Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Jackson County v. KPMG, LLP

Supreme Court of Mississippi

January 17, 2019

JACKSON COUNTY, MISSISSIPPI
v.
KPMG, LLP

          DATE OF JUDGMENT: 12/22/2017

          JACKSON COUNTY CIRCUIT COURT HON. JAMES D. BELL JUDGE

          TRIAL COURT ATTORNEYS: WILLIAM LEE GUICE, III MARIA MARTINEZ R. DAVID KAUFMAN TAYLOR BRANTLEY McNEEL AMELIA TOY RUDOLPH PATRICIA ANNE GORHAM EDWARD C. TAYLOR EARL L. DENHAM WILLIAM HARVEY BARTON BRETT K. WILLIAMS A. KELLY SESSOMS, III HANSON DOUGLAS HORN KRISTI ROGERS BROWN

          ATTORNEYS FOR APPELLANT: WILLIAM LEE GUICE, III MARIA MARTINEZ

          ATTORNEYS FOR APPELLEE: R. DAVID KAUFMAN TAYLOR BRANTLEY McNEEL LAUREN OAKS LAWHORN AMELIA TOY RUDOLPH PATRICIA ANNE GORHAM

          BEFORE RANDOLPH, P.J., MAXWELL AND BEAM, JJ.

          MAXWELL, JUSTICE

         ¶1. Recently, this Court unanimously held that KPMG, LLP, could not enforce arbitration agreements attached to five annual engagement letters with Singing River Health System (Singing River), a community hospital, because the terms and condition of the letters were not sufficiently spread upon the hospital board's minutes to create an enforceable contract. KPMG, LLP v. Singing River Health Sys., 2017-CA-1047-SCT, 2018 WL 5291088 (Miss. Oct. 25, 2018), reh'g denied Jan. 10, 2019. In the present appeal, KPMG seeks to enforce the very same arbitration agreements attached to the very same engagement letters with Singing River-but this time the entity against which KPMG seeks arbitration enforcement is Jackson County, Mississippi, which acted as Singing River's bond guarantor. For the same reason we affirmed the trial court's denial of KPMG's motion to compel arbitration in KPMG, LLP v. Singing River Health System, we reverse and remand the trial court's grant of KPMG's motion to compel arbitration in this case.

         Background Facts and Procedural History

         ¶2. Jackson County owns Singing River, a community hospital organized in accordance with the community hospital statutes and governed by a Board of Trustees. Miss. Code Ann. § 41-13-10 to -107 (Rev. 2013). For years, Singing River used the annual auditing services of KPMG. But in 2013, to save costs, Singing River hired Horne, LLP, to conduct the hospital's annual audit. Through Horne, Singing River learned that KPMG's prior annual audits had resulted in an $88, 000, 000 overstatement of Singing River's accounts receivable. Singing River also claimed KPMG's negligent audits left it unaware that its employee pension plan was underfunded by approximately $150, 000, 000.

         ¶3. In October 2015, Singing River sued KPMG in Hinds County Circuit Court, alleging breach of contract, negligence, and professional malpractice. KPMG, LLP, 2018 WL 5291088, at *3 (¶13). In March 2016, Jackson County filed its own lawsuit against KPMG in Jackson County Circuit Court. According to Jackson County's complaint, "KPMG failed to conduct its audits of [Singing River] pursuant to its contractual and professional duties, proximately causing damage to Jackson County." Specifically, Jackson County asserted "KPMG's actions left [Singing River] with a massive financial deficit, an underfunded pension plan, defending multiple lawsuits brought by members of its pension plan, and out of compliance with its bond covenants which has negatively affected [Singing River]." KPMG's actions also negatively impacted Jackson County, as Singing River's bond guarantor. Had KPMG's statements accurately reflected Singing River's financial status, Jackson County asserts it would have never guaranteed the bonds. But based on KPMG's negligent audit, Jackson County did guarantee certain bond issues to the benefit of Singing River, which led to a downgrade in its bond rating. Jackson County also alleged KPMG's actions led to various federal lawsuits against Singing River. And in order to facilitate a $149, 950, 000 settlement by Singing River, Jackson County agreed to contribute $13, 600, 000 to Singing River to support indigent care and prevent bond default by supporting operations.

         ¶4. KPMG responded to both lawsuits by filing motions to compel arbitration. KPMG asserted that Singing River and Jackson County were respectively "bound to the arbitration provisions, including the delegation clauses, contained in the audit engagement letters between KPMG and Singing River" for the relevant fiscal years-2008 to 2012.[1] Both Singing River and Jackson County responded that the KPMG Engagement Letters were not spread on the hospital board's minutes as required by Mississippi's "minutes rule." So no enforceable contract-and thus no enforceable arbitration clause-ever came into existence.

         ¶5. The Hinds County Circuit Court agreed with Singing River and denied KPMG's motion to compel arbitration in Singing River's lawsuit, which KPMG appealed to this Court. KPMG, LLP, 2018 WL 5291088, at *5 (¶18). The Jackson County Circuit Court, however, sided with KPMG, finding Jackson County's "minutes rule" argument was for the arbitrator, not the court, to decide. So the court granted KPMG's motion to compel arbitration in Jackson County's suit, which Jackson County appealed. See Sawyers v. Herrin-Gear Chevrolet Co., 26 So.3d 1026, 1034 (Miss. 2010) (holding that "any final decision with respect to arbitration is appealable to this Court pursuant to Mississippi Rules of Appellate Procedure 3 and 4").

         ¶6. On October 25, 2018, this Court unanimously resolved KPMG's appeal against Singing River in Singing River's favor, finding the minutes rule applied and prevented an enforceable arbitration agreement ever arising. KPMG, LLP, 2018 WL 5291088, at *5-9 (¶¶18-33). This leaves only the present appeal, which also turns on the minutes rule. Jackson County's primary appellate argument is that the trial court reversibly erred when it failed to recognize and apply the minutes rule to deny arbitration.[2] KPMG counters that the trial court correctly applied the arbitration ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.