author: ROBERTS, J.,

text:
    CITY OF HATTIESBURG, Mississippi, Appellant v. J.W. McARTHUR and Kenney Properties, Inc., Appellees.
    No. 2008-CA-01134-COA.
    Court of Appeals of Mississippi.
    Dec. 15, 2009.

      James W. Gladden, Jr., attorney for appellant.
    Lawrence Cary Gunn, Jr., Hattiesburg, attorney for appellees.
    Before MYERS, P.J., IRVING and ROBERTS, JJ.
   ROBERTS, J.,

for the Court.

¶[ 1. Developers, J.W. “Johnny” McAr-thur and Kenney Properties, Inc. (Kenney Properties), appealed an action of the City of Hattiesburg, Mississippi (the City), which denied the developers’ petition to rezone a 29.63 acre parcel of land (subject property) from R-1B, single-family residential, to R-4, high-density residential. The Forrest County Circuit Court reversed the decision of the Hattiesburg City Council (city council), permitting the rezoning of the subject property. The City filed its notice of appeal to this Court contending that the circuit court reviewed the legislative decision de novo, thereby applying the wrong legal standard and improperly substituting its opinion for that of the city council. Conversely, McArthur and Kenney Properties contend that the circuit court applied the proper legal standard of review, and the only issue before this Court is whether the circuit court correctly found that there was no evidence to support the city council’s denial of the zoning petition in question. We find that the circuit court applied the appropriate standard, but erred in its holding. After a thorough review of the record, we find that the issue before the City of Hattiesburg was “fairly debatable,” and its ruling was not arbitrary nor capricious. Accordingly, we reverse the judgment of the circuit court and render judgment reinstating the decision of the city council.

FACTS

¶ 2. Hattiesburg resident McArthur and North Carolina developer Kenney Properties filed an application request for rezoning with the City of Hattiesburg on May 16, 2007, requesting that approximately thirty acres of land, owned by McArthur, be rezoned from R-1B, single-family residential, to R-4, high-density residential. The proposed project for the parcel of land is a “luxury student housing project.” In other words, McArthur and Kenney Properties desire to build a 444-unit apartment complex.

¶ 3. McArthur’s and Kenney Properties’ plan was reviewed by the site review committee for the Hattiesburg Planning Department, and subsequent to the review, the application for rezoning was scheduled for a public hearing before the Hatties-burg Planning Commission (planning commission) on June 6, 2007. At that hearing, the application was tabled until July 5, 2007, at which time it was reconsidered. By a four-to-one vote, the planning commission recommended that the rezoning application be approved. Dissatisfied by the planning commission’s recommendation, Hattiesburg residents Hilda Perrott, Charles Holt, and Robert Walters appealed the planning commission’s decision to approve the petition filed by Kenney Properties on behalf of McArthur. In response, McArthur petitioned the City to approve the planning commission’s recommendation. All four persons requested a public hearing before the city council, which was held on August 6, 2007. Many area residents were present at the meeting. At the public hearing, the residents presented a petition to the City with approximately 288 signatures of persons opposing the zoning change, and the attendees were given an opportunity to voice their concerns about rezoning the area. McArthur and Kenney Properties reintroduced the evidence that was presented to the planning commission in support of rezoning, as well as a letter from an engineer employed by Neel-Schaffer, Inc. (Neel-Schaffer), which had been hired by Kenney Properties to perform a traffic-impact analysis. Following consideration of the evidence presented and discussion by the city council, the council voted four to zero to deny McArthur’s and Kenney Properties’ petition to rezone the subject property.

¶4. McArthur and Kenney Properties filed a bill of exceptions in the Forrest County Circuit Court appealing the city council’s decision. Judge Robert Helfrich recused himself, and the supreme court appointed Honorable Roger T. Clark to preside over the appeal. Judge Clark had presided over a rezoning dispute in Hat-tiesburg two years earlier; that case involved land situated on Beverly Hills Road, which is the same road involved in the instant case. In the earlier case, Judge Clark ruled that the City had acted arbitrarily and capriciously in denying a requested zoning change at the intersection of Beverly Hills Road, West 7th Street, and West 4th Streei/North 38th Avenue. The intersection and general area is a few hundred feet south of the McArthur property at issue in the case at bar.

¶ 5. Returning to the dispute involved in the instant case, Judge Clark, once again, determined that: the character of the neighborhood had changed; there was a public need to justify rezoning; and the City’s denial of McArthur’s and Kenney Properties’ application for rezoning was arbitrary and capricious, rather than fairly debatable. The circuit court reversed the city council’s decision and ordered that the property be rezoned from R-1B, single-family residential, to R-4, multi-family residential. The City filed a timely appeal raising the issue stated above.

STANDARD OF REVIEW

¶ 6. An appellate court’s standard of review in zoning matters is well settled:

The classification of property for zoning purposes is a legislative rather than a judicial matter. The order of the governing body may not be set aside unless it is clearly shown to be arbitrary, capricious, discriminatory, or is illegal, or without a substantial evidentiary basis. The action of the [bjoard of [supervisors in enacting or amending an ordinance, or its action of rezoning, carries a presumption of validity, casting the burden of proof upon the individual or other entity asserting its invalidity. On appeal,] we cannot substitute our judgment as to the wisdom or soundness of the [bjoard’s action. We have stated that where the point in controversy is “fairly debatable,” we have no authority to disturb the action of the zoning authority.

Childs v. Hancock County Bd. of Supervisors, 1 So.3d 855, 859(¶ 12) (Miss.2009) (quoting Faircloth v. Lyles, 592 So.2d 941, 943 (Miss.1991)). “‘Fairly debatable’ is the antithesis of arbitrary and capricious.” Id. (citation omitted).

ANALYSIS

WHETHER THE CITY COUNCIL’S DECISION TO DENY REZONING WAS ARBITRARY AND CAPRICIOUS

¶ 7. Before an application for rezoning should be approved, the “applicant seeking rezoning must prove by clear and convincing evidence either that: (1) there was a mistake in the original zoning, or (2) the character of the neighborhood has changed to such an extent as to justify rezoning and that a public need exists for rezoning.” Id. at 859-60(¶ 13) (citation omitted). McArthur and Kenney Properties do not contend that there was a mistake in the City’s original 1988-89 comprehensive zoning plan, so only the second prong of the analysis was a relevant issue before the city council. Not surprisingly, the parties vigorously disagree about the amount of change in the subject area, as well as a public need.

¶ 8. To begin, we will consider the issue raised and thoroughly addressed in the parties’ briefs regarding whether the planning commission initially recommended to the city council that the subject property be rezoned. McArthur and Kenney Properties contend that Lisa Reid, with the planning commission, stated that the planning commission recommended the change, but she later denied that the planning commission made such recommendations. On appeal to the circuit court, Mc-Arthur and Kenney Properties made a motion to the circuit court to supplement the minutes of the planning commission meeting to prove that a recommendation had been made by the planning commission to rezone the property. The City argues extensively that the consideration of this motion and the testimony given related to this motion was paramount to a de novo review by the circuit court. We find that both parties’ arguments are without merit.

¶ 9. First, it is clear from the record that the circuit court acknowledged the correct legal standard to apply when reviewing a decision of the city council. Furthermore, the circuit court denied Mc-Arthur’s and Kenney Properties’ motion to supplement the record, finding that the affidavits presented and testimony given, including testimony by Reid, supported that the planning commission did not recommend zoning changes. Rather, the circuit court held that the information provided by the planning commission was “more of a finding than a recommendation.” Second, it is irrelevant whether the planning commission initially recommended the change in zoning. The city council is not obligated to adopt the planning commission’s recommendation. The planning commission “does not have the authority to approve or disapprove a zoning change request, but acts merely as an advisory body to the board of supervisors.” Byram 3 Dev., Inc. v. Hinds County Bd. of Supervisors, 760 So.2d 841, 843(¶5) (Miss.Ct.App.2000) (citing City of Jackson v. Sheppard Investment Co., 185 So.2d 675, 676 (Miss.1966)). “An appeal from a decision of the board of supervisors [or city council] on a zoning matter is strictly limited to the record of what occurred before the [city council] as contained in the bill of exceptions.” Id. (citation omitted). Accordingly, whether or not the planning commission or one of its employees initially recommended a zoning change is not outcome determinative; it was merely a recommendation.

¶ 10. McArthur and Kenney Properties argue extensively that they presented “overwhelming” evidence to the planning commission and the city council, and they further argue that the City failed to contradict, challenge, or refute the evidence. We disagree, and we now briefly address the evidence that was presented to the city council.

