Horne v. Mobile Area Water & Sewer System

897 So.2d 972

Phillip HORNE, et al. v. MOBILE AREA WATER & SEWER SYSTEM, Board of Water & Sewer Commissioners of the City of Mobile, Alabama, and City of Mobile, Alabama.

No. 2002-CA-01874-SCT.

Supreme Court of Mississippi.

July 15, 2004.

Rehearing Denied October 14, 2004.

Brett K. Williams, Kevin C. Bradley, James H. Colmer, Sr., Pascagoula, William L. Denton, Biloxi, David Elias Kihyet, David O. McCormick, Pascagoula, Paul T. Benton, Biloxi, Tanya L. Hasbrouck, Pascagoula, H.R. Wilder, Gulfport, attorneys for appellants.

Timothy Dale Crawley, Emily Burke Ryan, Alben N. Hopkins, Beau A. Stewart, Gulfport, James Gordon House, III, Jackson, attorneys for appellees.

EN BANC.

COBB, Presiding Justice, for the Court.

¶ 1. On August 10, 1999, Phillip Horne and approximately 350 other owners of property in Jackson County (collectively, Horne) filed this action in the Jackson County Chancery Court, against the Mississippi Power Company¹, Mobile Area Water & Sewer System, Board of Water & Sewer Commissioners of the City of Mobile (BWSC), the City of Mobile (the City) and John Does A-J. The complaint alleged negligence, strict liability, nuisance, trespass, and outrageous conduct, and in addition, requested injunctive relief. Over the next three years, there were numerous motions, hearings, recusal of three chancellors, removal to federal court and remand back to chancery court, and discovery.

¶ 2. On August 20, 2002, the special chancellor granted the motions of the City and BWSC, dismissing Horne's complaint, pursuant to Rule 12(b)(2) of the Mississippi Rules of Civil Procedure, for lack of personal jurisdiction. On November 11 and 23, 2002, the special chancellor adopted and incorporated his earlier ruling, and found no just reason for delay and directed entry of a final judgment as to BWSC and the City, respectively, pursuant to M.R.C.P. 54(b).

¶ 3. Aggrieved by the trial court's dismissal, Horne raises a single issue on appeal: whether the chancellor erred in granting the motions of the City and BWSC to dismiss pursuant to Miss. R. Civ. P. 12(b)(2). Concluding that these entities are subject to the in personam jurisdiction of Mississippi courts pursuant to the Mississippi long-arm statute, we reverse and remand for further proceedings consistent with this opinion.

FACTS

¶ 4. The Big Creek Lake Reservoir lies east of Jackson County approximately 12 miles across the state line in Alabama, and water released from it flows into the Escatawpa River which flows through Jackson County. In September of 1998, Hurricane Georges made landfall in the Jackson County, Mississippi, area, bringing with it record amounts of rainfall. Fearing that the water in the Reservoir would escape as a result of the heavy rains, BWSC released a significant amount of water which Horne alleges caused damage and/or destruction to the real and personal property of more than 350 Jackson County property owners.

¶ 5. The City of Mobile, Alabama, is a municipal corporation organized and existing under the laws of the State of Alabama. According to the affidavit of the BWSC Director, the City did not own or operate the Reservoir or the dam at any time relevant to this litigation. Further, according to Stevens's deposition, the City of Mobile is a separate legal entity from the BWSC.

¶ 6. The Board of Water & Sewer Commissioners of the City of Mobile is a legal entity authorized by the laws of Alabama and created by the City of Mobile. The City contends that BWSC is a separate governmental entity; that is, BWSC is not an agent of the City of Mobile.

STANDARD OF REVIEW

¶ 7. We review jurisdictional issues de novo. Rayner v. Raytheon Co., 858 So.2d 132, 133 (Miss.2003). When considering jurisdictional issues, the Court sits in the same position as the trial court, "with all facts as set out in the pleadings or exhibits, and may reverse regardless of whether the error is manifest." Id.

¶ 8. However, as the parties note, the learned chancellor referred to matters outside the pleadings in ruling on the Rule 12(b)(2) motion. Horne argues that the motion was, therefore, converted to one for summary judgment and the defendants are entitled to dismissal only if there exists no issue of material fact. In response, BWSC argues that the issues of fact in dispute here are not material. The City asserts that where a court considers jurisdictional matters outside the pleadings in considering a Rule 12(b)(2) motion, conversion to a Rule 56 motion does not occur.

¶ 9. M.R.C.P. 12(b), referring to the 12(b)(6) defense, states in pertinent part:

If, on a motion to dismiss for failure of the pleading to state a claim upon which relief can be granted matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

(emphasis added). We have found no case in which this Court has addressed the issue of whether a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) is also converted to one for summary judgment where the trial court considers matters outside the pleadings.

