author: BEAM, JUSTICE, FOR THE COURT:

text:
    GREGORY G. NETHERY v. CAPITALSOUTH PARTNERS FUND II, L.P., CapitalSouth Partners SBIC Fund III, L.P., CapitalSouth Partners Florida Sidecar Fund I, LP, CapitalSouth Partners, LLC, Harbert Mezzanine Partners III SBIC, LP, Harbert Mezzanine Partners III, LP Properly Known as Harbert Mezzanine III, LP f/k/a Harbert Mezzanine Partners III SBIC, LP, On-Site Fuel Service, Inc. and On-Site Fuel Holdings, Inc.
    NO. 2017-CA-01238-SCT
    Supreme Court of Mississippi.
    November 15, 2018
    ATTORNEYS FOR APPELLANT: CECIL MAISON HEIDELBERG, Ridgeland, J. KEVIN WATSON, Jackson
    ATTORNEYS FOR APPELLEES: KAYTIE MICHELLE PICKETT, ADAM STONE, JACKIE RAY BOST, II, Jackson, EMERSON BARNEY ROBINSON, III, PHIL B. ABERNETHY, JOHN HOUSTON DOLLARHIDE, Ridgeland, PHILIP W. THOMAS, Jackson
    BEFORE KITCHENS, P.J., BEAM AND CHAMBERLIN, JJ.
   BEAM, JUSTICE, FOR THE COURT:

¶ 1. Gregory Nethery appeals from the Rankin County Circuit Court's decision to grant a motion to compel arbitration filed by Defendants CapitalSouth Partners, Harbert Mezzanine Partners, and On-Site Fuel Services (collectively, "Defendants"). Finding the circuit court properly granted Defendants' motion to compel arbitration, we affirm.

COURSE OF PROCEEDINGS

¶ 2. Nethery founded On-Site Fuel Service, Inc. (OSFS), in 1996. In 2011, Defendants CapitalSouth and Harbert approached Nethery about acquiring an ownership interest in OSFS. A deal was consummated for CapitalSouth and Harbert to invest in OSFS, and OSFS then used the investment capital to buy out two other longtime investors. On-Site Fuel Holdings (OSFH) was then created as a holding company. OSFH is a Delaware corporation that owns OSFS and does business in interstate commerce and in Mississippi.

¶ 3. Nethery retained a minority thirty-percent ownership interest in OSFS through his stock interest in OSFH. CapitalSouth and Harbert each held the remaining interest. No shareholder owns more than fifty percent of the holding company.

¶ 4. As part of the deal, Nethery signed a Stockholders Agreement containing an arbitration clause (denoted as Section 5.03(b) of the agreement), which provided the following:

Except as provided in Section 6.03(a), any dispute among the parties hereto shall, on demand of any party to such dispute, be submitted to binding arbitration in Charlotte, North Carolina, conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association by a panel of three impartial arbitrators selected in accordance with such Commercial Arbitration Rules, and judgment upon the award may be entered in any court of competent jurisdiction. In rendering the award, the arbitrators shall enforce this Agreement in accordance with its terms and in accordance with applicable law, and shall assess the costs of such arbitration as they deem just and equitable in light of their determination of the issues being arbitrated.

¶ 5. In October 2016, Nethery filed suit in circuit court against CapitalSouth and Harbert, claiming breach of fiduciary duty, corporate freeze out, unjust enrichment, constructive trust, civil conspiracy, and negligence and mismanagement.

¶ 6. In the complaint, Nethery claimed that OSFS, under his continued guidance, transitioned well from CapitalSouth's and Harbert's entry into the business, growing "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) substantially, which in turn "grew enterprise value." Due to the growth, OSFS was contacted by numerous investment groups interested in acquisition. But CapitalSouth and Harbert refused to engage seriously in these opportunities that "would have benefited all stockholders handsomely."

¶ 7. In December 2013, CapitalSouth and Harbert appointed their own executive to be present at the company offices on a regular basis. In 2014, Nethery claims he began to be excluded from company and departmental meetings. Nethery confronted CapitalSouth and Harbert about his exclusion from company business to no avail.

¶ 8. In June 2014, Nethery says he was invited to Atlanta to meet with CapitalSouth principals. CapitalSouth demanded core changes in the company and told Nethery these demands were better than asking for Nethery's resignation.

¶ 9. According to Nethery, CapitalSouth Defendants suspended him later that same month "under the guise of false and specious allegations." And in July 2014, Nethery was terminated without cause.

¶ 10. Nethery claims that since his termination, "the company's trajectory has spiraled in a 180-direction." The company reported approximately $8 million in losses during 2015, and shareholder equity essentially vanished. But the majority shareholders "profited in spite of the losses by implementing a loan arrangement with the company where they collect over $250,000 per month through interest and accruals." Through their loans to the company, the majority shareholders "drain cash flow, handcuffing the company, while they benefit."

¶ 11. Nethery claims that at all times, CapitalSouth and Harbert "conspired together and acted in concert on behalf of themselves and each other, taking the positions of each other, and acting in one block to control the voting of the company." Considering their combined majority interest, CapitalSouth and Harbert worked together for themselves and against the interests of Nethery, the minority shareholder.

¶ 12. Defendants answered Nethery's complaint, asserting the affirmative defense of arbitration, and filed their motion to compel arbitration that same day. The circuit court granted the motion and stayed the action filed by Nethery pending the completion of any resulting arbitration.

¶ 13. As he claimed in the circuit court, Nethery maintains on appeal that, based upon a choice-of-law provision contained in the Stockholders Agreement, Delaware law governs interpretation of the agreement. Nethery contends that under Delaware law, the arbitration clause does not apply because Nethery's complaint does not allege breach of the Stockholders Agreement, nor does Nethery seek legal relief under the agreement. Rather, Nethery asserts only noncontractual state-law claims and his legal claims exist independently from the contract.

¶ 14. Nethery contends the Delaware Supreme Court's decision in Parfi Holding AB v. Mirror Image Internet, Inc. , 817 A.2d 149, 155 (Del. 2002), controls. Under Parfi 's analysis dealing with an arbitration clause contained in a "stock underwriting agreement," Nethery argues his independent state-law claims fall outside the scope of the arbitration agreement; therefore, according to Nethery, they are not subject to arbitration.

¶ 15. Defendants respond that Delaware law is inapplicable, and it is also preempted by the Federal Arbitration Act (FAA). Alternatively, the Defendants contend that, even if Delaware law does apply, Parfi is distinguishable, and the controlling case is Elf Atochem North America, Inc. v. Jaffari , 727 A.2d 286, 294 (Del. 1999).

¶ 16. The Defendants further contend that, because the arbitration agreement incorporates the Rules of the American Arbitration Association (AAA), the parties intended to delegate questions of arbitrability to an arbitrator (in this case, an arbitration panel). Thus, they continue that the scope of the arbitration agreement should be determined by an arbitration panel, not the court.

DISCUSSION

¶ 17. At the outset, we agree with Nethery that Delaware law governs interpretation of Stockholders Agreement, based upon the agreement's choice-of-law provision. In turn, Delaware law governs the arbitration provision incorporated into the agreement. And because the Stockholders Agreement indisputably involves interstate commerce, the Federal Arbitration Act (FAA) governs. James & Jackson, LLC v. Willie Gary, LLC , 906 A.2d 76, 80 (Del. 2006).

¶ 18. "The FAA requires that upon application of a party to a suit brought in court, the court shall stay the court proceeding 'upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration ....' " McLaughlin v. McCann , 942 A.2d 616, 621 (Del. Ch. 2008). "When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally should apply ordinary state-law principles that govern the formation of contracts." Id. (quoting First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ). Generally, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) ).

¶ 19. In applying traditional state-contract-law principles to make a determination on the question of arbitrability, "the court presumes that parties intended courts to decide issues of substantive arbitrability[,] unless 'the parties clearly and unmistakably provide otherwise.' " Willie Gary , 906 A.2d at 79 (citing Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) ).

Arbitrability

¶ 20. As a threshold issue, Delaware has adopted "the majority federal view that reference to the AAA rules evidences a clear and unmistakable intent to submit arbitrability issues to an arbitrator." Willie Gary , 906 A.2d at 80. Willie Gary provides,

As a matter of policy, we adopt the majority federal view that reference to the AAA rules evidences a clear and unmistakable intent to submit arbitrability issues to an arbitrator. We do so in the belief that Delaware benefits from adopting a widely held interpretation of the applicable rule, as long as that interpretation is not unreasonable. The majority view does not, however, mandate that arbitrators decide arbitrability in all cases where an arbitration clause incorporates the AAA rules. Rather, it applies in those cases where the arbitration clause generally provides for arbitration of all disputes and also incorporates a set of arbitration rules that empower arbitrators to decide arbitrability.