A. Petitions and Various Attachments

¶ 11. The city council was presented with signed petitions by both the proponents and the opponents of the zoning change. The opponents presented 288 signatures of area residents opposing the zoning change. Many of the opponents were residents of the Highland Neighborhood, which is located across the street from the subject property at issue. Likewise, but in a much smaller showing, McArthur and Kenney Properties presented signed statements by three or four property owners located adjacent to the subject property, which supported the zoning change. As stated, many of the opponents attended the city council meeting, and they were given an opportunity to voice their opposition. McArthur and Kenney Properties now state that although the opponents “expressed their disapproval [with] the zoning request, [they] offered no real evidence against the petition.” The record indicates that the opponents stated legitimate concerns.

¶ 12. Among other things, the opponents spoke about their concerns over increased traffic congestion, a possible increase in crime, and their desire for the area to remain a single-family residential area. In support of it remaining a single-family residential area, they argue that was the type of property they had invested in and would not have purchased the property, if they had known that it would be changing. The City was well within its discretion to give credence to the opponents’ views. We have previously held that giving substantial weight to homeowners’ testimonies regarding opposition to a nearby zoning change is not error. Mayor and Board of Aldermen v. Estate of Lewis, 963 So.2d 1210, 1216 (¶ 13) (Miss.Ct.App.2007).

¶ 13. The rationale behind this view is as follows:

It should also be borne in mind, however, that while a duly enacted comprehensive zoning ordinance is not a true protective covenants agreement, it bears some analogy.

Purchasers of small tracts of land invest a substantial portion of their entire lifetime earnings, relying upon a zoning ordinance. Without the assurance of the zoning ordinance, such investments would not be made. On this small area they build their homes, where they expect to spend the most peaceful, restful and enjoyable hours of the day.

Zoning ordinances curb the exodus of city workers to a lot in the distant countryside. Indeed, the protection of zoning ordinances in municipalities, as opposed to no zoning in most county areas, encourage the choice of a city lot rather than a country lot for a home in the first instance. Zoning ordinances make city property more attractive to the prudent investor.

In the absence of agreement between all interested parties, an amendment to a zoning ordinance is not meant to be easy. Otherwise, it would be a meaningless scrap of paper. As former Justice Robertson noted in City of Jackson v. Wilson, 195 So.2d 470 (Miss.1966), at 473:

Homeowners are the backbone of any community. They take pride in developing and maintaining attractive homes and yards, and anything that discourages this wholesome attitude on their part hurts the community.

Estate of Lewis, 963 So.2d at 1216(¶ 13) (citing Mayor and Comm’rs of Jackson v. Wheatley Place, Inc., 468 So.2d 81, 83 (Miss.1985)). The homeowner’s concerns and objections were a valid consideration before the city council.

B. Zoning and Land Use Maps, As Well As Zoning Changes Over The Past Two Decades

¶ 14. The city council was presented with multiple maps reflecting the subject area, as well as zoning trends in the area over the past two decades. McArthur and Kenney Properties assert that these maps and zoning-change summaries support that there has been a substantial change in the area. However, the City notes that not all of the changes have been from a lower-density residential zone to a higher-density residential zone. The City is correct.

¶ 15. A review of the record and the zoning summaries reveal that there were eight zoning changes during the 1990s, and only two of them changed from a business zone to a high-density residential area. Between January 1, 2000, and July 2, 2007, there were eight zoning changes requested, and four of the eight rezonings were from a lower-density multi-family use to a higher-density multi-family use. One of the four zoning changes resulted from the disputed rezoning petition in the Foundation Development case two years prior. Undoubtedly, the area surrounding the Hillside Neighborhood and Beverly Hills Road includes a variety of businesses, apartments, and neighborhoods of single-family residences. However, the City was presented with evidence that did not fully support McArthur’s and Kenney Properties’ assertion that the area was changing to higher-density zoning, as several of the changes over the past two decades resulted in fewer residences in the area.

C. Information Regarding Kenney Properties, Marketing Research, the Anticipated Growth of the University of Southern Mississippi, and the Need for More Apartments

¶ 16. McArthur and Kenney Properties have presented a voluminous amount of information to the planning commission, the city council, and to this Court. However, the City correctly notes that much of it — over one hundred pages — is self-serving sales advertisements, articles about the developer, and letters of recommendation for Steve Kenney with Kenney Properties from various lenders and business acquaintances. If the decision before the city council was whether to accept Kenney Properties as an accomplished developer, perhaps the issue may not have been “fairly debatable.” However, that was not the issue before the city council. Included in the evidence presented by McArthur and Kenney Properties were various newspaper articles and other public information concerning the growth of University of Southern Mississippi (USM) and the need for additional housing in the area. The City also presented evidence. We decline to address the majority of the presented information, but we will recognize some significant facts that the city council was presented with by both parties, in order to demonstrate that the issue before the city council was “fairly debatable.”

¶ 17. In support of their argument, Mc-Arthur and Kenney Properties presented the city council with a newspaper article from the June 19, 2006, edition of the Hattiesburg American, which stated that there were five major projects ongoing in Hattiesburg that would add 1,200 apartment units to the City’s inventory. The article discussed the need for apartments and the “booming” apartment business, and it also stated that the expansion or growth was due to military expansion, Hurricane Katrina, and the recently enacted Gulf Opportunity Zone Act that provided tax breaks for new developments. However, the article also addressed the potential problem of over saturation of apartments in the area once the influx of persons from Hurricane Katrina declined. The article stated:

But adding thousands of units could over saturate the market, especially with fewer troops coming to Camp Shelby for training and people returning to then-homes in the hurricane zones.... There’s always a limit, and you can overbuild, says Alan Levow, whose Georgia-based company Foundation is in the planning stages for a 210-unit complex along Beverly Hills Drive. We saw this in Florida. Properties went from 105 percent occupied and six months later everybody packed up and left.

(Internal quotation omitted). Although McArthur and Kenney Properties choose to emphasize only the newspaper comments in support of their ambition, the City was within its discretion to consider the possibility of an overexpansion of mul-ti-family residences within the area.

¶ 18. Also, evidence was presented that USM is actively involved in renovating its dormitories, as well as adding new ones. McArthur and Kenney Properties presented evidence to the city council that USM’s strategic growth plan was for its enrollment to increase by five percent between 2005 and 2008. However, USM’s enrollment has actually declined 1.8%. The City recognizes that this is a low percentage, but nonetheless, it verified that USM has not experienced its anticipated growth. Therefore, it is a plausible argument that there is not the need for rapid apartment development within the area of USM’s campus, as McArthur and Kenney Properties aggressively argue. Additionally, evidence has been presented to support that Hattiesburg can only absorb 167 new apartments each year, and as stated, there was evidence that there were currently 1,200 new apartments being constructed in Hattiesburg.

D. The Foundation Development Case

¶ 19. Both parties, and the circuit court in its opinion, address, at length, the Foundation Development case, wherein the circuit court previously ruled in favor of the developer in that case, thereby reversing the city council’s decision to deny rezoning of property on Beverly Hills Road. As mentioned, the earlier case virtually mirrors this one. It involves land in the same area, another apartment-complex development, the same opponents, and the same circuit court judge overruling the city council’s decision to deny rezoning. However, the City did not appeal the circuit court’s decision in the Foundation Development case. We are not constrained by the ruling of the circuit court in its Foundation Development ruling, and it does not serve as precedent in the instant case. Furthermore, the Foundation Development case was not binding precedent upon the city council when it was considering whether to rezone the McAr-thur property.

E. The Neel-Schaffer and Perrott Reports

¶ 20. McArthur and Kenney Properties hired Neel-Schaffer to prepare a report, which was done by land-use planner Patricia Brantley, to describe that the zoning change was consistent with the overall comprehensive land-use plan of the City, to demonstrate the general growth in the area, and to show that the new development would not negatively impact the traffic situation in the area. A report, in opposition, was prepared by rezoning opponent Hilda Perrott, which will be discussed further below.

1. Neel-Schaffer report

¶ 21. As stated in the Neel-Schaffer report, “Neel-Schaffer, Inc.[,] was hired by The Kenney Companies, Inc.[,] of Raleigh North Carolina to conduct a traffic[-]impact analysis for the proposed development of Eagle’s Pointe Apartments.” Indeed, Neel-Schaffer presented a twenty-five page report on this matter. However, in summary, it was shown that the traffic congestion and poor level of service in the area of Beverly Hills Road, West 7th Street, West 4th Street, and North 38th Avenue is significant. As mentioned, this intersection is only a few hundred feet south of the McArthur property. The recommendation and conclusion section of the Neel-Schaffer report begins with the statement: “Development of the project site with 21 new buildings comprised of 444 dwelling units will only add slightly to an already significant traffic problem at the intersections of West 4th Street/ North 38th Avenue, and West 7th Street/Beverly Hills Road.” (Emphasis added). The report recommended that the City place turn lanes into the development, install a new traffic signal, and change the timing of the traffic signal at the intersection stated above to mitigate the traffic congestion. The traffic-congestion issue was contested in Perrott’s report and at the city council meeting.

