This article first appeared on the Magnolia Tribune.
- The Mississippi Supreme Court recently greenlit more than $15 million in extracontractual damages, punitive damages and attorneys’ fees in a case with sweeping implications for tort reform, then moved the deadline for rehearing up in a play that could prevent newly elected justices from considering the merits.
In November, Mississippi Supreme Court Justices Jim Kitchens and Dawn Beam were defeated in their bids for re-election. Weeks later, the pair joined a bare five-member majority to uphold an eye-popping $10 million in punitive damages and award an additional $4.5 million in attorneys’ fees to the family of Paul Minor.
The size, circumstances, and cast of characters in the case harken back to an era of “jackpot justice” that made Mississippi a judicial hellscape for business, and made a cabal of trial lawyers, Minor included, extremely wealthy.
Tort reform became a central theme in former Governor Haley Barbour’s 2003 successful campaign. The Legislature passed a package of restrictions in 2004 aimed to slow the exploitation of our courts and the undermining of the state’s business climate.
Now Barbour and a bevy of business organizations are sounding the alarm about how the Supreme Court’s December decision in USAA v. Minor threatens to erode tort reform.
The case at issue stemmed from a “wind versus water” dispute following Hurricane Katrina. Nearly six months after Katrina, the Minors informed USAA of their homeowners claim. USAA insured the Minors’ home only for wind damage. It contended, on the back of an evaluation by an independent engineer, that most of the damage to the coastal property had been caused by storm surge not covered by the wind policy.
A jury ultimately disagreed and awarded the Minors over $1.5 million in contractual damages. Not content with the award, an odyssey of appeals and a second trial resulted in the $10 million punitive damage award, and approximately $458,000 in “extra-contractual damages,” which the Supreme Court notes were “solely attorneys’ fees.” USAA appealed the verdict on punitive damages and the Minors appealed seeking additional attorneys’ fees.
Stretching the Punitive Damages Statute
The implications of the Supreme Court’s December decision in favor of the Minors is far more significant than a one-off, lingering Katrina dispute. That’s because the majority ignored the plain language of Mississippi’s punitive damage statute to justify the eight-figure sum.
In his dissent, Justice Kenny Griffis noted the statute explicitly requires proof that a defendant acted with “gross negligence which evidences a willful, wanton or reckless disregard for the safety of others” in order to award punitive damages.
Griffis found, “there is no evidence that USAA acted in reckless disregard for the Minors’ safety. The Minors do not contend that USAA adjusted their insurance claim in some manner that affected their safety, let alone evidenced a willful, wanton, or reckless disregard for their
safety.”
Instead, the majority simply used a different standard — one that predated tort reform and is not found in statute — to validate the massive punitive damage award.
Derek Easley, President and CEO of BIPEC, told Magnolia Tribune the business community is alarmed by the decision and view it as a form of judicial activism. Easley said, “The Mississippi Supreme Court should apply the laws passed by the legislature. BIPEC and its members believe that the majority decision by the Mississippi Supreme Court in this case was wrong. This ruling sets a troubling precedent that could undo many of the gains for businesses in Mississippi.”
The Supreme Court not only reversed the trial court’s decision not to consider an additional attorneys’ fees award on top of punitive and extra-contractual damages. The majority also took the unusual step of assessing the nearly $5 million in fees directly from the appellate bench. These types of awards are historically decided at the trial court level.
The decision drew the ire of Justices Maxwell, Chamberlin and Griffis. Griffis explained, “I cannot join my colleagues in this extraordinary decision to act in the role of the trial court. Not only does the majority reverse the trial court’s denial of post-trial attorneys’ fees, but it also renders an award of attorneys’ fees in the amount of $4,500,000. The majority does not cite one Mississippi case that supports this decision.”
Deadline Moved Without Explanation for Rehearing Petition
The timing of the ruling, and subsequent action by the Supreme Court, also raise real questions. The decision has the potential to be incredibly consequential in Mississippi’s judicial landscape, but there would have been no majority to support the full award made without two justices, Kitchens and Beam, who voters had already rejected at the ballot box.
To compound questions around timing, following the decision, USAA informed the Court it would file a petition for rehearing. The Supreme Court initially set the deadline for filing the petition for a date after Kitchens’ and Beam’s replacements, Jenifer Branning and David Sullivan, would be sworn into office.
But after the deadline to petition for rehearing had been set, the Supreme Court entered an order moving it up to January 2nd — four days prior to Branning and Sullivan being seated. No explanation was provided for changing the date.
A majority of the Court can deny the petition for rehearing, without any additional briefing or hearings, and could do so almost immediately. Moving the deadline up to before Branning’s and Sullivan’s inauguration means the petition for rehearing can now be denied before they take office — essentially that the newly elected justices could be prevented from considering the case on its merits.
A Familiar Cast of Characters
Within a few years of tort reform, trial lawyers like Dickie Scruggs, Joey Langston and Paul Minor, who had gotten wealthy off of Mississippi’s judicial system, found themselves embroiled in alleged judicial bribery scandals. In 2007, Minor was convicted for providing and paying off loans to two judges. Prosecutors alleged that, in turn, he received favorable treatment from those judges.
A familiar cast of attorneys helped push the Minors’ case against USAA across the finish line. The family was represented by former Supreme Court Justices Chuck McRae and Oliver Diaz, along with former legislator David Baria.
But the redux of the “jackpot justice,” tort reform tension of the early 2000s would not be complete without the business community. BIPEC’s Easley told Magnolia Tribune that a long list of business groups are prepared to file an amicus brief if permitted by the Court in favor of USAA’s position. The list, according to Easley, will be headlined by the man who brought tort reform to Mississippi — Haley Barbour.
Easley provided a list of the groups that have been marshalled in opposition the Court’s decision:
Governor Haley Barbour
BIPEC (Business & Industry Political Education Committee)
Mississippi Manufacturers Association
Mississippi Economic Council – The State Chamber of Commerce
Mississippi State Medical Association
Gulf Coast Business Council
Mississippi Bankers Association
Electric Cooperatives of Mississippi
American Council of Engineering Companies of Mississippi
Associated Builders and Contractors – Mississippi
Independent Insurance Agents of Mississippi
Mississippi Association of REALTORS
Mississippi Association of Self-Insurers
Mississippi Automobile Dealers Association
Mississippi Beverage Association
Mississippi Energy Institute
Mississippi Forestry Association
Mississippi Hospitality & Restaurant Association
Mississippi Manufactured Housing Association
Mississippi Petroleum Marketers & Convenience Stores Association
Mississippi Poultry Association
Mississippi Propane Gas Association
Mississippi Trucking Association
Southeast Oil and Gas Association
Insurance Coalition of Mississippi
This article first appeared on the Magnolia Tribune and is republished here under a Creative Commons license.
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