Id.

¶ 21. Thus, under Delaware law, "the parties are deemed to have agreed to arbitrate substantive arbitrability in accordance with the rules that they have broadly incorporated," under two conditions: "(1) the arbitration provision refers to the AAA or comparable rules and (2) the arbitration clause generally provides for the arbitration of all disputes." Roberts v. Strickland , No. CV 510-081, 2010 WL 11553201, *1 (S.D. Ga. Dec. 10, 2010) ) (quoting GTSI Corp. v. Eyak Tech., LLC , 10 A.3d 1116, 1120-21 (Del. Ch. 2010) ).

¶ 22. In Willie Gary , the Delaware Supreme Court held that, even though the arbitration clause before it had incorporated the AAA rules, the federal majority rule did not apply. Id. at 81. Because the arbitration clause contained in the parties' "LLC agreement" also allowed LLC members to pursue injunctive relief and specific performance in the court, the Delaware Supreme Court reasoned that the arbitration clause did not refer "all controversies to arbitration, ... and something other than the incorporation of the AAA rules would be needed to establish that the parties intended to submit arbitrability questions to an arbitrator." Id. at 81.

¶ 23. Here, similar to the LLC agreement construed in Willie Gary , the arbitration clause under Section 5.03(b) of the Stockholders Agreement generally refers all disputes arising or relating to the Stockholders Agreement to arbitration, and the clause specifically incorporates the Commercial Arbitration Rules of the AAA. But also similar to Willie Gary , the language contained in Section 5.03(a) allows the parties to pursue claims for injunctive relief and specific performance in the court.

¶ 24. While Nethery does not seek injunctive or specific-performance relief, unlike as was the case in Willie Gary , we think Section 5.03 fails under Willie Gary 's second prong. Under Willie Gary , Section 5.03(a) constitutes a carve-out provision providing judicial remedies for disputes. Given its inclusion in the agreement, we think "something other than incorporation of the AAA rules would be needed to establish that the parties intended to submit arbitrability questions to an arbitrator." Id. at 81. Accordingly, we find that the question of arbitrability in this case was an issue for the circuit court's determination; it was not an issue for determination by an arbitration panel.

¶ 25. The circuit court's order compelled Nethery to arbitrate all of his claims against the defendants in accordance with the arbitration clause contained in the parties' Stockholders Agreement. For reasons explained below, we affirm the circuit court's order.

Scope

¶ 26. In Parfi , the Delaware Supreme Court established a two-part test for determining whether a dispute is committed to arbitration:

First, the court must determine whether the arbitration clause is broad or narrow in scope. Second, the court must apply the relevant scope of the provision to the asserted legal claim to determine whether the claim falls within the scope of the contractual provisions that require arbitration. If the court is evaluating a narrow arbitration clause, it will ask if the cause of action pursued in court directly relates to a right in the contract. If the arbitration clause is broad in scope, the court will defer to arbitration on any issues that touch on contract rights or contract performance.

Parfi , 817 A.2d at 155.

¶ 27. The issue before the Delaware Supreme Court in Parfi was whether an arbitration clause in an underwriting agreement should control in a minority shareholder's fiduciary-duty claims against a corporation. Id. at 155-56. The Parfi court found at the outset that the arbitration clause was broad in scope. "By agreeing to submit to arbitration any dispute, controversy, or claim arising out of or in connection with Underwriting Agreement, [the parties] have signaled an intent to arbitrate all possible claims that touch on the rights set forth in their contract." Id. at 155. Even though the Parfi Court found the arbitration clause was broad in scope, it said the actual question before it was "whether the arbitrable contract claims are connected to the fiduciary duty claims that are independently grounded on Delaware corporation law." Id.

¶ 28. In answering the question, the Parfi court said, "Generally, purportedly independent actions do not touch matters implicated in a contract if the independent cause of action could be brought had the parties not signed a contract." Id. at 156 n.24. Applying this test, the Parfi court concluded that because the fiduciary claims "would be independently and separately assertable" even if no underwriting agreement existed, they are "not 'in connection' with the Agreement." Id. at 157. That is to say, because the fiduciary claims did not depend in any manner on the underwriting agreement, the Parfi court found that the claims were not arbitrable. Id.

¶ 29. The Parfi court, however, was careful to distinguish its case, which involved a separate underwriting agreement not binding on all the stockholders of the corporation, and the situation in Jaffari . In Jaffari , the Delaware Supreme Court held that a broad arbitration provision in an LLC Agreement could encompass breach-of-fiduciary-duty claims raised by a member. Jaffari , 727 A.2d at 295. And as Parfi itself summarized, the LLC agreement in Jaffari required "parties to submit purported fiduciary duty claims to arbitration since the series of agreements created a system setting for[th] the governance and operation of the parties' joint venture." Parfi , 817 A.2d at 160 n.42 (citing Jaffari , 727 A.2d at 293-95 ).

¶ 30. Here, the arbitration provision contained in the Stockholders Agreement is broad in scope, because it governs "[a]ny dispute among the parties." The Stockholders Agreement governs the relationship between stockholders (CapitalSouth, Harbert, Sidecar, and Nethery) who expressed the "desire to enter into this Agreement for the purpose of agreeing to certain aspects of their relationship as holders of such capital stock."

¶ 31. This relationship, as the Defendants argue, is directly related to Nethery's primary allegation: "Due to the majority shareholders' actions, the company has become encumbered with high interest debt to the majority shareholders and/or their entities, a benefit to the majority shareholders and a detriment to the minority shareholders."

¶ 32. Section 3.04 of the Stockholders Agreement provides,

Major Management Decisions. The following acts, expenditures, decisions and obligations made or incurred by the Company or any Subsidiary shall require the prior written approval of the Required Investors (unless the Required Investors indicate otherwise in writing prior to any action by the Board, approval by the CapitalSouth Nominees and the Harbert Nominees at a meeting or by written consent shall constitute the approval of the Required Investors for the purposes of this Section 3.04):
....
(h) the incurrence of Debt, other than borrowings under any revolving line of credit that has been approved hereunder, or the sale or issuance by the Company or any Subsidiary of any equity security of the Company or any Subidiary;
(i) the guarantee of any obligation (including Debt) in excess of $100,000 of any Person, other than a Company Subsidiary.

¶ 33. Section 5.14 of the Stockholders Agreement provides,

No Effect on Lending Relationships. To the extent any lender to the Company owns any Company Securities, nothing contained in this Agreement or any other equity documentation shall affect, limit or impair the rights and remedies of any lender to the Company in its capacity as a lender pursuant to any agreement under which the Company has borrowed money from such Person.

¶ 34. Section 5.16 provides,

Discussion re Purchase of Nethery's Company Securities. Upon termination of Nethery's employment with the Company and its Subsidiaries for any reason, the Company and Nethery shall negotiate in good faith with respect to a potential repurchase of the Nethery's Company Securities by the Company. In connection with such negotiations, upon the request of Nethery, the Company shall engage a national or regional investment bank or business appraiser who shall be mutually acceptable to the Company and Nethery, to provide a non-binding determination of the fair market value of such Company Securities. The costs of such appraisal shall be born[e] 50% by Nethery and 50% by the Company.

¶ 35. The conduct in which Nethery alleges the Defendants engaged (and which forms the basis for each of Nethery's state-law claims) arises from the authority provided by the Stockholders Agreement and its provisions therein-Sections 3.04(h) and (i) and Section 5.14 of the Stockholders Agreement, in particular. The alleged conduct is dependent on the agreement's terms and is not "independently and separately assertable" apart from the Stockholders Agreement. Cf . Parfi , 817 A.2d at 157. Thus, the circuit court correctly found that Nethery's claims are subject to the agreement's arbitration provision.

CONCLUSION

¶ 36. For these reasons, we affirm the circuit court's order granting the defendants' motion to compel arbitration.

¶ 37. AFFIRMED.

WALLER, C.J., RANDOLPH AND KITCHENS, P.JJ., KING, COLEMAN, MAXWELL, CHAMBERLIN AND ISHEE, JJ., CONCUR.

      CapitalSouth Defendants are CapitalSouth Partners Fund II, L.P.; CapitalSouth Partners SBIC, Fund III, L.P.; CapitalSouth Partners, Florida Sidecar Fund I, L.P.; and CapitalSouth Partners, LLC.

      On-Site Fuel Defendants are On-Site Fuel Service, Inc., and On-Site Fuel Holdings, Inc.