¶22. The minutes from the August 6, 2007, city council meeting reflect that City Council President Bradley stated that the City did not think that the intersection could handle the traffic generated by the new development. Councilman Bradley also questioned Brantley, who was previously a planner for the City, about whether she had predicted increased traffic problems when the city council was considering the Foundation Development issue. Brantley, who by that time worked for Neel-Schaffer, seemed to side-step the issue and simply stated that at the time the Foundation Development case was being decided, the planning staff did not make recommendations, and just as in this case, a traffic analysis had been done by Neel-Schaffer for Foundation Development.

¶ 23. Councilman Bradley expressed some of his concerns about the traffic problems in the area based upon his own perceptions. Councilman Bradley stated that “[h]e travels through [the intersection], [he] sees the traffic issues on [West] 7th, and [he wonders] what, if anything, [could] be done about the number of cars.” The response by Neel-Schaffer’s representative, Mike Essary, was that “there is no doubt that there will be increased traffic,” and Essary went on to outline the mitigation plans stated above. At the meeting, other council members also expressed their concerns about rezoning the area.

¶ 24. The city council was entitled to rely on its representatives’ personal perceptions of the area and its related problems. See Childs, 1 So.3d at 860(¶ 16) (supreme court held that the board properly considered its own familiarity with the subject area when determining whether there was a need for rezoning); Bd. of Aldermen v. Conerly, 509 So.2d 877, 885 (Miss.1987) (recognizing that informality attends rezoning proceedings, and board members may take into consideration their personal knowledge and familiarity with their community; such knowledge would be nearly impossible to ignore). We find from the record that the city council had a legitimate concern related to an already significant traffic problem in the area, and it was reasonable for the city council to determine that an apartment complex adding 444 units would greatly exacerbate an existing problem. McArthur and Kenney Properties clearly acknowledge that the apartments would be marketed to college students. The apartments would include units with as many as four bedrooms, and it is likely that each college-student resident would have his or her own car. Therefore, the additional 444 units, with multiple residents per unit, has the potential to add well over 1,000 cars traveling through that area multiple times per day. The city council’s consideration of this problem and its decision not to exacerbate the existing traffic problem was not arbitrary and capricious.

2. Perrott Report

¶25. Perrott is the daughter of Hughlene Perrott (Hughlene). Hughlene is an area homeowner that initially contracted to sell her home to the developers, but she later asked to be released from the contract. Kenney Properties agreed to release Hughlene from the sales contract if she agreed not to oppose the rezoning. Perrott, who holds a Mississippi driver’s license and claims to own a residence on Beverly Hills Road, apparently took up the cause and has fought vigorously to prevent the rezoning of the area. Perrott presented a ten-page letter at the June 6, 2007, hearing, and she had expanded it to a twenty-five-page report by the time of the July 5, 2007, hearing. In the minutes of the city council meeting, the city council acknowledged the receipt of Perrott’s report.

¶ 26. In their brief to this Court, McAr-thur and Kenney Properties do not contest Perrott’s qualifications as aggressively as they did to the circuit court, but in their brief to the circuit court, they refer to Perrott as a “gadfly,” “not a real professional,” and they claim that her report is “devoid of any real evidence.” We decline to comment about the parties’ dueling urban planners, but we note that McArthur and Kenney Properties have not disproved Perrott’s stated credentials. Furthermore, among other things, she relies on newspaper articles from the Hattiesburg American, USM facts and statistics, and the Neel-Sehaffer report, just as McAr-thur and Kenney Properties do. The city council was within its discretion to consider Perrott’s report. After thoroughly reviewing the record, we find that the evidence presented by McArthur and Kenney Properties alone was sufficient to indicate the decision before the city council was a fairly debatable issue.

CONCLUSION

¶ 27. City councils are better situated than are the appellate courts to determine the zoning needs of their cities, and where the decision is not clearly arbitrary, capricious, or unsupported by substantial evidence, and the issues are fairly debatable, we will not substitute our judgment for that of a local governing body. Estate of Lewis, 963 So.2d at 1216(¶ 14). Finding that the issues presented by Mc-Arthur’s and Kenney Properties’ petition to rezone were fairly debatable, and finding no evidence in the record that the decision to deny the petition was arbitrary, capricious, or unsupported by substantial evidence, we hold that the judgment of the Forrest County Circuit Court overreached the appropriate standard of appellate review and must be reversed. Accordingly, the decision of the city council denying McArthur’s and Kenney Properties’ petition for rezoning is reinstated.

¶ 28. THE JUDGMENT OF THE CIRCUIT COURT OF FORREST COUNTY IS REVERSED AND RENDERED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE AP-PELLEES.

KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE AND MAXWELL, JJ., CONCUR. CARLTON, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION.

      . The prior case was styled Foundation Development v. City of Hattiesburg, Cause No. C105-0052. Judge Clark found that the character of the neighborhood had changed from single family to multi-family and that there was a public need for additional student housing in the area in question. He found that the City had failed to put forth evidence refuting that there had been a substantial change. The City did not appeal that ruling, and Foundation Development built an apartment complex with approximately 200 units on the same street at issue in the instant case. As mentioned, McArthur and Kenney Properties are seeking to rezone the McArthur property to build an apartment complex with 444 units.

      . McArthur and Kenney Properties acknowledge that this issue is not outcome determinative in the instant appeal, but the matter was argued vigorously by both parties to the circuit court and to this Court. Therefore, we briefly address the matter to verify that the consideration of the motion and related testimony was not a matter that affects the decision of this Court in the instant case.

      . Some of the items listed in the briefs are interrelated, so they will be combined.

      . Although McArthur and Kenney Properties assert that some of the opponents were not from the immediate area of the proposed change, there has been no evidence placed in the record that refutes that most of the opponents were from the Highland Neighborhood/Beverly Hills Road area.

      . It appears that Mr. Levow is the developer that waged the same battle as McArthur and Kenney Properties with the city council two years earlier in the Foundation Development case.

      .In the opinion of the Foundation Development case, the circuit court opined that, other than Highland Neighborhood opponents speaking against rezoning at the public hearing before the city council, the opponents presented no expert testimony relating to such issues as neighborhood change and public need. As it is not before this Court, we do not address the circuit court’s evaluation of the evidence presented in the Foundation Development case. However, we are inclined to state that opponents to rezoning are not required to hire experts to demonstrate that an area has not substantially changed or that there is not a public need. We are cognizant of the fact that acquiring expert testimony is likely to be cost prohibitive to many people, and our laws do not require that such testimony be presented to our city councils in zoning disputes. Expert testimony is simply a tool that may be utilized by both proponents and opponents to zoning changes.

      . "Eagle’s Pointe Apartments” is the name of McArthur's and Kenney Properties' proposed development.

      . Additionally, Brantley prepared a multiple-page report about the land use and zoning trends in the area. The report also addressed matters other than just traffic issues. As we have already briefly addressed some of the zoning changes and trends in the area, we will not discuss them further, nor will we address all of the evidence presented in the record. We are of the opinion that the stated matters alone illustrate that the issue before the city council was "fairly debatable.”

      . The city council minutes do not reflect Councilman Bradley's full name.

      . Perrott states the she holds three graduate degrees in urban planning and development, including a Masters of Urban and Regional Planning from the University of New Orleans, LA. She grew up in the Beverly Hills Road area, and her husband works abroad, but she maintains a permanent address in Hatties-burg. At the public hearing, in response to allegations that she was not a resident of Hattiesburg, Mississippi, she presented her Mississippi driver's license.


source: Caselaw Access Project

license: Public Domain

text:
    MISSISSIPPI DEPARTMENT OF HUMAN SERVICES, Appellant v. Pamela W. McDONALD, Appellee.
    No. 2008-SA-00868-COA.
    Court of Appeals of Mississippi.
    Dec. 15, 2009.

      Office of the Attorney General by Katherine Jane Caldwell, attorney for appellant.
    Matthew Yarbrough Harris, attorney for appellee.
    Before KING, C.J., BAKNES and ROBERTS, JJ.
   ROBERTS, J.,

for the Court.

¶ 1. The Mississippi Employee Appeals Board (EAB) determined that Pamela W. McDonald was entitled to receive the appointment as the Mississippi Department of Human Services (MDHS) County Director for Pontotoc County, Mississippi. The Circuit Court of Hinds County affirmed the decision of the EAB. MDHS then perfected an appeal, which was assigned to this Court. The MDHS raises three issues: (1) the EAB erred in denying a motion to dismiss the administrative appeal based on the controversy being outside the scope of matters subject to administrative review; (2) the EAB erred in denying a motion to dismiss the administrative appeal based upon McDonald’s failure to disclose the subject matter of witness testimony prior to the administrative appeal; and (3) the factual finding by the EAB that McDonald had been appointed as a county director by Governor Ronnie Musgrove was not supported by credible evidence. Finding no error, we affirm.

