DATE OF JUDGMENT: 11/01/93 TRIAL JUDGE: HON. KEITH STARRETT COURT FROM WHICH APPEALED: PIKE COUNTY CIRCUIT COURT
The opinion of the court was delivered by: Banks, Justice, For The Court:
ON PETITION FOR WRIT OF CERTIORARI
NATURE OF THE CASE: CIVIL - LEGAL MALPRACTICE
MOTION FOR REHEARING FILED:
¶1. This matter is before the Court on petition for certiorari from the Mississippi Court of Appeals. We granted certiorari to address a question of broad public importance in regard to Mississippi's punitive damages statute. Our recent decision in American Funeral Assurance Co. v. Hubbs, 700 So. 2d 283 (Miss. 1997), determined that Miss. Code Ann. § 11-1-65 is not applicable to actions for tortious breach of contract, which is contrary to the decision of the Court of Appeals here. Because we find that the trial court abused its discretion when it originally sent the issue of punitive damages to the jury, however, the judgment denying punitive damages is affirmed.
¶2. In 1979, the heirs of Roy Ellzey brought suit against Josie Connerly and Geraldine and Kenneth Hurst to confirm title to the mineral rights in certain real property in Pike County, Mississippi. Southwest Mississippi Legal Services (Southwest) undertook the defense and assigned the case to attorney Hilda Burnett, now Hilda Burnett-Baker. Trial was set for June 27, 1980, after which the court found in favor of the heirs of Ellzey. Burnett-Baker filed a notice of appeal and applied for several extensions of time. She never filed a brief, however, and this Court ultimately dismissed the appeal in 1981. Burnett-Baker did not inform the court that she was withdrawing from the case, although she claims to have expressly discussed the appeal's lack of merit with the Hursts and told them that she would not proceed. In 1986, Connerly and the Hursts filed suit against Southwest and Burnett-Baker, alleging legal malpractice and tortious breach of contract. The circuit court granted summary judgment in favor of Southwest and Burnett-Baker. On appeal, this Court reversed and remanded. See Hurst v. Southwest Mississippi Legal Services Corp., 610 So. 2d 374 (Miss. 1992).
¶3. At the trial of the case following remand, the jury found in favor of Southwest and Burnett-Baker on the issue of legal malpractice in their defense of the Hursts in the Ellzey suit. On the issue of breach of contract, however, the jury found by a preponderance of the evidence that the defendants had breached their legal obligation to the Hursts by failing to file a brief or properly withdraw after appealing their case. The jury awarded $40.00 in compensatory damages and $75,000.00 in punitive damages. Southwest and Burnett-Baker moved for a judgment notwithstanding the verdict, which was granted by the circuit court as to punitive damages. The circuit court found that it had improperly permitted the issue of punitive damages to go to the jury on the common law preponderance standard because it had determined that Miss. Code Ann. § 11-1-65 was not applicable. *fn1 The court reversed itself, finding that "the applicable portions of Section 11-1-65 were in effect at the time of trial and that the burden was on the Plaintiffs to prove by clear and convincing evidence that the Defendants acted with actual malice, gross negligence which evidences a willful, wanton, or reckless disregard for the safety of others, or committed actual fraud . . . ." The court found that the proof presented did not rise to the level of clear and convincing and that a judgment notwithstanding the verdict in favor of Southwest and Burnett-Baker was thus warranted. *fn2
¶4. The Hursts appealed, and the case was assigned to the Mississippi Court of Appeals. By opinion dated October 1, 1996, that court affirmed, ruling that the circuit court correctly applied § 11-1-65 to the case. The Court of Appeals disregarded the exemption provision of § 11-1-65(2)(a), finding that the Hursts had alleged "the tort of bad faith, not a breach of contract per se." (emphasis in original). The Hursts' petition for rehearing was denied by order entered December 17, 1996. We granted certiorari on the sole issue of whether Miss. Code Ann. § 11-1-65 is applicable to actions for tortious breach of contract.
¶5. Our task is simplified in light of our recent decision in American Funeral Assurance Co. v. Hubbs, 700 So. 2d 283 (Miss. 1997). In American Funeral, we held that the issue of punitive damages in suits for tortious breach of contract, breach of fiduciary duties and fraud are governed by the common law, not by the provisions of § 11-1-65(1). This is because § 11-1-65(2)(a) specifically exempts contract actions from the provisions of the statute.
¶6. As in American Funeral, the question of punitive damages in the present case arises in an action founded on a contract and it is therefore governed by the common law standards ...