      This is a typographical error. Section 5.03(b) clearly refers to Section 5.03(a), not Section 6.03(a), because no Section 6 is contained in the Stockholders Agreement. Section 5.03(a) provided the following:
      Each Stockholder acknowledges and agrees that in the event of any breach of this Agreement, the non-breaching party or parties would be irreparably harmed and could not be made whole by monetary damages, and therefore each Stockholder hereby waives the defense in any action for specific performance or injunctive relief that a remedy at law would be adequate. Each Stockholder further agrees that all other Stockholders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement and to obtain injunctive relief in any action instituted in a court of proper jurisdiction.

      Nethery did not plead a cause of action against OSFS, but he named it as a defendant in order to "seek the remedy of an accounting."

      Section 5.07 of the Stockholders Agreement provides, "The laws of the State of Delaware, excluding the principles of conflicts of law thereof, shall govern the interpretation, validity and performance of the terms of this Agreement."

      In Willie Gary , the complainant had sought injunctive relief, specific performance, and, alternatively, dissolution. Willie Gary , 906 A.2d at 78. No other relief was sought. Id. Here, Nethery seeks monetary damages only.


source: Caselaw Access Project

author: MAXWELL, JUSTICE, FOR THE COURT:

license: Public Domain

text:
    Tammy WEBSTER v. MISSISSIPPI DEPARTMENT OF WILDLIFE, FISHERIES AND PARKS
    NO. 2017-CA-00935-SCT
    Supreme Court of Mississippi.
    November 15, 2018
    ATTORNEY FOR APPELLANT: MICHAEL FARRELL
    ATTORNEY FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL BY: LEE DAVIS THAMES, JR., Jackson
    BEFORE WALLER, C.J., MAXWELL AND ISHEE, JJ.
   MAXWELL, JUSTICE, FOR THE COURT:

¶ 1. To encourage noncareer military service, the Uniformed Services Employment and Reemployment Rights Act (USERRA) entitles uniformed service members to prompt civil reemployment upon completing service. When Tammy Webster completed her National Guard training, she requested the Mississippi Department of Wildlife, Fisheries, and Parks (MDWFP) renew her contract as a part-time dispatcher. When MDWFP refused to rehire her, Webster filed a USERRA claim in state court, successfully proving MDWFP violated her federal statutory right to reemployment. Though the prevailing party, Webster appeals, challenging both her compensation award of $7,589-one year's worth of lost part-time wages-and her attorney-fee award of $2,800.

¶ 2. We hold that the trial court did not err in limiting Webster's compensation to one year of lost wages. Webster had been employed under yearly contracts that were not automatically renewable. While USERRA required MDWFP to reemploy her, it was under no statutory obligation to employ her indefinitely . So the compensation award is reasonably linked to what Webster lost due to MDWFP's failure to comply with USERRA.

¶ 3. That said, we reverse and remand the remainder of the judgment. First, the trial court failed to rule on Webster's liquidated-damages claim, even though Webster presented evidence MDWFP's USERRA violation was "willful," as that term is used in the statute. Second, the trial court arbitrarily assigned $2,800 as a reasonable attorney fee, without considering the time spent by or hourly rate of Webster's counsel or any other relevant factor. Third, the trial court taxed Webster her respective court costs, even though USERRA prohibits claimants from being taxed with costs.

¶ 4. Therefore, we affirm in part and reverse and remand in part the trial court's judgment.

Background Facts and Procedural History

I. Webster's USERRA Claim

¶ 5. In 2011, Webster was working as a part-time dispatcher for MDWFP when she decided to enlist in the Mississippi Air National Guard. She was ordered to attend training for six months. Before she left, Webster informed MDWFP of her upcoming service. During training, she kept in contact with MDWFP, letting her supervisor know her orders had been extended two months. And when training finally ended eight months later in January 2012, she asked to be placed back on the dispatch schedule.

¶ 6. But MDWFP did not renew her contract for 2012, citing scheduling conflicts with Webster's full-time, police-department job and a reduced need for part-time dispatchers. MDWFP refused to rehire Webster even when she informed her supervisor, who had served in the National Guard thirty years, that MDWFP was violating USERRA.

¶ 7. USERRA is federal legislation enacted to encourage noncareer uniform service by eliminating the disadvantages such service has on civilian careers and employment. 38 U.S.C. § 4301(a)(1) (2012). USERRA prohibits employment decisions motivated by discrimination based on service. 38 U.S.C. §§ 4301(a)(3), 4311 (2012). USERRA also provides service members a statutory right to prompt reemployment upon completion of a period of service. 38 U.S.C. §§ 4301(a)(2), 4312 - 4313 (2012). Claiming that MDWFP violated this latter statutory right to prompt reemployment, Webster filed an action against her state-agency employer in Hinds County Circuit Court. See 38 U.S.C. § 4323(b)(2) (2012) (permitting a plaintiff to bring a USERRA claim in state court when the action is against the state). Following a bench trial, the trial court ruled Webster had prevailed on her USERRA claim.

¶ 8. Unlike a § 4311 discrimination claim, to prove her failure-to-reemploy claim, Webster did not have to show her service was a motivating factor in MDWFP's decision not to renew her contract. Petty v. Metro. Gov't of Nashville & Davidson Cty. , 687 F.3d 710, 716 (6th Cir. 2012). Instead, § 4312"provides for nearly strict liability for failure or refusal to promptly reemploy a returning service member to his or her former employment." Mace v. Willis , 259 F.Supp.3d 1007, 1016 (D. S.D. 2017). All Webster had to prove-and did prove-is that (1) she gave advance notice of her service to her employer; (2) her cumulative length of absences did not exceed five years; and (3) she timely submitted an application for reemployment. See Sumrall v. Ensco Offshore Co. , No. 2:17-CV-48-KS-MTP, 2018 WL 2088761, at *4 (S.D. Miss. May 7, 2018) (citing 38 U.S.C. § 4312(a), (e)(1)(D) ). The burden then shifted to MDWFP to prove one of the two available statutory affirmative defenses-(1) MDWFP's "circumstances ha[d] so changed as to make such reemployment impossible or unreasonable"; or (2) Webster had "no reasonable expectation" to continued employment because the position she left was for "a brief, nonrecurrent period." 38 U.S.C. § 4312(d)(1)(A), (d)(1)(C).

¶ 9. MDWFP had argued both that the need for part-time dispatchers had decreased and that Webster had no reasonable expectation in reemployment since she knew part-time dispatcher's contracts were not automatically renewable. The trial court rejected MDWFP's first argument, finding MDWFP had "offered little credible proof that the need for part-time dispatchers decreased." The trial court also found Webster's expectations of reemployment to be reasonable. Webster's annual contract had been renewed four times prior to her service. And during her service, MDWFP gave no indication her contract would not be renewed upon completing service. While at trial MDWFP pointed to Webster's deficient work habits and scheduling conflicts with her full-time job, the trial court found these excuses not to rehire Webster to be "superficial since no efforts to resolve the alleged issues were raised and/or resolved with Webster prior to her deployment." (Emphasis in original.) Having rejected MDWFP's defenses, the trial court held MDWFP strictly liable for its failure promptly reemploy Webster when her service ended.

II. Trial Court's Judgment

¶ 10. As relief, USERRA provides that a court may (A) order the employer to comply with the act, (B) award compensatory damages, and (C) if the court find the USERRA violation was "willful," further award an amount equal to the compensatory damages as liquidated damages. 38 U.S.C. § 4323(d)(1) (2012). The court also has the discretionary authority to award a prevailing employee reasonable attorney fees and litigation expenses. 38 U.S.C. § 4323(h)(2) (2012). Webster requested all these forms of relief-reinstatement, compensatory damages, liquidated damages, and attorney fees and expenses. Specifically, Webster claimed she was entitled to four-and-a-half years of back pay from the time her contract was not renewed in early 2012 to the time of the bench trial in mid-2016, which Webster calculated to be almost $44,000. Webster based her calculation on the $9,716.29 in part-time wages she earned in 2009-her highest earning year.

¶ 11. The trial court did not order Webster be reinstated, nor did the court award Webster four and a half years' worth of back pay. Instead, the trial court found Webster had been "entitled to reemployment for the 2012 contractual year" only. Specifically, the court found it had no authority to require MDWFP to reemploy Webster beyond the yearly contract term, because MDWFP could have decided not to renew Webster's contract after 2012 without violating USERRA. Using the amount of part-time wages Webster earned in 2010-her last full year of work before enlisting-the trial court awarded Webster $7,549 "as liquidated damages."