STATEMENT OF THE FACTS

¶ 2. McDonald began working for the MDHS in 1989 as a MDHS case-manager in Union County. In April 2003, McDonald applied for the position of county director for Pontotoc County MDHS. On December 26, 2004, McDonald received a letter stating that her recommendation for the Pontotoc County position had been approved by Governor Musgrove. Further, in January 2004, McDonald received a letter, dated January 9, 2004, from Gloria Jackson, the MDHS personnel director, stating that she had been “promoted” to the county director position, and that she would receive a monthly salary in the amount of $2,703.52. The letter from Jackson went on to state that “[A]ll necessary paperwork has been processed to promote you with an effective date of January 1, 2004.” Pursuant to these letters, McDonald actually started work in her new position as county director in Pontotoc County.

¶ 3. On or about January 25, 2004, McDonald then received a letter, dated January 22, 2004, from Don Taylor, the Executive Director of MDHS. This letter rescinded McDonald’s promotion, stating “as written approval from the former Governor was not obtained prior to your appointment, this action is null and void.” McDonald then returned to her previous duties in Union County at a lower salary than that which she would have received as a county director.

¶ 4. McDonald appealed Taylor’s decision to the EAB. Following an administrative hearing, an EAB administrative law judge (ALJ) entered an order finding that McDonald was entitled to receive the appointment as the MDHS county director for Pontotoc County, Mississippi. The MDHS appealed the ALJ’s ruling to the EAB, and on October 8, 2004, the EAB affirmed the decision of the ALJ. The MDHS then appealed to the circuit court, and on November 26, 2007, the circuit court affirmed the decision of the EAB. The MDHS then perfected the present appeal.

ANALYSIS

STANDARD OF REVIEW

¶ 5. An appellate court will not disturb a decision of an administrative agency if substantial evidence supports that agency’s finding, and the scope of review is limited to the factual findings of the agency. Walters v. Miss. Dep’t of Economic and Cmty Dev., 768 So.2d 893, 895(¶ 8) (Miss.2000) (citing Holloway v. Prassell Enters., Inc., 348 So.2d 771, 773 (Miss.1977) and Miss. Employment Sec. Comm’n v. Pulphus, 538 So.2d 770, 772 (Miss.1989)). However, an appellate court will “examine the record as a whole and where such record reveals that the order of the [agency] is based on a mere scintilla of evidence, and is against the overwhelming weight of the credible evidence the court will not hesitate to reverse.” Walters, 768 So.2d at 895(¶ 8) (quoting Johnson v. Ferguson, 435 So.2d 1191, 1194-95 (Miss.1983)).

1. CLAIM WAS SUBJECT TO REVIEW

¶ 6. The MDHS contends that McDonald’s action was “non-grievable” because the claim involved the selection of an applicant to fill a vacant position, and matters going to the selection of personnel to fill positions are not subject to EAB review. According to the EAB rules non-grievable actions include: “the selection of an individual by the appointing authority, department head, or designee to fill a position through promotion, transfer, demotion, or appointment unless it is alleged that the selection is in violation of a written agency policy or a State Personnel Board rule on filling vacancies.” Miss. EmpLApp. Bd. Admin. R.App. B (July 2007). The ALJ, the EAB, and the circuit court all found McDonald’s claim was subject to administrative review because the issue McDonald raised was not whether she should have been selected to fill the position of county director; instead, the issue was whether she already had been selected to fill the position prior to Taylor’s letter informing her that her selection “was null and void.”

¶ 7. The MDHS asks this Court to overturn the EAB’s construction of its own administrative rules. However, the law is well settled as to the standard of review applied to an agency’s application of its own administrative rules. “Great deference has been afforded to an administrative agency’s construction of its own rules and regulations and the statutes under which they operate.” Miss. Dep’t. of Transp. v. Rutland, 965 So.2d 696, 701-702(¶ 9) (Miss.Ct.App.2007) (citing Miss. State Tax Comm’n v. Mask, 667 So.2d 1313, 1314-15 (Miss.1995)). This standard of review limits an appellate court to determining whether the agency’s construction of its own rules rises to a level of being an arbitrary determination. See, e.g., Mask, 667 So.2d at 1315. In this case, the EAB construed its limitation of what actions were non-grievable to the actual selection of an individual to fill a position, not to an individual challenging whether they had been previously selected. This construction is not an arbitrary exercise of discretion. Therefore, the circuit court did not err in affirming the decision of the EAB, and this issue is without merit.

2. FAILURE TO DISCLOSE THE SUBSTANCE OF WITNESS TESTIMONY

¶ 8. At the administrative hearing, the MDHS objected to McDonald calling witnesses because McDonald had failed to disclose the expected substance of the testimony of witnesses she intended to call to testify. The EAB rules provided:

Rule 14(A)(5) of the Administrative Rules of the Employee Appeals Board states that “each party, no later than ten (10) calendar days prior to the hearing date, shall file with the Employee Appeals Board a list of witnesses such party will call to testify at the hearing. The list shall contain for each witness: (5) brief summary of testimony to be given.” Moreover, Rule 32(c) of the Administrative Rules of the Employee Appeals Board states that “the Employee Appeals Board shall have the authority, duty and responsibility to abide by and enforce these rules.”

Miss. EmpLApp. Bd. Admin. R. 32 (July 2007).

¶ 9. The record shows that McDonald did timely disclose her list of witnesses. However, her attorney, who was making his first appearance in a EAB hearing, had not realized the necessity of the “brief summaries.” The testimony at issue was that of former Governor Mus-grove’s chief of staff, William Renick. The record shows that McDonald’s attorney spoke with counsel opposite more than a week before the hearing, and he disclosed the expected testimony at that time. Moreover, the proposed testimony had been previously disclosed to the MDHS in pleadings. It is well settled that administrative bodies have the discretionary authority to apply procedural and evidentiary rules in a flexible manner so as to most efficiently carry out their responsibilities. McGowan v. Miss. State Oil & Gas Bd., 604 So.2d 312, 318 (Miss.1992). Given that the MDHS could not have been prejudiced by McDonald’s technical failure to list brief summaries, the circuit court did not err in affirming the decision of the EAB. This issue is without merit.

3. FINDING WAS SUPPORTED BY CREDIBLE EVIDENCE

¶ 10. The ultimate factual issue in this case is whether Governor Musgrove, in the last weeks of his administration, issued a letter in which he appointed McDonald to be the MDHS county director for Pontotoc County. The parties agree in their arguments that if this fact had occurred, McDonald was entitled to the position, and Taylor’s action in removing her from the position was beyond the scope of his power. Renick testified that he and Thelma Brittain, and perhaps other individuals, met with then Governor Musgrove to discuss four or five vacancies within the MDHS which Governor Musgrove could fill prior to the expiration of his term. Renick testified that Governor Musgrove selected McDonald from a pool of applicants to fill one of these vacancies. Renick further testified that he was sure that Governor Musgrove had signed a letter of appointment before leaving office because Renick had a checklist of duties needing to be completed, and signing the letters for the appointments was one of these duties. Furthermore, he stated that he knew the letters for other appointees who were discussed in this meeting were in fact signed.

¶ 11. Former Governor Musgrove submitted an affidavit stating that he had appointed McDonald to the county director position, and the paperwork was completed prior to his leaving office.

¶ 12. Jackson, the Personnel Director of the Department of Human Resources, testified that she prepared the necessary paperwork to submit McDonald’s appointment to the State Personnel Board, and that her office had received the letter on January 20, 2004, but her office could no longer locate the letter. In short, her testimony was Governor Musgrove’s letter was lost somewhere in her office.

¶ 18. The standard of review applicable to this case mandates that we affirm the decision of the EAB unless its decision was based on merely a scintilla of evidence and the weight of evidence so strongly tilts to a contrary result that we cannot find that the decision was based on substantial evidence. Walters, 768 So.2d at 895(¶ 8). In this case, we find that substantial evidence supported the EAB’s decision, and the circuit court did not err in affirming the decision of the EAB.

¶ 14. THE JUDGMENT OF THE HINDS COUNTY CIRCUIT COURT IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.

KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE, CARLTON AND MAXWELL, JJ., CONCUR.


author: MAXWELL, J„

text:
    Kelly L. WRIGHT, Appellant v. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM OF MISSISSIPPI, Appellee.
    No. 2008-SA-01738-COA.
    Court of Appeals of Mississippi.
    Dec. 15, 2009.

