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Sneed v. Ford Motor Co.

March 31, 1999

LORI SNEED, ALLISON HUNTER, BRAD CONWILL, UNITED STATES FIRE INSURANCE COMPANY AND NATIONAL UNION FIRE INSURANCE COMPANY, FRED MANNINO AND RUSSELL L. COOK, JR.
v.
FORD MOTOR COMPANY CONSOLIDATED WITH LORI SNEED, ALLISON HUNTER, BRAD CONWILL, UNITED STATES FIRE INSURANCE COMPANY, AND NATIONAL UNION FIRE INSURANCE COMPANY
v.
FORD MOTOR COMPANY



The opinion of the court was delivered by: Pittman, Presiding Justice

DATE OF JUDGMENT: 07/03/97

TRIAL JUDGE: HON. JERRY OWEN TERRY SR.

COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT

NATURE OF THE CASE: CIVIL - PERSONAL INJURY

MOTION FOR REHEARING FILED:

MANDATE ISSUED:

EN BANC

¶1. On January 29, 1991, William Hough was driving a 1989 Ford Bronco II on Interstate Highway 55 near Winona, Mississippi. The vehicle was owned by Phillips Building Supply of Gulfport, Inc. Guest passengers in the vehicle were Lori Sneed, Allison Hunter, and Brad Conwill. ("Plaintiffs"). An accident occurred in which the Bronco II rolled over several times. Lori Sneed was rendered a quadriplegic. Allison Hunter and Brad Conwill were also injured. The Plaintiffs made claims against Hough, Phillips, Allied Building Products, and Hough's parents ("the Insureds") for Hough's negligent operation of the vehicle. The Insureds were insured under liability policies issued by United States Fire Insurance Company and National Union Fire Insurance Company ("the Insurers"). Before suit was filed, the Insurers began settlement Discussions with the Plaintiffs.

¶2. Under the terms of the settlement agreement, the Insurers paid their policy limits of $5,000,000. In addition to payment of the policy limits, the Plaintiffs and the Insurers entered into an agreement which provided that the Plaintiffs would sue Ford Motor Company for personal injuries and other damages. According to the agreement, United States Fire Insurance Company would pay for all expenses incurred by the Plaintiffs in prosecution of their action against Ford. Upon recovery of damages by the Plaintiffs, United States Fire Insurance Company would be reimbursed first for expenses paid. Thereafter, a 15% fee would be paid to the Page, Mannino, & Peresich law firm for its representation of the Plaintiffs. The remaining proceeds would be evenly divided between the Insurers and the Plaintiffs until the Insurers had recovered the $5,000,000 paid to the Plaintiffs under the settlement agreement. Finally, the remainder of the proceeds would go to the Plaintiffs for their division.

¶3. On January 27, 1994, the Plaintiffs filed suit against Ford Motor Company in the Circuit Court of Harrison County. After Ford learned of the agreement between the Insurers and the Plaintiffs, Ford filed a Motion to Substitute Real Party in Interest. On April 8, 1997, the trial court granted Ford's motion to add the Insurers as real parties in interest. At that motion hearing, the trial court also issued a sua sponte order directing the Plaintiffs, the Insurers, and their attorneys to file the statutory champerty affidavits set out in Miss. Code Ann. § § 97-9-15 and 97-9-17 because it found that the agreement entered into appeared to be champertous. The Plaintiffs, the Insurers, and the attorneys moved for reconsideration of the order.

¶4. On July 3, 1997, the Motion for Reconsideration was denied by the court. The trial court made the following findings:

"The "agreement" entered into by the parties Plaintiff speaks for itself. The individual Plaintiffs have absolutely no control of the litigation, nor do they have any financial investment nor interest in the success of the litigation until all expenses including attorney fees have been deducted. These Plaintiffs are required to accept the appointment of the carriers' attorneys to pursue the litigation and further to accept the decision of these representatives and carriers to either continue the pursuit, or abandon not only the alleged rights of the carriers, but also the rights of these individual Plaintiffs... "It would appear that this absolute control of the individual Plaintiffs extends to joinder with the carriers in seeking relief from the Court's prior ruling. Since these individual Plaintiffs do, in fact, have a viable cause of action against the Defendant Ford Motor Company, it would appear that the best interest of these parties would be adverse to the carriers when the validity of the "agreement" is in issue. Counsel would be well-advised to consider this potential conflict of interest when representing not only the carrier, but the individual Plaintiff as well... "It would appear that the parties have ignored the fact that the insurance carriers were strangers to the individual Plaintiffs' causes of action. It was only through a contract of indemnity between their host driver, William Hough, Jr., that the carriers surfaced. These carriers' interest at that point was two-fold - defend and indemnify Hough for all sums in damages for which he was legally liable. They owed no contractual duty to the injured parties under the policy and were not in any position to use payment as a bargaining "chip" to gain this agreement in settlement. As the liability carrier for Hough, they stood in his shoes as a tortfeasor, and this Court is unaware of any legal precedent in Mississippi which allows a tortfeasor to recover from a joint tortfeasor damages voluntarily paid to an injured party as a result of their joint and several tortious acts. Under the common law, a wrongdoer is not entitled to compel contribution from a joint tortfeasor. This is in accord with the doctrine that if tortfeasors are in pari delicto, no indemnity is due to one held separately liable. Therefore a joint tortfeasor's insurer, under this rule, cannot have subrogation... "It would appear from the "agreement" that the current action violates the laws of this State which prohibit champerty and maintenance... "This Court is satisfied that its prior ruling, requiring joinder and filing of affidavits was well founded and should not be disturbed..."