¶ 12. The court also exercised its discretion to award reasonable attorney fees and expenses, "opin[ing] that attorney fees in the amount of $2,800 is sufficient for all litigation costs and trial expenses." Finally, the judge taxed all court costs and fees "to the respective parties."

Issues on Appeal

¶ 13. Though the successful party, Webster has appealed to this Court, challenging the trial court's monetary award. MDWFP has not cross-appealed. So the trial court's ruling that MDWFP violated USERRA by not renewing Webster's contract for 2012 is outside the scope of this Court's review. And this appeal is limited to reviewing the trial court's remedy.

¶ 14. As to that remedy, Webster claims:

(1) The trial court erred in awarding one year of back pay only instead of "the normal recovery period under USERAA" from non-reemployment to judgment.
(2) The trial court erred in not awarding liquidated, or double, damages in light of the proof of MDWFP's willful violation of USERAA.
(3) The trial court erred in sua sponte awarding an arbitrary amount of attorney fees and expenses without reviewing a statement of the attorney's hours and hourly rate and a bill of actual costs.
(4) The trial court erred in not calculating legal fees based on the lodestar method.

¶ 15. Because the court's judgment followed a bench trial, this Court applies the same deferential standard of review that it would for a chancellor.

City of Jackson v. Perry , 764 So.2d 373, 376 (Miss. 2000). The circuit judge's factual "findings are safe on appeal where they are supported by substantial, credible, and reasonable evidence." Id. (citations omitted). But her legal rulings are reviewed de novo. Id.

Discussion

I. Compensatory Damages

¶ 16. To begin, while the trial court labeled the $7,549 award "liquidated damages," it is clear from the context of the order that this award was not "liquidated damages" as envisioned by USERRA. The phrase "liquidated damages" refers to an award of double the compensatory damages for a willful violation of USERRA. 38 U.S.C. § 4323(d)(1)(C). The $7,589 was not double the compensatory damages. It was the compensatory damages. Despite the confusing label, the trial court clearly intended to compensate Webster $7,589 for wages she would have earned had MDWFP complied with USERRA and renewed her yearly contract. See 38 U.S.C. § 4323(d)(1)(B).

¶ 17. Webster argues the trial judge erred by limiting her "back pay" to one year. Webster concedes the trial court was within its discretion to use her most recent year of wages, versus her highest year of wages, to calculate what she would have earned that year. But she strongly contests the trial judge's limiting her compensation to one year. Citing numerous Title VII cases, Webster claims the recovery period in employment cases is the time between the discriminatory act and the date of the judgment, which in this case was five and a half years.

¶ 18. Because relatively few cases address USERRA damages, federal courts often look to other federal employment discrimination cases for guidance. E.g. , Hance v. Norfolk S. Ry. Co. , 571 F.3d 511, 519-20 (6th Cir. 2009) (applying Title VII's burden of proof for proving damages). That said, this is not an employment-discrimination case. Webster did not bring a discrimination claim under § 4311. Instead, she brought a strict liability failure-to-reemploy claim under §§ 4312 and 4313.

¶ 19. This distinction is important for two reasons. One, back pay is intended to advance the statutory purpose "of eradicating discrimination ... and making persons whole for injuries suffered through past discrimination." Albemarle Paper Co. v. Moody , 422 U.S. 405, 421, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975). So without a discrimination claim, the reason to award back pay is not present. Second, USERRA's language specifically links available compensation to the "loss of wages or benefits suffered by reason of such employer's failure to comply with the provisions of this chapter." 38 U.S.C. § 4323(d)(1)(B). Thus, how MDWFP failed to comply with USERRA matters when determining if the trial court was within its discretion when awarding compensation.

¶ 20. MDWFP failed to comply with USERRA by not promptly reemploying Webster upon the completion of her service.

Stated differently, had MDWFP complied with §§ 4312 and 4313, it would have promptly renewed Webster's contract for 2012. As the trial court rightly recognized, that was all USERRA required. MDWFP had no obligation to employ Webster indefinitely based on her service. Instead, what USERRA does guarantee is reemployment for one year, absent cause for termination. Serricchio v. Wachovia Sec., LLC , 556 F.Supp.2d 99, 108 (D. Conn. 2008) (citing 38 U.S.C. § 4316(c)(1) ). So the trial court was right. MDWFP "might well have ended her contract after 2012" without running afoul of USERRA.

¶ 21. Thus, the $7,589 award was not an abuse of discretion, because it reasonably reflects the "loss of wages ... [Webster] suffered by reason of [MDWFP's] failure to comply with [ §§ 4312 and 4313 ]." 38 U.S.C. § 4323(d)(1)(B).

¶ 22. We note our conclusion would be the same, even if we were to apply, as Webster urges, the presumption that "prevailing plaintiffs in employment discrimination cases are '... entitled to back pay until the date of judgment has been entered in the case.' " Hance , 571 F.3d at 521 (quoting EEOC v. Wilson Metal Casket Co. , 24 F.3d 836, 840 (6th Cir. 1994) ). Even with this presumption, "back-pay awards should make a plaintiff whole, not better off." Id. And based on these facts, were Webster to be awarded multiple years' worth of wages, instead of one year, she would be better off. This is so because MDWFP's only obligation under USERRA was to renew her 2012 contract. Moreover, "[i]n the Title VII context, ... the plaintiff bears the burden of proving damages and is 'entitled to the amount claimed unless the defendant can prove otherwise.' " Id. at 519-20 (quoting Wilson Metal Casket Co. , 24 F.3d at 840 ). Though Webster claimed she was entitled to $9,716 in damages each year for every year between the time she was denied reemployment until the time of judgment, the trial judge essentially found her employer MDWFP had proven otherwise. Because Webster's annual contract was not automatically renewable, the trial judge determined Webster was entitled to a year's worth of lost part-time wages. This determination is entitled to deference, since it is supported by substantial evidence and does not contradict federal law.

¶ 23. Thus, we affirm the trial court's $7,589 compensatory-damages award.

II. Liquidated Damages

¶ 24. Again, despite the trial court's label, the $7,549 award was not "liquidated damages." As used in USERRA, the term "liquidated damages" refers to the trial court's requirement that an employer pay "an amount equal to the amount ... [awarded under § 4323(d)(1)(B) ] as liquidated damages, if the court determines that the employer's failure to comply with the provisions of this chapter was willful." 38 U.S.C. § 4323(d)(1)(C).

¶ 25. The trial court did not award double damages. Nor did it expressly determine if MDWFP's failure to comply with USERRA was willful. Webster claims this was error. We agree. Not only did Webster request liquidated damages, but also she presented evidence that MDWFP's USERRA violation was willful.

¶ 26. A USERRA "violation shall be considered to be willful if the employer either knew or showed reckless disregard for whether its conduct was prohibited by the Act." 20 C.F.R. § 1002.312(c) (2018). See also Duarte v. Agilent Techs., Inc. , 366 F.Supp.2d 1039, 1048 (D. Colo. 2005) (applying ADEA case Trans World Airlines, Inc. v. Thurston , 469 U.S. 111, 125, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985), which interpreted "willful" to mean "that an employer engaged in conduct known to be prohibited or engaged in conduct with reckless disregard of its prohibition"). And here, Webster presented evidence that her supervisor, who served in the National Guard for thirty years, was familiar with USERRA and its requirements.

¶ 27. MDWFP counters that liquidated damages were not warranted because Webster failed to prove intentional discrimination under § 4311. What MDWFP misses, however, is that "[w]illfulness is not the same as discrimination." Mace , 259 F.Supp.3d at 1022. Again, MDWFP was found to have violated § 4312, not § 4311. Section "4312 is a rather strict-liability statute. Section 4311 is not." Id. So an employer "could be willful about [its] violation of § 4312 without having a discriminatory motivation." Id.

¶ 28. That said, "[m]erely knowing that a military beneficiary was asserting a USERRA claim is not, by itself, reckless disregard where, for example, the employer's decision was based on the exercise of a business judgment such as the employer's financial hardship." Id. MDWFP presented evidence its decision was strictly a business judgment. While the trial judge's order largely discredited MDWFP's justifications for not rehiring Webster, in the absence of an express finding on this issue, we are hesitant to find on appeal that MDWFP's USERRA violation was willful.

¶ 29. Instead, we remand this issue to the trial court to determine, based on the evidence already presented at the bench trial, whether MDWFP's USERRA violation was "willful," as that term is defined for USERRA purposes, and, if so, whether MDWFP should have to pay Webster an additional $7,589 as liquidated damages.