      Kelly L. Wright, Appellant, pro se.
    Office of the Attorney General by Mary Margaret Bowers, attorney for appellee.
    Before LEE, P.J., CARLTON and MAXWELL, JJ.
   MAXWELL, J„

for the Court.

¶ 1. The Hinds County Circuit Court affirmed the ruling of the Public Employees’ Retirement System of Mississippi (PERS) Board of Trustees denying Kelly Wright disability benefits. She now claims: (1) the law-of-the-case doctrine applies; (2) PERS’s decision was not supported by substantial evidence; and (3) PERS improperly applied a heightened standard of disability to her case.

¶ 2. Finding the denial of Wright’s disability claim is not supported by substantial evidence, we reverse and remand.

PROCEDURAL HISTORY

¶ 3. Wright’s current appeal brings a somewhat unusual procedural history. Her initial application for benefits was filed with PERS on August 19, 2002. On March 20, 2003, PERS denied Wright’s initial application for disability benefits. Wright then appealed to the Disability Appeals Committee (DAC), and on August 4, 2003, the DAC recommended denial of benefits. The PERS Board of Trustees adopted the DAC’s recommendation on August 26, 2003.

¶ 4. Wright appealed to the Hinds County Circuit Court, and on September 13, 2005, the circuit court found PERS’s decision was not supported by substantial evidence and reversed PERS’s denial of benefits.

¶ 5. On appeal from the circuit court, this Court remanded the case to PERS for due process violations, which stemmed from PERS’s subsequent review of a consulting psychiatrist’s report and PERS’s denial of Wright’s opportunity to respond to the psychiatrist’s findings. Pub. Employees’ Ret. Sys. v. Wright, 949 So.2d 839 (Miss.Ct.App.2007) (Wright I). On remand, PERS again denied disability benefits, but this time the circuit court affirmed the denial. Wright now appeals the recent denial of benefits.

FACTS

¶ 6. Wright worked as a nurse with the Mississippi Department of Health. On June 6, 2000, she began experiencing chest pains and consulted a doctor at the facility where she worked. Then on June 8, 2000, she sought treatment at a clinic. No abnormalities were found after electrocardiogram testing.

¶ 7. On June 12, 2000, Dr. Frank Cov-ington, a psychiatrist, diagnosed Wright with panic disorder and prescribed Zoloft and Ativan. Wright and her daughter then moved in with her mother, Nathaleen Farmer. She spent two weeks in bed and a third at home before returning to work. On December 6, 2002, Wright left her employment with the State of Mississippi.

¶ 8. In the time between her initial diagnosis, in June 2000, and her disability application with PERS, on August 19, 2002, Wright consulted multiple doctors for treatment of her medical issues. Dr. Cov-ington transferred Wright to Dr. Andrew Bishop, a psychiatrist, who increased her Zoloft prescription, continued her on Ati-van, and diagnosed her with adjustment disorder and possibly histrionic traits. Dr. Bishop treated Wright from July 2001 to November 2001. She began to see Dr. Krishan Gupta, a psychiatrist, in January 2002. Dr. Gupta diagnosed Wright with panic disorder, generalized anxiety disorder, depressive disorder, and fibromyalgia. In April 2002, Dr. Gupta determined Wright was totally disabled because of these conditions. Dr. Gupta issued three similar opinions that Wright was disabled and not able to handle work-related stress due to anxiety disorder and panic disorder which are related to the fibromyalgia.

¶ 9. Wright also sought treatment from a rheumatologist, Dr. James Hensarling. In October 2002, Dr. Hensarling confirmed Dr. Gupta’s fibromyalgia diagnosis. He issued letters to PERS regarding Wright’s disability in September 200B and February 2007. Dr. Hensarling wrote that Wright was disabled because fibromyalgia requires a great deal of coping skills, and her psychological impairments would inhibit improvement. On August 19, 2002, Wright applied for disability benefits with PERS.

¶ 10. At PERS’s request, in January 2003, Dr. Edward Manning performed a neuropsychological examination of Wright. Dr. Manning diagnosed Wright with depression, anxiety, panic attacks, agoraphobia, social phobia, and fibromyalgia. In his “opinion,” it was possible that a combination of medications and “empirically based psychological treatment ... would give [Wright] the best opportunity for improvement and possibly give her a better opportunity to return to work.” Dr. Manning did not provide an opinion about whether Wright was permanently disabled.

¶ 11. On April 21, 2003, Wright was notified by her insurance company that she had been found to be totally and permanently disabled and that she qualified for long-term disability benefits. Wright was also approved by the Social Security Administration to receive disability benefits.

¶ 12. Wright’s initial application with PERS was denied, and she appealed to the DAC. The DAC conducted a hearing on May 19, 2003. After the hearing, the DAC requested a second independent medical evaluation, this time by psychiatrist, Dr. Mark Webb.

¶ 13. In July 2003, Dr. Webb met with Wright for one brief consultation. Though he did not confirm Wright’s medical history or review records from her other treating physicians, Dr. Webb found Wright does suffer from panic disorder, but her condition is in full remission with her medications. Based on this lone, short consultation with Wright, Dr. Webb concluded she had chosen not to work and returning to work would do her well.

¶ 14. The DAC prohibited Wright from presenting evidence to refute Dr. Webb’s findings at her initial hearing, which gave rise to the due process violations we addressed in Wright I. On remand, at the June 8, 2007, DAC hearing, Wright’s mother introduced additional medical records from Wright’s treating physicians. She also provided medication records, and a letter from the Mississippi Board of Nursing denying renewal of Wright’s nursing license. Wright’s mother took issue with several aspects of Dr. Webb’s report and provided an essentially different patient history.

¶ 15. After considering the additional evidence, PERS again rejected Wright’s disability claim. But this time on appeal, a different circuit court judge affirmed PERS’s denial of disability benefits. Wright appeals from this judgment.

STANDARD OF REVIEW

¶ 16. This Court may not re-weigh the evidence or substitute its judgment for that of the administrative agency. Pub. Employees’ Ret. Sys. v. Howard, 905 So.2d 1279, 1284(¶ 15) (Miss.2005). Rule 5.03 of the Uniform Rules of Circuit and County Court states that an agency’s decision will not be disturbed on appeal unless it was: (1) unsupported by substantial evidence, (2) arbitrary and capricious, (3) beyond the power of the agency, or (4) violates the complainant’s statutory or constitutional rights. Pub. Employees’ Ret. Sys. v. Smith, 880 So.2d 348, 350-51(¶ 12) (Miss.Ct.App.2004) (citing Pub. Employees’ Ret. Sys. v. Dearman, 846 So.2d 1014, 1018(¶ 13) (Miss.2003)).

¶ 17. An administrative agency’s decision will be deemed arbitrary and capricious if it is not based on substantial evidence. Pub. Employees’ Ret. Sys. v. Allen, 834 So.2d 50, 53(¶ 10) (Miss.Ct.App.2002). Our supreme court has defined substantial evidence as “such relevant evidence as reasonable minds might accept as adequate to support a conclusion.” Pub. Employees’ Ret. Sys. v. Marquez, 774 So.2d 421, 425(¶ 13) (Miss.2000). Substantial evidence is “more than a ‘mere scintilla’ or suspicion.” Id.

DISCUSSION

I. LAW-OF-THE-CASE DOCTRINE

¶ 18. In Wright I, the circuit court found that substantial evidence did not support PERS’s denial of Wright’s request for disability benefits, and reversed PERS’s decision. On appeal, we reversed and remanded the case to PERS based solely on the previously-addressed due process violations. Now, on appeal after remand, Wright argues the law-of-the-case doctrine should foreclose re-litigation of whether she is entitled to benefits. Specifically, she claims because the circuit court originally found PERS’s decision was not supported by substantial evidence, the circuit court’s decision became the law of the case and could not be re-litigated on remand.

¶ 19. The law-of-the-case doctrine is the general practice of courts to refuse to re-examine what has been previously decided. TXG Intrastate Pipeline Co. v. Grossnickle, 716 So.2d 991, 1019(¶ 97) (Miss.1997). The law of the case, “once established as the controlling legal rule of decision, between the same parties in the same case, continues to be the law of the case, so long as there is a similarity of facts.” Pub. Employees’ Ret. Sys. v. Freeman, 868 So.2d 327, 330(¶ 10) (Miss.2004) (quoting Moeller v. Am. Guarantee and Liab. Ins. Co., 812 So.2d 953, 960(¶ 22) (Miss.2002)). However, the doctrine is inapplicable if there are “material changes in evidence, pleadings or findings.” Id. (citing Moeller, 812 So.2d at 960(¶ 22)).

¶20. Wright claims this doctrine applies because PERS did not present additional evidence on remand. But we point out that PERS is not required to present evidence of the non-existence of a disability. Instead, Wright bore the burden of proving the existence of a disability.

