused by payor's negligence, may be recovered from the person to whom it was paid, in an action for money had and received. The ground on which recovery is allowed is that one receiving money paid to him by mistake should not be allowed to enrich himself at the expense of the party who paid the money to him by retaining it, but in equity and good conscience should refund it. In order that this rule may apply, the party to whom the payment mistake was made must be left in the same situation after he refunds it as he would have been left had the payment to him not been made.

Mason v. Southern Mortg. Co., 828 So.2d 735, 739 (Miss.2002); see also Milliken & Michaels, Inc. v. Fred Netterville Lumber Co., 676 So.2d 266, 269 (Miss.1996)

; Bessler Movable Stairway Co. v. Bank of Leakesville, 140 Miss. 537, 106 So. 445 (1925).

¶ 15. "A constructive trust is a fiction of equity created for the purpose of preventing unjust enrichment by one who holds legal title to property which, under principles of justice and fairness, rightfully belongs to another." McNeil v. Hester, 753 So.2d 1057, 1064 (Miss.2000). See also Allgood v. Allgood, 473 So.2d 416 (Miss. 1985)

; Russell v. Douglas, 243 Miss. 497, 138 So.2d 730 (1962). A constructive trust is:

one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the

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