¶ 10. Rule 12(b) of the Mississippi Rules of Civil Procedure is in all relevant aspects very similar to Rule 12(b) of the Federal Rules of Civil Procedure. Applying F.R.C.P. 12(b)(2), the Fifth Circuit has concluded that a motion to dismiss for lack of personal jurisdiction is not converted to a Rule 56 motion when the trial court considers matters outside the pleadings. Attwell v. LaSalle Nat'l Bank, 607 F.2d 1157, 1161 (5th Cir.1979) (citing Edwards v. Associated Press, 512 F.2d 258 (5th Cir.1975); 5 Wright & Miller, Federal Practice & Procedure, Civil § 1351, p. 565). Moreover, a majority of federal courts that have considered this issue apply the same rule. See Patterson v. F.B.I., 893 F.2d 595, 604 (3d Cir.1990); Weidner Communications, Inc. v. Faisal, 859 F.2d 1302, 1306 (7th Cir.1988); Visual Sciences, Inc. v. Integrated Communications, Inc., 660 F.2d 56, 58 (2d Cir.1981); Topliff v. Atlas Air, Inc., 60 F.Supp.2d 1175, 1177 (D.Kan.1999); Sunwest Silver, Inc. v. Int'l Connection, Inc., 4 F.Supp.2d 1284, 1285 (D.N.M.1998); Bensusan Rest. Corp. v. King, 937 F.Supp. 295, 298 (S.D.N.Y.1996), aff'd, 126 F.3d 25 (2d Cir.1997); VDI Tech. v. Price, 781 F.Supp. 85, 87 (D.N.H.1991); Coan v. Bell Atl. Sys. Leasing Int'l, Inc., 813 F.Supp. 929, 942 n. 18 (D.Conn.1990); Ulman v. Boulevard Enters., Inc., 638 F.Supp. 813, 814 n. 3 (D.Md.1986); Mello v. K-Mart Corp., 604 F.Supp. 769, 771 n. 1 (D.Mass.1985). The rationale for this majority rule has been stated as follows:

[I]f the court has no jurisdiction, it has no power to enter a judgment on the merits and must dismiss the action. In addition, a dismissal for want of jurisdiction has no preclusive effect and the same action subsequently may be brought in a court of competent jurisdiction. A summary judgment, on the other hand, is on the merits and purports to have preclusive effect on any later action. The court's role on the two motions also is different. On a motion attacking the court's jurisdiction, the ... judge may resolve disputed jurisdictional-fact issues. On a motion under Rule 56 the judge simply determines whether any issues of material fact exist that require trial.

Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure: Civil 3d § 2713, at 239-40 (1998). A minority of federal courts hold that a Rule 12(b)(2) motion is converted to one for summary judgment where the trial court considers matters outside the pleadings. See Rodriguez v. Fullerton Tires Corp., 115 F.3d 81, 83 (1st Cir.1997); Matosantos Commercial Corp. v. Applebee's Int'l, Inc., 64 F.Supp.2d 1105 (D.Kan.1999), aff'd, 245 F.3d 1203 (10th Cir.2001); Woods v. Bentsen, 889 F.Supp. 179 (E.D.Pa.1995).

¶ 11. We find that the majority position is the better rule. Thus, the summary judgment standard of review should not be applied in this case. First, the language of M.R.C.P. 12(b) is explicit. The rule provides for conversion to a motion for summary judgment only where a party makes a 12(b)(6) motion and the trial court considers matters outside the pleadings. That is, the rule does not address 12(b)(2) motions in this context. Further, the Fifth Circuit and a majority of federal courts that have passed on the issue, applying the very similar federal rule, have adopted this rationale.

ANALYSIS

¶ 12. Whether a Mississippi court may exercise personal jurisdiction over a nonresident defendant is determined through the application of a two-tiered analytical framework. Two distinct questions must be addressed. The first question is whether the defendant is amenable to suit here by virtue of the Mississippi long-arm statute, Miss.Code Ann. § 13-3-57 (Rev.2002). McDaniel v. Ritter, 556 So.2d 303, 307 (Miss.1989.) This inquiry is governed by Mississippi law. Assuming an affirmative answer, the second question is whether the defendant is amenable to suit in Mississippi consistent with the due process clauses of the federal constitution, and, as well, this state's constitution. Id. at 308. This inquiry is controlled by federal law.

a. Long-arm Statute

¶ 13. Horne asserts that the elements of the long-arm statute are satisfied; and therefore, the chancery court had personal jurisdiction. Specifically, Horne asserts that a tort occurs in Mississippi for purposes of the long-arm statute when the injury occurs inside the State but the injury-causing act is committed in another state. The City argues in response that Mississippi's long-arm statute does not confer personal jurisdiction on the chancery court because: (1) the City is not a person, firm or general or limited partnership; and (2) generally, several provisions of Mississippi substantive law distinguish municipalities from corporations. BWSC...