¶ 21. On remand, Wright presented additional evidence to the committee in the form of doctors’ opinions, medication and patient history via her mother, and a letter denying renewal of her nursing license. Not only did Wright present additional evidence, but the hearing resulted in new findings by PERS. Because of these material changes in both the evidence presented and the findings by PERS, the law-of-the-case doctrine does not apply.

¶ 22. Furthermore, Wright wrongly characterizes our holding in Wright I as “not finding] fault with Judge Kidd’s ruling on the existing evidence.” This is an erroneous interpretation of the analysis and disposition reached by this Court in Wright I, as we made no findings regarding the legal sufficiency of the evidence presented or relied upon, nor did we address the merits of the circuit court’s decision. We simply remanded to PERS because of due process violations at the agency level. For these reasons, we find the law-of-the-case doctrine inapplicable.

II. SUBSTANTIAL EVIDENCE OF DISABILITY

¶ 23. On appellate review, we are instructed to determine whether substantial credible evidence exists to support PERS’s decision that Wright was not disabled, not whether there is substantial evidence of Wright’s position. Thomas v. Pub. Employees' Ret. Sys. of Miss., 995 So.2d 115, 119(¶ 17) (Miss.2008).

¶ 24. We begin our review of Wright’s claim with a clear understanding of this disability-benefits program. PERS Medical Board, Disability Appeals Committee, and Board of Trustees are tasked with determining whether Wright qualifies for non-work-related disability retirement. In performing this inquiry, the medical board, after an evaluation of medical evidence, must certify that “the member is mentally or physically incapacitated for the further performance of duty, that the incapacity is likely to be permanent, and that the member should be retiredf.]” Miss. Code Ann. § 25-ll-113(l)(a) (Supp.2009). Next, the medical board must apply the statutory definition of “disability,” which is:

[T]he inability to perform the usual duties of employment or the incapacity to perform such lesser duties, if any, as the employer, in its discretion, may assign without material reduction in compensation or the incapacity to perform the duties of any employment covered by the Public Employees’ Retirement System (Section 25-11-101 et seq.) that is actually offered and is within the same general territorial work area, without material reduction in compensation.

Id. An employee must prove non-work-related disability to the medical board according to the requirements of section 25-ll-113(l)(a). Case v. Pub. Employees’ Ret. Sys., 973 So.2d 301, 311(¶23) (Miss.Ct.App.2008). “The agency, not the reviewing court, acts as the finder of fact.” Id. (citing Pub. Employees’ Ret. Sys. v. Cobb, 839 So.2d 605, 609(¶12) (Miss.Ct.App.2003)). Fact-finding includes evaluating the credibility of witnesses, and PERS has the sole responsibility for determining which medical evaluations to rely upon. Id. The Mississippi Constitution prohibits the judiciary from retrying matters appealed from agencies de novo. Id. at 311(¶ 24) (citing Miss. State Tax Comm’n v. Mississippi-Alabama State Fair, 222 So.2d 664, 665 (Miss.1969)). We must affirm the agency’s decision if it is supported by substantial evidence and is not arbitrary or capricious. Id. (citing URCCC 5.03).

¶ 25. On remand, the DAC determined Wright presented no objective evidence of fibromyalgia or other disorders, and Dr. Gupta’s notes did not document a permanent and total disability. Furthermore, the DAC found that both Dr. Webb and Dr. Manning concluded Wright’s treatment was inadequate. The DAC determined Wright “merely has a diagnosis that needs to be treated appropriately,” rather than an incapacitating disability.

A. Dr. Webb’s Report

¶ 26. As we begin our review of PERS’s findings, we are immediately troubled by a glaring inconsistency in PERS’s reasoning underlying its prior denial and its most recent denial of Wright’s disability claim. First, we note that previously, on August 4, 2003, based on Dr. Webb’s examination of Wright, the DAC found:

We recognize that there are several contrary opinions in this ease, but psychiatric problems are generally fluid in nature and obviously, the panic disorder from which Ms. Wright suffers is not disabling at all, when it is treated correctly. She is presently being treated optimally and according to Dr. Webb, not only is Ms. Wright ready to go back to work [,] but work would be good for her.

Wright I, 949 So.2d at 842(¶ 13) (emphasis added). Based on the DAC’s conclusion that Wright was being treated optimally, the DAC found Wright was not disabled.

¶ 27. However, after we remanded the case to PERS, the DAC altered its reasoning and determined:

So while we have Dr. Gupta saying that Ms. Wright is disabled, we have both Dr. Manning and Dr. Webb saying that Ms. Wright has not received adequate treatment for her illness and needs to be optimized.... Dr. Manning and Dr. Webb agree that Ms. Wright’s treatment has not been optimal.

(Emphasis added).

¶ 28. These findings are clearly inconsistent. We simply cannot see how the DAC can base its 2003 denial on its conclusion that Wright was treated “optimally,” and turn around in 2007 and claim this same report from Dr. Webb illustrates Wright “has not received adequate treatment for her illness and needs to be optimized.”

¶ 29. The supreme court defines arbitrary as “not done according to reason or judgment, but depending on the will alone.” Marquez, 774 So.2d at 429(¶ 34) (citing Burks v. Amite County Sch. Dist., 708 So.2d 1366, 1370(¶14) (Miss.1998)). Capricious means “done without reason, in a whimsical manner, implying either a lack of understanding of or a disregard for the surrounding facts and settled controlling principles.” Id. at 429-30(¶ 34) (citing Burks, 708 So.2d at 1370(¶14)). “If an administrative agency’s decision is not based on substantial evidence, it necessarily follows that the decision is arbitrary and capricious.” Id. at 430(¶ 35) (quoting Miss. State Dep’t of Health v. Natchez Cmty. Hosp., 743 So.2d 973, 976(¶13) (Miss.1999)).

¶ 30. Dr. Webb offered no new findings to the DAC on June 8, 2007, and it reviewed the same report as it had earlier in 2003. Furthermore, these inconsistent findings do not concern mere collateral matters. Instead, these contradictory conclusions form the main bases the DAC relied upon in 2003 and on remand in 2007 to deny Wright’s claim.

¶ 31. In addressing whether substantial evidence existed to form the basis of PERS’s 2007 denial, we note that it appears PERS was not satisfied with Dr. Manning’s diagnosis, so it sought a second independent evaluation of Wright. We also point out that Dr. Webb only conducted one brief evaluation of Wright, which took place in July 2003. He did not review her complete medical records from her other physicians, nor did he conduct any follow-up interviews with her family or the other doctors. This is shown by the fact he dictated his report on the date of his examination.

¶ 32. After Wright was initially denied benefits by the DAC in 2003, she continued to be treated by Dr. Gupta and Dr. Hen-sarling for five more years. Neither of these doctors’ opinions that Wright is disabled have ever wavered.

¶ 33. This Court has recognized, “PERS has the discretion to determine which physicians’ assessments to consider and how much weight should be given to each assessment.” Brakefield v. Pub. Employees’ Ret. Sys., 940 So.2d 945, 948(¶ 12) (Miss.Ct.App.2006) (citing Byrd v. Pub. Employees’ Ret. Sys., 774 So.2d 434, 438(¶ 15) (Miss.2000)). However, the DAC’s puzzling contradictory analysis leaves the impression that its decision was indeed arbitrary and without support of substantial, objective evidence.

¶ 34. Further, the DAC’s denial also appears to be based in part on pure speculation. The DAC’s denial relies heavily on Dr. Manning’s evaluation of Wright. In interpreting Dr. Manning’s diagnosis, PERS emphasizes its conclusion that: “the most important part of [Dr. Manning’s] report states that [Wright] would improve if her medications and treatment were optimized.” (Emphasis added).

¶ 35. However, we must point out this is not what Dr. Manning found. Rather, Dr. Manning concluded a combination of medications and empirically-based psychological treatments may help provide Wright with the best opportunity for improvement. But Dr. Manning did not go as for as to opine that this course of treatment would enable her to perform her duties as a nurse as PERS suggests. Instead, Dr. Manning very carefully emphasized that such treatment, “would give her the best opportunity for improvement and possibly give her a better opportunity to return to work.” (Emphasis added) We note, as we did previously in Wright I, that “Dr. Manning did not ... explicitly state whether, in his opinion, Wright was likely to be permanently disabled.” Wright I, 949 So.2d at 841(¶ 7).

¶ 36. Nevertheless, the DAC utilizes Dr. Manning’s opinion to support its conclusion that Wright is not disabled. The reliance on such speculation or suspicion does not constitute substantial evidence but merely “exemplifies an arbitrary, capricious decision.” See Pub. Employees’ Ret. Sys. v. Ross, 829 So.2d 1238, 1243(¶ 24) (Miss.2002) (“PERS is required to make findings; doubt does not constitute a finding. Instead, it constitutes suspicion, a basis upon which the denial of disability benefits is arbitrary and capricious.”).