¶5. The Plaintiffs, the Insurers, and their attorneys sought interlocutory appeals from the trial court's order, which this Court permitted on December 23, 1997. This case presents a matter of first impression for this Court's review. The Plaintiffs, the Insurers, and their attorneys raise the following issues for this Court's consideration:

"I. THE CIRCUIT COURT ERRED IN FINDING THAT THE AGREEMENT BETWEEN THE ORIGINAL PLAINTIFFS AND THE INSURERS WAS CHAMPERTOUS. "II. THE CIRCUIT COURT ERRED IN ORDERING AFFIDAVITS PURSUANT TO SECTIONS 97-9-15 AND 97-9-17 OF THE MISSISSIPPI CODE FOR A NONCHAMPERTOUS AGREEMENT. "III. AS APPLIED TO RUSSELL L. COOK, JR. AND COOK, BUTLER & DOYLE, THE LOWER COURT'S ORDER IS ARBITRARY AND CAPRICIOUS AND, THEREFORE, UNCONSTITUTIONAL. "DISCUSSION OF LAW "I. THE CIRCUIT COURT ERRED IN FINDING THAT THE AGREEMENT BETWEEN THE ORIGINAL PLAINTIFFS AND THE INSURERS WAS CHAMPERTOUS. "a. THE CIRCUIT COURT ERRED IN ORDERING AFFIDAVITS PURSUANT TO SECTIONS 97-9-15 AND 97-9-17 OF THE MISSISSIPPI CODE FOR A NONCHAMPERTOUS AGREEMENT."

¶6. Champerty is generally defined as "[a] bargain between a stranger and a party to a lawsuit by which the stranger pursues the party's claim in consideration of receiving part of any judgment proceeds... ." Black's Law Dictionary 157 (6th ed. 1990). "Champerty is a species of maintenance and that term and 'maintenance' have been used by the courts almost interchangeably." State ex rel. Carr v. Cabana Terrace, Inc., 247 Miss. 26, 153 So. 2d 257, 259 (1963)(quoting 10 Am. Jur. Champerty and Maintenance § 3 (1964)).

"Perhaps the best, because it is the most flexible, definition of maintenance is that it is an officious intermeddling in a suit which in no way belongs to one, by maintaining or assisting either party, with money or otherwise, to prosecute or defend it..." 153 So. 2d at 259.

¶7. Mississippi has declared champerty and maintenance unlawful. Miss. Code Ann. § 97-9-11 (Rev. 1994), which is entitled Champerty and maintenance; solicitation and stirring up of litigation prohibited, provides that:

"It shall be unlawful for any person, firm, partnership, corporation, group, organization, or association, either incorporated or unincorporated, either before or after proceedings commenced: (a) to promise, give, or offer, or to conspire or agree to promise, give or offer, (b) to receive or accept, or to agree or conspire to receive or accept, (c) to solicit, request, or donate, any money, bank note, bank check, chose in action, personal services, or any other personal or real property, or any other thing of value, or any other assistance as an inducement to any person to commence or to prosecute further, or for the purpose of assisting such person to commence or prosecute further, any proceeding in any court or before any administrative board or other agency, regardless of jurisdiction; provided, however, this section shall not be construed to prohibit the constitutional right of regular employment of any attorney at law or solicitor in chancery, for either a fixed fee or upon a contingent basis, to represent such person, firm, partnership, corporation, group, organization, or association before any court or administrative agency."

¶8. Miss. Code Ann. § 97-9-23 (Rev. 1994), entitled Champerty and maintenance; exceptions; legislative intent, provides that:

"The provisions of sections 97-9-11 to 97-9-23 shall not be applicable to attorneys who are parties to contingent fee contracts with their clients where the attorney does not pay or protect the client from payment of the costs and expenses of litigation, nor shall said sections apply to suits pertaining to or affecting possession of or title to real or personal property, nor shall said sections apply to suits involving the legality of assessment or collection of taxes, nor shall said sections apply to suits involving rates or charges by common carriers or public utilities, nor shall said sections apply to criminal prosecutions, nor to the payment of attorneys by legal aid societies approved by the Mississippi State Bar. "Nothing in sections 97-9-11 to 97-9-23 is intended to be in derogation of the constitutional right of real parties in interest to employ counsel or to prosecute any available legal remedy. The intent, as herein set out, is to prohibit and punish, more clearly and definitely, champerty, maintenance, barratry, and the solicitation or stirring up of litigation, whether the same be committed by licensed attorneys or by others who are not real parties in interest to the subject matter of litigation."

ΒΆ9. In the case sub judice, the trial court found that the agreement between the Insurers and the original Plaintiffs appeared to be champertous. The trial court also granted Ford's motion to join the Insurers as real parties in interest and sua sponte ordered the Plaintiffs, the Insurers, and their attorneys to file the statutory champerty ...


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