III. Attorney Fees and Expenses

¶ 30. We also reverse the $2,800 attorney-fee award and remand this issue to the trial court.

¶ 31. USERRA authorizes the trial court to award a prevailing USERRA plaintiff "reasonable attorney fees, expert witness fees, and other litigation expenses." 38 U.S.C. § 4323(h)(2). "The fixing of reasonable attorneys' fees is a matter ordinarily within the sound discretion of the trial court." Mauck v. Columbus Hotel Co. , 741 So.2d 259, 269 (Miss. 1999) (citing Gilchrist Tractor Co. v. Stribling , 192 So.2d 409, 418 (Miss. 1966) ). But to determine a reasonable fee, this Court has directed trial courts to apply the "lodestar method"-i.e., the number of hours reasonably expended, multiplied by a reasonable hourly rate-as well as "consider the eight factors enumerated in Rule 1.5 of the Mississippi Rules of Professional Conduct." Collins v. Koppers, Inc. , 59 So.3d 582, 593 (Miss. 2011) (quoting In re Estate of Gillies , 830 So.2d 640, 646 (Miss. 2002) ).

¶ 32. Here, the trial court's "opinion that attorney fees in the amount of $2,800 is sufficient for all litigation costs and trial expenses" may very well be reasonable. But the trial judge's order is void of any explanation for that figure. According to Webster's counsel, he was never asked to submit to the court the "lodestar" calculation figures-the number of hours worked on Webster's case and his hourly rate. Nor does it appear that the trial judge considered any of the factors in Rule 1.5 of the Mississippi Rules of Professional Conduct.

¶ 33. We reverse the $2,800 award and remand the attorney-fees-and-expenses issue to the trial court to reconsider what amount would be reasonable in light of the number of hours worked, Webster's counsel's hourly rate, and the eight factors listed in Rule 1.5.

IV. Court Costs

¶ 34. Finally, the order taxed "[a]ll court cost and fees ... to the respective parties." But USERRA prohibits taxing Webster with court costs. Under § 4323, "No fees or court costs may be charged or taxed against any person claiming rights under this chapter." 38 U.S.C. § 4323(h)(1). Taxing Webster with her respective costs not only runs afoul of the clear prohibition in § 4323(h)(1), but it also cuts against the pro-employee policy embodied in this provision, which encourages claimants to bring USERRA actions without fear of being taxed costs. So we reverse the portion of the order taxing Webster with her respective costs and remand this issue to the trial court to assess costs in a manner compliant with § 4323(h)(1).

Conclusion

¶ 35. The trial court was within its discretion to award $7,589, or the amount of part-time wages Webster lost when MDWFP failed to comply with USERRA and renew her contract for 2012. But the trial court abused its discretion when it failed to rule on Webster's liquidated-damages claim, arbitrarily awarded $2,800 in attorney fees without considering the lodestar method, and taxed Webster with costs. We thus affirm the $7,589 compensatory award, but we reverse and remand the issues of liquidated damages, attorney fees and expenses, and court costs.

¶ 36. AFFIRMED IN PART AND REVERSED AND REMANDED IN PART.

WALLER, C.J., RANDOLPH AND KITCHENS, P.JJ., KING, COLEMAN, BEAM, CHAMBERLIN AND ISHEE, JJ., CONCUR.

      MDWFP conceded Webster's active-duty training in the Mississippi Air National Guard qualified her for USERRA's protections and benefits. See 38 U.S.C. § 4303(13) (2012) (defining "service in uniformed services") and 38 U.S.C. § 4303(16) (2012) (defining "uniformed services").

      Section 4312 actually provides three affirmative defenses. But the second, "undue hardship" provision does not apply to Webster because she was not "a person entitled to reemployment under subsection (a)(3), (a)(4), or (b)(2)(B) of section 4313." 38 U.S.C. § 4312(d)(1)(B).

      "Back pay" typically refers to the wages lost between the time of the USERRA violation and court-ordered reinstatement. E.g. , Petty , 687 F.3d at 717-19. Here, the trial court did not order Webster be reinstated-a decision she does not challenge on appeal. Tracking the language of § 4323(d)(1)(B), we refer to the $7,589 award as "compensation" and not "back pay."

      Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on an individual's race, color, religion, sex, or national origin. 42 U.S.C. § 2000e-2(a) (2012).

      The trial court's final judgment was not entered until a year after trial, hence the extra year added to her damages claim post-trial.

      This one-year guarantees applies to employees whose period of service was greater than 180 days. 38 U.S.C. § 4316(c)(1) (2012).

      That is not to say all failure-to-rehire employment cases should be limited to one year of wages based on § 4316. Our analysis would be different had the facts not clearly shown Webster was employed under yearly contracts that had to be renewed.

      While Webster cites federal law for how attorney fees should be calculated, § 4323(b)(2) directs that a USERRA action brought against a state employer in a state court shall be "in accordance with the laws of the State." 38 U.S.C. § 4323(b)(2). Thus, Mississippi law on calculating reasonable attorney fees controls. That said, Mississippi law is consistent with federal law, adopting the United States Supreme Court's "lodestar" method for calculating reasonable attorney fees. Mauck , 741 So.2d at 271 (citing Hensley v. Eckerhart , 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) ).


author: FAIR, J., FOR THE COURT:

text:
    Lonnie JONES a/k/a Lonnie Jones, Jr., Appellant v. STATE of Mississippi, Appellee
    NO. 2016-KA-01305-COA
    Court of Appeals of Mississippi.
    March 27, 2018 Rehearing Denied August 21, 2018
    OFFICE OF STATE PUBLIC DEFENDER BY: GEORGE T. HOLMES, ATTORNEY FOR APPELLANT
    OFFICE OF THE ATTORNEY GENERAL BY: LISA L. BLOUNT JOSEPH SCOTT HEMLEBEN, ATTORNEYS FOR APPELLEE
    BEFORE IRVING, P.J., FAIR AND WESTBROOKS, JJ.
   FAIR, J., FOR THE COURT:

¶ 1. Lonnie Jones was convicted of possession of synthetic cannabinoids with intent to distribute. He was also convicted of child endangerment based on the presence of his four-year-old daughter in the home with the drugs. On appeal, Jones contends that the search warrant for his residence was issued without probable cause and that his convictions are unsupported by sufficient evidence. We find no merit to these contentions, and so we affirm.

DISCUSSION

1. Search Warrant / Probable Cause

¶ 2. The search warrant for Jones's residence stemmed from a police search for guns, magazines, and ammunition stolen in a local burglary approximately five days before. The warrant was issued based on an affidavit from a police investigator that stated a woman, Jessica Cochran, had been suspected of taking the guns based on her having been in the residence prior to their being stolen. The affidavit further noted that a "concerned citizen" had told a deputy that Cochran had said she took the guns to Jones's residence. A separate "proven confidential source" had told a different investigator that Jones was in possession of stolen guns at his residence.

¶ 3. When the authorities executed the search warrant, they saw Jones toss a camera bag behind a couch he had been sitting on. A search of the camera bag revealed two small bags of synthetic marijuana, other small plastic bags, and a digital scale. The authorities found other drug paraphernalia in plain view, as well as four more small bags of synthetic marijuana in a pillowcase on Jones's bed. According to the officers, the bags fell out of the pillowcase when the bed was searched.

¶ 4. On appeal, Jones contends that the warrant was not supported by probable cause because it was based on accounts of confidential informants. The relevant test was outlined by the United States Supreme Court in Illinois v. Gates , 462 U.S. 213, 238, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983), as follows:

The task of the issuing magistrate is simply to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the "veracity" and "basis of knowledge" of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place.

"[T]he duty of a reviewing court is simply to ensure that the magistrate had a substantial basis for concluding that probable cause existed." Id. at 238-39, 103 S.Ct. 2317.

¶ 5. Jones focuses his arguments on the reliability of the confidential informants. He notes the absence of any attested prior police experience with the "concerned citizen" that might speak to his or her veracity. Jones further notes that the second informant was only said to have been "proven," without explanation of what had been proven. According to Jones, the informant could have been "proven" to be unreliable or untruthful. This is just not a reasonable construction of the warrant's language. When used to describe a source, by itself the word "proven" can only be reasonably construed to have a positive connotation; for example, the American Heritage Dictionary defines proven as "having been demonstrated or verified without doubt." American Heritage Dictionary 1458 (3d ed. 1993).