¶ 37. Essentially, the DAC’s recent finding that Wright was not optimally treated is used by the DAC to support its conclusion that Dr. Gupta’s treatment was not aggressive enough, so Wright is not disabled. Though we do not re-weigh the evidence, we must point out the lack of it. There was simply no substantial, objective medical evidence before PERS to establish that if Wright’s medications had been changed more often she would be able to return to work. Likewise, there is no medical evidence that Dr. Gupta failed to abide by the standard of care in his treatment and diagnosis of Wright.

B. Fibromyalgia

¶ 38. The DAC found that Wright’s diagnosis of fibromyalgia “clearly was not supported by objective testing,” and that “[n]o trigger points were documented, and to a doctor, the lack of documentation means that it does not exist.”

¶ 39. In reaching this finding, the DAC disregarded both of Wright’s treating physicians’ diagnosis that her fibromyalgia, along with her psychological impairment to cope, rendered her disabled. The DAC also disregarded Dr. Hensarling’s notes indicating classic trigger point patterns. Perhaps more peculiar is the DAC’s disregard for both of the independent medical examinations performed by Dr. Webb and Dr. Manning. Both of these examinations were conducted at PERS’s request, and both evaluations confirmed the fibromyal-gia diagnosis. “[M]edical diagnoses by licensed physicians constitute objective evidence of disability.” Case, 973 So.2d at 317(¶ 37). We are mindful that PERS is the finder of fact. However, the supreme court has previously held that PERS’s opinion is not conclusive, and PERS cannot choose to ignore uncontroverted evidence provided by treating physicians. Dearman, 846 So.2d at 1018 (¶ 11).

¶ 40. Dr. Gupta’s and Dr. Hensarling’s findings of fibromyalgia are objective evidence, and the findings were confirmed by Dr. Webb and Dr. Manning. PERS’s rejection of these physicians’ medical opinions as subjective assessments of Wright’s condition was improper. Furthermore, the substantial evidence sufficient to withstand appellate scrutiny must be found in the record, not in the minds of the doctors sitting on the PERS board. Thomas, 809 So.2d at 694(¶ 14). The only evidence the DAC relies upon is its own conclusion that Wright’s diagnosis was not supported by “objective testing.” While PERS is not required to put forth contradictory evidence, “it is required to make a nonarbitrary decision as to disability that comports with the statutory definition thereof.” Case, 973 So.2d at 317(¶ 37) (quoting Ross, 829 So.2d at 1241(¶ 17)). In this case, the DAC appears to have arbitrarily picked which findings to accept from Dr. Webb and Dr. Manning. The DAC also fails to point to any objective evidence in the record to indicate Wright’s fibromyalgia does not exist and does not contribute to her disabling condition.

C. Nursing License

¶ 41. Finally, Wright is prescribed mood altering medications, and even Dr. Webb found these medications were necessary. The Mississippi Board of Nursing classifies working while under the influence of mood altering medications as unprofessional conduct. Mississippi Board of Nursing Regulations, Vol. 35, Ch. II, Rule 1.2(e); see also Miss.Code Ann. § 73-15-29 (Rev.2008) (giving authority to the nursing board to deny, revoke, or suspend license of those violating nursing board rules and regulations). The DAC failed to consider Wright’s potential legal inability to work as a nurse while taking the prescribed medications.

¶42. Not only was Wright prescribed mood altering medications, she was later, in 2005, denied renewal of her nursing license after receiving her treating physicians’ diagnoses. Specifically, the Mississippi Board of Nursing cited Dr. Gupta’s report from April 2003, diagnosing Wright with anxiety disorder, panic disorder, and fibromyalgia, as well as, his determination that Wright is unable to handle work-related stress and, therefore, cannot perform the duties of a registered nurse. The Board of Nursing also relied on Dr. Hen-sarling’s report from September 2003, which stated “[fjibromyalgia is a chronic pain condition which requires a great deal of coping skills, and [Wright’s] psychological setting would inhibit any improvement.”

¶ 43. Though the Board of Nursing’s non-renewal of Wright’s nursing license had not yet occurred at the time of her claim, the record reflects that Wright suffered disqualifying psychological conditions and that Wright was on mood altering medications. The DAC did not address whether Wright’s prescribed medications impacted her lawful ability to perform the usual duties of her employment as a nurse. Instead, the DAC only acknowledged receipt of the non-renewal letter and pointed out that Wright had never appealed the decision.

¶ 44. Based upon the reasons addressed herein, we find PERS’s denial of benefits was arbitrary, capricious, and not supported by substantial evidence. Thus, we remand the case to PERS for an award of benefits to Wright.

III. STANDARD OF DISABILITY

¶ 45. Having found reversible error, we do not address Wright’s argument that PERS used an incorrect standard in addressing her disability claim.

¶ 46. THE JUDGMENT OF THE CIRCUIT COURT OF HINDS COUNTY IS REVERSED, AND THIS CASE IS REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE AP-PELLEE.

KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE, ROBERTS AND CARLTON, JJ„ CONCUR.

      . At the time of her claim, Wright was an employee of the State of Mississippi and had 5.25 years of service credit.

      . We accept the facts as presented in Wright I and, therefore, include only a brief summary of those facts necessary for this appeal.

      .The DAC indicated Dr. Gupta's opinion was first submitted in April 2002; however, Wright contends the correct date is April 3, 2003.

      . Wright’s mother contends her daughter’s sole consultation with Dr. Webb lasted approximately forty-five minutes.

      . Wright feared she would suffer a panic attack if she attended, so her mother, Farmer, represented her at the PERS hearings.

      . On January 5, 2005, Wright received a letter from the Mississippi Board of Nursing denying her license renewal. The letter cited Dr. Gupta's opinion from April 3, 2003, and Dr. Hensarling's opinion from September 30, 2003, as basis for the denial.

      .On the first appeal to the circuit court, the case was decided by the Honorable Winston L. Kidd, but on remand, the Honorable William F. Coleman presided over Wright’s appeal to the Hinds County Circuit Court.


author: LEE, P.J.,

text:
    JULVANNA, LLC, Appellant, v. ECONOMY INNS, INC., A Mississippi Corporation, Appellee.
    No. 2007-CA-02226-COA.
    Court of Appeals of Mississippi.
    Dec. 15, 2009.

      Beau A. Stewart, attorney for appellant.
    Michael B. Holleman, Gulfport, attorney for appellee.
    Before LEE, P.J., GRIFFIS and ROBERTS, JJ.
   LEE, P.J.,

for the Court.

PROCEDURAL HISTORY

¶ 1. On May 8, 2005, Julvanna, LLC brought suit in the Chancery Court of Harrison County against Economy Inns, Inc., for specific performance of a sales contract. Prior to trial, both parties reached a settlement agreement, which was reduced to an agreed judgment on March 31, 2006. The parties also entered into an agreement regarding the mutual release of claims. Julvanna subsequently filed a motion to enforce the terms of the agreed judgment. Economy filed a motion to dismiss and a counterclaim seeking the $250,000 earnest money deposit. After a hearing on May 22, 2007, the chancellor denied Julvanna’s motion to enforce the agreed judgment, terminated the sales contract, and allowed Economy to retain the $250,000 earnest money deposit. Jul-vanna now appeals, asserting the following: (1) the chancellor erred in denying its motion to enforce the judgment, and (2) the chancellor erred in awarding damages to Economy.

FACTS

¶ 2. On December 14, 2004, Julvanna entered into a contract to purchase a Super 8 motel located in Biloxi, Mississippi from Economy. Another property was also included in the sales contract, but it is not relevant to this appeal. The original contract called for a closing date on or before July 25, 2005. In April 2005, Economy, unable to secure an IRS 1031 exchange, notified Julvanna that no closing would occur.

¶ 3. Julvanna then filed its complaint for specific performance, and Economy filed its motion to dismiss and counterclaim. On August 29, 2005, the Super 8 sustained substantial damage from Hurricane Katrina. Economy entered into a construction and lease agreement with Southern Construction Services, Inc. (Southern), to rebuild the Super 8 as it existed prior to Hurricane Katrina. Southern was assigned the insurance proceeds and was to lease the Super 8 beginning on September 25, 2005, until October 25, 2006, for $500,000. Economy and Southern would share the costs of construction beyond the amount of the insurance proceeds.

¶ 4. Economy and Julvanna entered into the agreed judgment on March 31, 2006. The agreed judgment provided that the original sales contract from December 14, 2004, was in full force and effect and that the terms, as modified by the agreed judgment, were controlling. The agreed judgment stated the following: Julvanna was to purchase the Super 8 for 5.5 million dollars; closing was to occur within 90 days of a written request by Economy, but no later than December 31, 2006; Economy’s failure to effectuate an IRS 1031 exchange would not extend the closing date; Economy was to obtain clarification from Southern concerning a section of the construction and lease agreement; Julvan-na was to take the Super 8 property subject to the construction agreement; and the judgment provided for prorated lease payments should the closing occur before Southern’s lease expired. In conjunction with this agreed judgment, the parties entered into a “Full and Final Mutual Release,” wherein the parties agreed to release the other from any claims, causes of action, and liability relating to the matter at hand. The mutual release also stated that the agreed judgment would represent a compromise and settlement of all doubtful claims.

¶ 5. On December 4, 2006, Economy notified Julvanna that the repairs were to be finished for the closing to occur by the end of December. Economy further advised Julvanna that its franchise had been terminated. The new owner of Super 8 franchises, Wyndham Hotels (Wyndham), had upgraded its standards for Super 8 motels, and the pre-Katrina status of the Super 8 would be insufficient to meet the new Super 8 quality standards. Economy notified Julvanna that it would help Julvanna reinstate and transfer the franchise if Julvan-na paid the $5,000 transfer fee. Economy ultimately entered into negotiations with Wyndham to reacquire the franchise on condition of certain updates being made to the property. Julvanna notified Economy that the closing could not occur by December 31, 2006, because of work yet to be completed to the Super 8. After receiving a copy of the inspection report, Julvanna notified Economy that a closing in January 2007 was acceptable. No closing occurred. Instead, the parties sent correspondence back and forth for the next month quibbling over the condition of the Super 8. Ultimately, Economy notified Julvanna that it considered the sales contract terminated when Julvanna failed to notify Economy by January 31, 2007, of its intent to close by February 24, 2007. Julvanna then filed its motion to enforce the agreed judgment.

STANDARD OF REVIEW

¶ 6. The Court will not disturb a chancellor’s findings if they are supported by substantial evidence unless the chancellor abused his or her discretion, was manifestly wrong, clearly erroneous, or applied an erroneous legal standard. Sanderson v. Sanderson, 824 So.2d 623, 625-26(¶ 8) (Miss.2002). The principle of “manifest error” applies only to findings of fact. Boggs v. Eaton, 379 So.2d 520, 522 (Miss.1980). However, questions of law, including questions of contract construction, are reviewed de novo. McMurphy v. Three Rivers Planning and Dev. Dist., Inc., 966 So.2d 192, 195(¶ 12) (Miss.Ct.App.2007).

DISCUSSION

I. MOTION TO ENFORCE THE JUDGMENT

¶ 7. In its first issue on appeal, Julvanna argues that the chancellor erred in denying its motion to enforce the agreed judgment. Specifically, Julvanna claims that the chancellor misinterpreted the “as-is, where-is” language in the original contract; the agreed judgment did not contain the “as-is, where-is” language; and Economy obstructed the performance of the agreed judgment by failing to maintain the Super 8 franchise status.

¶ 8. Agreed judgments are “ ‘in the nature of a contract’ and are binding and conclusive in the absence of fraud, mutual mistake, or collusion.” Ruff v. Estate of Ruff, 989 So.2d 366, 372(¶23) (Miss.2008) (citing Guthrie v. Guthrie, 233 Miss. 550, 557, 102 So.2d 381, 383 (1958)).

¶ 9. The courts use a three-step approach to contract interpretation:

First, the “four corners” test is applied, wherein the reviewing court looks to the language that the parties used in expressing their agreement. Second, if the court is unable to translate a clear understanding of the parties’ intent, the court should apply the discretionary “canons” of contract construction. Finally, if the contract continues to evade clarity as to the parties’ intent, the court should consider extrinsic or parol evidence. It is only when the review of a contract reaches this point that prior negotiations, agreements and conversations might be considered in determining the parties’ intentions in the construction of the contract.

Tupelo Redevelopment Agency v. Abernathy, 913 So.2d 278, 284(¶ 13) (Miss.2005) (internal citations omitted).

¶ 10. Under the terms of the agreed judgment, the parties agreed to release each other from all pending claims. The agreed judgment also reaffirmed the terms of the original purchase agreement, including the condition of the property. The original sales contract called for the property to be delivered in “as is, where is” condition. After Hurricane Katrina damaged the Super 8, Economy offered Jul-vanna the option to walk away or take the damaged property along with any insurance proceeds. Julvanna failed to select an option. Economy then entered into the agreement with Southern to rebuild the Super 8 to its pre-Katrina condition. In the agreed judgment, Julvanna agreed to take the Super 8 subject to the Economy-Southern agreement.

¶ 11. Although Julvanna contends that the Super 8 was to be completely finished prior to closing, using the “four corners” test, the intent of the parties was for Jul-vanna to take the Super 8 subject to the Economy-Southern agreement in an “as is, where is” condition. The agreed judgment contemplated that the closing might occur before the expiration of Southern’s lease. If that were the case, then Julvanna would have assumed Economy’s role in the agreement and received a pro-rata share of the lease payments while Southern finished completing the repairs to the Super 8.

¶ 12. The Economy-Southern agreement called for Southern to rebuild the Super 8 to the condition as it existed on August 28, 2005, and to be franchise-compliant with Super 8 standards. Section 4.3 of this agreement stated that Economy and Southern “shall bear equally any additional costs in the construction, not covered by insurance, resulting from any law, ordinance, rule, or regulation that requires an improvement or modification in the building construction over the condition that existed on August 28, 2005.” In assuming the risks and benefits of the Economy-Southern agreement, Julvanna understood that it would be required to share costs under Section 4.3, if applicable, but it wanted clarification that the circumstances under which that might happen were limited. The agreed judgment reiterated the language of Section 4.3, stating that “the provision only applies to improvements not covered by insurance which also result from any law, ordinance, rule or regulation that requires an improvement or modification of the building construction over the condition that existed on August 28, 2005.” Julvanna’s counsel conceded at trial that “[i]f Southern doesn’t do their job ... we [Julvanna] stand in the shoes of Economy.”

¶ 13. Julvanna clearly did not want to be responsible for any additional improvements required by the new, updated franchise requirements. At trial, Julvanna admitted that Economy was not required to provide a franchise agreement nor was it required to bring the Super 8 into compli-anee with the new Wyndham standards. However, Julvanna contends on appeal that the property was to be franchise-compliant. As stated previously, any increased costs caused by improvements to the property were to be paid by either Economy and Southern, or Julvanna and Southern, depending upon when the closing was to occur.

¶ 14. We note that, regardless of Jul-vanna’s interpretation of the agreed judgment, Julvanna did not put on any proof that the Super 8 did not meet the standards of the Economy-Southern agreement. There was no proof of the condition of the Super 8 on August 28, 2005, nor was there any proof of what the Super 8 standards were at that time.

¶ 15. Julvanna was unwilling to complete the sale of the property by December 81, 2006, or in January or February 2007. Julvanna breached the agreed judgment by failing to accept the property subject to the obligations and liabilities of the agreed judgment, and Economy was left with no choice but to consider the contract terminated. The chancellor came to this conclusion as well and properly denied Julvanna’s motion to enforce the agreed judgment.

II. DAMAGES TO ECONOMY

¶ 16. The chancellor found that Economy, pursuant to the terms of the agreed judgment, was entitled to have the contract terminated and retain the $250,000 earnest money. Julvanna argues that the issue of money damages was not properly before the chancellor. Julvanna asserts that Economy did not have the right to file a motion to dismiss and a counterclaim in response to Julvanna’s motion to enforce the agreed judgment. However, Julvanna failed to raise this issue at trial. It is well settled that this Court does not review matters on appeal that were not first raised in the lower court. Daniels v. Bains, 967 So.2d 77, 81 (¶ 13) (Miss.Ct.App.2007).

¶ 17. Regardless of the procedural bar, Economy filed a response to Julvan-na’s motion asking the chancellor to overrule the motion to enforce the agreed judgment. Economy interpreted Julvan-na’s motion as a motion for specific performance, asserted that Julvanna breached the contract, and argued it was entitled to the $250,000 earnest money. Whether Economy properly filed a motion to dismiss or a counterclaim, Economy was entitled to the earnest money because it was able and willing to perform the contract while Julvanna breached the contract. See Gunn v. Heggins, 964 So.2d 586, 594(¶ 18) (Miss.Ct.App.2007). This argument is without merit.

¶ 18. THE JUDGMENT OF THE HARRISON COUNTY CHANCERY COURT IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.

KING, C.J., MYERS, P.J., IRVING, GRIFFIS, BARNES, ISHEE, ROBERTS, CARLTON AND MAXWELL, JJ., CONCUR.