¶ 6. While it certainly would have been preferable for the affidavit to have explicitly recited that the informant had "furnished [the authorities] with information in the past that has proven to be true and correct," or some similar formulation, given the context it is difficult to take any other meaning from the use of the words "proven confidential source." Indeed, there are numerous published examples of courts using a similar description to indicate that informants have previously provided reliable information. See, e.g. , State v. Johnson , 52 So.3d 110, 117 (La. Ct. App. 2010) ("proven confidential informant"); State v. McRae , 203 N.C.App. 319, 691 S.E.2d 56, 60 (2010) ("proven, confidential informant"); Davis v. State , 165 S.W.3d 393, 402 n.24 (Tex. Ct. App. 2005) ("proven confidential informant") (reversed on other grounds by Davis v. State , 202 S.W.3d 149, 158 (Tex. Crim. App. 2006) ); Bristol v. State , 584 So.2d 1086, 1088 (Fla. Dist. Ct. App. 1991) ("proven informant"); Corley v. State , 713 P.2d 12, 13 (Okla. Crim. App. 1985) ("proven confidential informant") (overruled on other grounds by Langham v. State , 787 P.2d 1279, 1281 (Okla. Crim. App. 1990) ).

¶ 7. Probable cause is a totality of the circumstances analysis. Petti v. State , 666 So.2d 754, 757 (Miss. 1995). The account of the "proven source" was corroborated by the independent account of the (admittedly "unproven") "concerned citizen," which was itself supported by the police investigation that had identified Cochran as a suspect in the burglary where the guns were stolen. We are satisfied that this evidence, viewed in the totality of the circumstances, was sufficient to give the issuing court a "substantial basis for concluding that probable cause existed." Gates , 462 U.S. at 238-39, 103 S.Ct. 2317.

¶ 8. Jones also contends that the issuing court lacked probable cause as to the magazines and ammunition, as the affidavit only specifically mentioned that the guns, and not the magazines and ammunition which had been taken with the guns, had been moved to Jones's home. Jones cites Carney v. State , 525 So.2d 776, 783 (Miss. 1988), where the Mississippi Supreme Court found a warrant to have been issued without probable cause as to "other small items." Jones argues that, without probable cause for the magazines and ammunition, the warrant could not authorize the search of any areas of his home that were too small to contain a rifle.

¶ 9. This particular challenge to the search is raised for the first time on appeal and is barred as a result. See Baskin v. State , 145 So.3d 601, 603 (¶ 11) (Miss. 2014). Notwithstanding the procedural bar, however, we find that the issuing court had a substantial basis for concluding that probable cause existed as to the ammunition and magazines. They were taken at the same time as the firearms and would be expected to accompany them because guns, magazines, and ammunition are related items and depend on each other for utility. But at the same time, a separate search is justified because the magazines and ammunition are often removed when firearms are placed in storage. "Probable cause is a practical, nontechnical concept, based upon the conventional considerations of everyday life on which reasonable and prudent men, not legal technicians, act." Strode v. State , 231 So.2d 779, 782 (Miss. 1970). Notwithstanding that it is procedurally barred, we find no merit to this argument.

2. Search Warrant / Particularity

¶ 10. Jones contends that the search warrant was invalid because it was overbroad. He points to what he calls a "catchall clause" that formed the concluding paragraph of the warrant. It stated:

Do not interpret this writ as limiting your authority to seize all contraband and things the possession of which is itself unlawful which you find incident to your search, or as limiting your authority to make otherwise valid arrests at the place described above.

¶ 11. This challenge to the warrant has also been raised for the first time on appeal and is barred as a result. See Baskin , 145 So.3d at 603 (¶ 11). Notwithstanding the procedural bar, we see no overbroadness in the provision. It only authorizes the seizure of contraband if it is found pursuant to the search authorized for the items particularly described in the warrant; in other words, the clause is a restatement of the plain view doctrine. See Horton v. California , 496 U.S. 128, 135, 110 S.Ct. 2301, 110 L.Ed.2d 112 (1990) ; Hall v. State , 455 So.2d 1303, 1307 (Miss. 1984).

3. Sufficiency of the Evidence / Constructive Possession

¶ 12. Jones describes this issue as a challenge to the weight of the evidence, but his arguments are all addressed to its sufficiency, so we will address that question instead. Specifically, Jones contends on appeal that there was insufficient evidence to prove he constructively possessed the synthetic marijuana that was found in a pillowcase in the bedroom.

¶ 13. When reviewing the sufficiency of the evidence, "the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Magee v. State , 231 So. 3d 243, 249 (¶ 14) (Miss. Ct. App. 2017). Where the facts and inferences "point in favor of the defendant on any element of the offense with sufficient force that reasonable [jurors] could not have found beyond a reasonable doubt that the defendant was guilty," the proper remedy is to reverse and render. Id. However, if "reasonable fair-minded [jurors] in the exercise of impartial judgment might reach different conclusions on every element of the offense," the evidence will be deemed to have been sufficient. Id.

¶ 14. Possession can be actual or constructive; constructive possession exists where the contraband was not found in the defendant's actual physical possession but was "subject to [the defendant's] dominion or control." Curry v. State , 249 So.2d 414, 416 (Miss. 1971). It "may be established where the evidence, considered under the totality of the circumstances, shows that the defendant knowingly exercised control over the contraband." Knight v. State , 72 So.3d 1056, 1063 (¶ 26) (Miss. 2011). When the defendant owns or controls the premises where the contraband is found, there is a presumption of constructive possession of the contraband. Ferrell v. State , 649 So.2d 831, 834 (Miss. 1995). But if the defendant's possession of the premises is not exclusive, there must be additional incriminating circumstances tying him to the drugs. Fultz v. State , 573 So.2d 689, 690 (Miss. 1990). While it is evidence of constructive possession, "mere physical proximity to the contraband does not, in itself, show constructive possession." Ferrell , 649 So.2d at 834.

¶ 15. On appeal, Jones points out that the home was owned by his mother, and that there were other individuals in it at the time the warrant was served and the drugs were found. He notes that one of them, a juvenile, was also in possession of synthetic marijuana when the warrant was served.

¶ 16. Jones's argument falls apart, however, when he contends that there was nothing linking him to the drugs found in the bedroom. In fact, the officers testified that Jones admitted the bedroom was his. They also testified that Jones told them they would find documents relating to his daughter in a dresser in his bedroom, which they did. The officers also testified that it appeared that Jones's mother resided in a different bedroom in the house, based on the personal effects. On appeal, Jones just ignores this testimony; but we are of the opinion that Jones's possession of the home and the bedroom were established by sufficient evidence at trial, and that even if that possession were not exclusive, there were clearly "additional incriminating circumstances"-the facts that Jones was contemporaneously found in actual possession of other synthetic marijuana, along with paraphernalia related to distribution, such as bagging material and digital scales. See Fultz , 573 So.2d at 690. We are satisfied that there was sufficient evidence for a reasonable jury to convict based on a constructive-possession theory. This issue is without merit.

4. Sufficiency of the Evidence / Child Endangerment

¶ 17. Finally, Jones contests the sufficiency of the evidence supporting his conviction for child endangerment.

¶ 18. Mississippi Code Annotated section 97-5-39(4)(a) (Rev. 2014) provides in relevant part:

A parent, legal guardian or caretaker who endangers a child's person or health by knowingly causing or permitting the child to be present where any person is selling, manufacturing or possessing immediate precursors or chemical substances with intent to manufacture, sell or possess a controlled substance as prohibited under Section 41-29-139 or 41-29-313, is guilty of child endangerment[.]

The indictment specifically alleged that Jones permitted his four-year-old daughter to be present where he possessed a controlled chemical substance-synthetic marijuana-with intent to sell it.

¶ 19. Jones focuses his arguments on the fact that there was no evidence the child was present during any actual drug sales. While he is correct on that point, his argument misses the mark-the statute requires only that the child be present with the controlled chemical substances while Jones possessed them with the intent to sell; there is no requirement that actual sales occur in the child's presence. The evidence at trial supported a finding that the synthetic marijuana was possessed with intent to distribute-the quantity was testified to be in excess of what would be expected for personal use, and some of the drugs were found with small empty bags and digital scales that suggested they were being repackaged for sale. One of the officers who served the warrant testified that Jones's daughter was present in the living room with him when the warrant was served. At the time, Jones was in actual physical possession of the camera bag with synthetic marijuana and distribution-related paraphernalia inside.

¶ 20. Finally, Jones contends that there was no evidence the child was actually "endangered" by the drugs since they were under his control and there was no evidence she was actually exposed to them. This contention is factually dubious, given that other controlled substances and paraphernalia were found unattended in the house. Regardless, by its plain language the statute does not require proof that the child was placed into any danger beyond the inherent danger of being in the presence of the chemical substances while they are possessed with the requisite intent-by statutory definition, one "endangers a child's person or health by knowingly causing or permitting the child to be present" with the drugs or precursors. See Miss. Code Ann. § 97-5-39(4)(a) ; see also State v. Perry , 725 N.W.2d 761, 765-66 (Minn. Ct. App. 2007) (construing Minnesota's materially identical child endangerment statute and concluding that "the state does not have to prove actual danger to a child's person or health as an element of the crime").

¶ 21. Jones's conviction of child endangerment is supported by sufficient evidence.

¶ 22. AFFIRMED.

LEE, C.J., IRVING AND GRIFFIS, P.JJ., BARNES, CARLTON, WILSON, GREENLEE, WESTBROOKS AND TINDELL, JJ., CONCUR.

      At the suppression hearing and the trial, the officers testified to additional facts that bolstered the case for probable cause; but they cannot be considered. "[A]n otherwise insufficient affidavit cannot be rehabilitated by testimony concerning information possessed by the affiant when he sought the warrant but not disclosed to the issuing magistrate." Whiteley v. Warden Wyo. State Penitentiary , 401 U.S. 560, 565 n.8, 91 S.Ct. 1031, 28 L.Ed.2d 306 (1971).

      See, e.g. , Roach v. State , 7 So.3d 911, 913 (¶ 3) (Miss. 2009).


author: PER CURIAM.

text:
    M.M. v. K.H.
    2160146
    Court of Civil Appeals of Alabama.
    July 28, 2017 Rehearing Denied October 13, 2017 Certiorari Denied January 12, 2018
    Alabama Supreme Court 1170094
    Charles H. Dunn and Joseph Callaway of Boyd, Fernambucq & Dunn, P.C., Birmingham, for appellant.
    Jon David Terry of Bains & Terry, Bessemer, for appellee.
   PER CURIAM.

On June 21, 2016, K.H. filed in the Jefferson Juvenile Court ("the juvenile court") a petition seeking to have a child born to M.M. ("the mother") declared dependent and seeking an award of custody of the child. The mother filed an answer asserting, among other things, that K.H. had intervened in a divorce action between the mother and B.M., the mother's husband, that was then pending in the Jefferson Circuit Court ("the circuit court"). The mother alleged that in a June 20, 2016, order, the circuit court had ordered that the child be "returned" to the mother. It is undisputed that the circuit court in the mother's divorce action did not receive any evidence before it entered the order "returning" custody of the child to the mother. It does not appear that K.H. sought appellate review of that order.

We note that it appears the mother had physical custody of the child pursuant to the circuit court's order for approximately one to two days when K.H. filed the dependency petition. The mother bases her argument-that there was no evidence indicating that she was not properly caring for the child at the time the dependency petition was filed-on that custodial period. It appears that the juvenile court awarded K.H. pendente lite custody of the child. The juvenile court awarded the mother visitation during the pendency of the dependency action, and that visitation took place with no difficulties.

The juvenile court conducted an ore tenus hearing in the dependency action. On October 15, 2016, the juvenile court entered a judgment in which it found the child dependent and awarded custody of the child to K.H., subject to the mother's rights of visitation. The mother filed a postjudgment motion on October 28, 2016. The juvenile court rendered an order extending its time to consider that postjudgment motion so that it could conduct a hearing on the motion on November 17, 2016. See Rule 1(B)(1), Ala. R. Juv. P. (providing that a juvenile court may extend the time for considering a postjudgment motion for an additional 14 days by issuing a written order to that effect). The juvenile court entered an order on November 17, 2016, in which it denied the postjudgment motion in substance but made minor alterations to the original judgment. The mother timely appealed.

The record indicates the following facts. The mother was married to B.M., and the two had a child, D.M. ("the half sibling"), born in 2014. The mother and B.M. separated in May 2015; a divorce action between the two was initiated in the circuit court at some point in 2015. The mother testified that she began a relationship with another man and that, in July 2015, she became pregnant with that man's child, who is the child at issue in this case. For the first time at the dependency hearing, the mother identified J.A. as the man with whom she had had the relationship in 2015 and as the father of the child. The mother testified that J.A. had asked her to have an abortion and that their relationship had ended.

The mother's divorce action was stayed during her pregnancy, and it is undisputed that B.M. was excluded, through genetic testing, as being the father of the child. At the time of the dependency hearing in this matter, a judgment had been entered in the mother's divorce action that divorced the parties to that action and awarded them joint legal and joint physical custody of the half sibling. The mother explained that she and B.M. alternate custody of D.M. on a weekly basis.

The mother testified that K.H. was her hairdresser and that she had learned that K.H. and her husband, J.H., were unable to have children. The mother approached K.H. about the possibility of K.H. and J.H. adopting the child. K.H. and J.H. agreed; the record indicates that the mother spoke primarily with K.H. and that she spoke with J.H. only once before the child was born. K.H. attended several prenatal doctor's appointments with the mother.

The child was born, two months premature, on February 4, 2016. The next day, on February 5, 2016, the mother signed a form at the hospital in which the child was born that identified K.H. and J.H. as the "adoptive parents" and allowed them access to the child in the hospital. The mother also signed a form that allowed the hospital to release the child, upon her discharge, into the custody of K.H. and J.H. The mother acknowledged during the dependency hearing that, by signing those forms, she believed that she was relinquishing custody of the child to K.H. and J.H.

The mother was discharged from the hospital within a few days of the child's birth, but the child was not discharged into the care of K.H. and J.H. until March 7, 2016. The patient-care instructions for the child upon her discharge were signed by K.H. on March 7, 2016, as the "parent/guardian." The record indicates that the mother visited the child in the hospital weekly until the child was discharged.

On March 16, 2016, J.H. was arrested in connection with his alleged abuse of prescription medications. K.H. immediately moved out of the home she had shared with J.H. and moved, with the child, into her parents' home. K.H. explained that she did not want to have herself or the child in an environment in which drugs might be an issue. She admitted that J.H. had a previous arrest, apparently related to drug use, but that the charges stemming from that arrest had been dropped; the record does not indicate when that occurred or if it occurred during her marriage to J.H.

K.H. informed the mother of J.H.'s arrest and the fact that the two had separated on March 17, 2017. Both K.H. and the mother testified that the mother told K.H. that she needed to think. The mother testified that she asked for the return of the child the next day. K.H. disputed that testimony and stated that the mother telephoned her back quickly and told her that she would not take any action to prevent K.H. from adopting the child.

The mother testified that she visited the child at the mother's parents' home or K.H.'s parents' home once a week for five or six weeks after K.H. left J.H. K.H. testified she had accommodated all of the mother's requests for visitation with the child until the Wednesday before Mother's Day weekend, when the mother requested that she be allowed to take the child to a "meet and greet" on the Saturday of Mother's Day weekend. K.H. stated that she refused that request by the mother to pick up the child and take her to meet the mother's family. On May 9, 2016, the day after Mother's Day, the mother filed in her divorce action a motion for the return of custody of the child from K.H. We note that the mother testified that she had asked for the child for a "meet and greet" with her family in late March or April 2016, although she was uncertain of the specific date on which she made that request.

The mother testified that she had not been allowed to see the child for a period of approximately six to seven weeks between the time she filed her May 9, 2016, motion for the return of the child in her divorce action through the date of the June 20, 2016, hearing on that motion. K.H. testified that the mother had not asked to visit the child during that period and that, with the exception of the mother's request to take the child for the "meet and greet" with her family, she had not refused any of the mother's requests to see the child.

The juvenile court questioned the mother about several issues. In response to that questioning, the mother explained that she wanted the child to be raised in a two-parent, Christian home and that K.H. could not provide that because she was in the process of obtaining a divorce. The juvenile court asked the mother whether she would have sought the return of the child if J.H. had died instead of engaging in conduct that led to the divorce action between him and K.H., and the mother responded in the negative. The mother agreed with the juvenile court that if custody of the child were returned to her, the child would not be raised in a two-parent home. However, the mother testified that if the child were returned to her, she would have the child only temporarily. The mother explained that life-long family friends ("the family friends") wanted to adopt the child and that she intended to allow them to do so. The mother stated that she and the family friends shared a close relationship and that the families had vacationed together. The mother explained that she had not approached the family friends about adopting the child because she had not known they were looking to adopt. In response to questioning from the juvenile court about why she had approached K.H., rather than the family friends, about adopting the child, the mother claimed that it had not occurred to her to inquire why the family friends were childless after nine years of marriage.

As a part of this action, the juvenile court ordered the Jefferson County Department of Human Resources ("DHR") to perform home evaluations for K.H. and for the mother. Carla McIntyre, the DHR social worker, testified that she had no concerns about the home K.H. and the child shared with K.H.'s parents at that time. McIntyre stated that she was "impressed" because K.H. had a nursery for the child, food for her, and the house was "baby-proofed." McIntyre testified that when she spoke with the mother on June 15, 2016, about scheduling a safety walk-through of the mother's home to ensure that the home was safe for the child and that the mother had necessary items for the child, the mother informed her that she did not have any items necessary to care for the child. McIntyre testified that she told the mother that those things were necessary before the child could be released to go home with the mother. McIntyre stated that the mother contacted her on June 20, 2016, to schedule the safety walk-through and that, by that time, the mother had purchased a bassinet, a pack of diapers, baby wipes, and "a little amount of food" for the child. McIntyre reported that she did not find any areas of concern in the mother's home.

At the close of her presentation of evidence, K.H. moved for a judgment as a matter of law. After oral argument, the juvenile court granted that motion. In its October 15, 2016, judgment, and in its postjudgment order, the juvenile court found the child to be dependent as a result of the mother's abandonment of the child.

The mother first argues that the juvenile court lacked jurisdiction over the dependency action. However, K.H. initiated a separate dependency action during the pendency of the mother's divorce action. Under § 12-15-114(a), Ala. Code 1975, a juvenile court exercises exclusive jurisdiction over an action alleging that a child is dependent. The initiation of a dependency action is an exception to the rule that a circuit court retains jurisdiction over the issue of custody of a child in a divorce action. M.P. v. C.P., 8 So.3d 316, 318 (Ala. Civ. App. 2008). "Although a circuit court ordinarily retains continuing jurisdiction over the custody of a child, in the event a genuine dispute between a parent and a third party arises as to the dependency of the child, the juvenile court assumes exclusive jurisdiction to adjudicate that dispute." P.S.R. v. C.L.P., 67 So.3d 917, 922 (Ala. Civ. App. 2011). "[A] circuit court does not retain exclusive jurisdiction over a child whose custody is addressed in a divorce judgment when a separate action is initiated in a juvenile court alleging that the child is dependent." B.H. v. Tuscaloosa Cty. Dep't of Human Res., 161 So.3d 1215, 1218 (Ala. Civ. App. 2014). Once the juvenile court's jurisdiction is triggered by allegations that, if proven, are sufficient to find a child dependent, the juvenile court loses jurisdiction if it determines, after a hearing, that the child is not dependent. A.G. v. Ka.G., 114 So.3d 24, 26-27 (Ala. 2012). However, the juvenile court maintains jurisdiction if the child is found to be dependent. Thompson v. Halliwell, 668 So.2d 43, 44 (Ala. Civ. App. 1995).

In this case, K.H. alleged that the mother had abandoned the child, and she sought emergency relief and a determination that the child was dependent. That petition was sufficient to invoke the jurisdiction of the juvenile court pursuant to § 12-15-114(a). The juvenile court later conducted an ore tenus hearing, and, based on the evidence it received at that hearing, it found the child to be dependent. Once a juvenile court makes a dependency determination, it retains jurisdiction to enter a custodial disposition of the child. § 12-15-311(a), Ala. Code 1975; Thompson v. Halliwell, supra. Thus, after finding the child in this case to be dependent, the juvenile court had jurisdiction to enter a custody determination.

The mother also argues that the juvenile court erred in finding the child to be dependent. We note that, as a part of her argument on this issue, the mother also contends that the evidence does not support a determination that she was unfit to parent the child. There is no requirement that a court find a parent unfit in determining a child to be dependent. P.D. v. S.S., 67 So.3d 128, 131-32 (Ala. Civ. App. 2011). In this case, the juvenile court made no finding that the mother was unfit. Rather, the juvenile court found that the mother had abandoned the child.

Under the Alabama Juvenile Justice Act ("the AJJA"), §§ 12-15-101 et seq., Ala. Code 1975, a dependent child is defined, in pertinent part, as follows:

"(8) Dependent Child. a. A child who has been adjudicated dependent by a juvenile court and is in need of care or supervision and meets any of the following circumstances:
"....
"2. Who is without a parent, legal guardian, or legal custodian willing and able to provide for the care, support, or education of the child.
"....
"5. Whose parent, legal guardian, legal custodian, or other custodian has abandoned the child, as defined in subdivision (1) of Section 12-15-301.
"6. Whose parent, legal guardian, legal custodian, or other custodian is unable or unwilling to discharge his or her responsibilities to and for the child.
"....
"8. Who, for any other cause, is in need of the care and protection of the state."

§ 12-15-102(8), Ala. Code 1975.

The mother argues on appeal that she did not "voluntarily relinquish" custody of the child, in accordance with the provisions of § 26-10A-11(a), Ala. Code 1975, a portion of the Alabama Adoption Code, § 26-10A-1 et seq., Ala. Code 1975, which requires a signed, written relinquishment containing a list of certain requirements. In making her argument on this issue, the mother contends only that the documents she signed in the hospital were not sufficient to constitute "adoption forms." We note, however, that the juvenile court did not apply the Adoption Code, or conclude that the mother had voluntarily relinquished custody pursuant to § 26-10A-11 or that the forms she signed at the hospital on February 5, 2016, authorizing K.H. and J.H. to have access to the child and that the child be released from the hospital into their custody constituted adoption forms.

It does appear that the juvenile court, in its postjudgment order, intermingled its determination of dependency with a discussion indicating that it had concluded that the mother, by executing the forms in the hospital, had executed documents sufficient to conclude that she had voluntarily transferred legal custody of the child to K.H. and J.H. We do not reach the issue whether such a transfer of legal custody could be effected, however, because there is no argument on that issue in the parties' briefs. Rather, we interpret the juvenile court's October 15, 2016, dependency judgment and the November 17, 2016, postjudgment order as citing to the mother's execution of the hospital forms as evidence of the mother's intention to transfer custody of the child to K.H. and J.H., to leave the child in their care, and to allow them to fulfill parental responsibilities for the child.

The juvenile court cited the mother's execution of those forms, and her allowing the child to be cared for and reared by others since the child's birth, as evidence of her abandonment of the child. Under the AJJA, the term "abandonment," for the purposes of § 12-15-102(8), Ala. Code 1975, is defined as:

"A voluntary and intentional relinquishment of the custody of a child by a parent, or a withholding from the child, without good cause or excuse, by the parent, of his or her presence, care, love, protection, maintenance, or the opportunity for the display of filial affection, or the failure to claim the rights of a parent, or failure to perform the duties of a parent."

§ 12-15-301(1), Ala. Code 1975. Thus, although while the mother's execution of the hospital forms would not constitute a voluntary relinquishment under the § 26-10A-11 of the Adoption Code, we cannot say that she has demonstrated that the juvenile court erred in considering her execution of those forms in reaching its determination that she intentionally and voluntarily transferred or relinquished custody of the child to K.H. and J.H. for the purposes of § 12-15-301 and § 12-15-102(8). The mother has not argued that the juvenile court could not consider her execution of the hospital forms as a basis for determining that she had abandoned the child as that term is defined in § 12-15-301, and this court may not formulate such an argument on her behalf.

The mother argues that this case is similar to T.E.W. v. T.S., 97 So.3d 157 (Ala. Civ. App. 2012). She points out that, in that case, this court noted that, although there were times in which the father in that case failed to "actively assert his rights as a father," there was no evidence indicating that he had abandoned the child. 97 So.3d at 162. In that case, the father had been adjudicated the father of the child and had regularly exercised visitation, albeit at the discretion of the mother. After the mother became ill, she attempted to transfer custody of the child to the child's aunt. The aunt filed a dependency petition, to which the father objected. The juvenile court determined that the child was dependent and awarded custody to the aunt, but this court reversed, stating, in part:

"[T]he evidence indicates that the father has been regularly involved in the child's life and that he has consistently provided for her support. The father became more involved in caring for the child in response to the mother's health crisis in the year before the mother's death.... The record contains no evidence indicating that the father is not ready and willing to appropriately parent and care for the child."

T.E.W. v. T.S., 97 So.3d at 163 (emphasis added).

In this case, the mother approached K.H. about an open adoption of the child. The mother signed documents identifying K.H. and J.H. as the adoptive parents and permitting the hospital to allow them to visit and care for the child in the hospital for the six weeks following the child's birth and to release the child into their care when the child was finally released from the hospital. The mother relies on the fact that she visited the child almost weekly until May 2016 as evidence that she did not abandon the child. We note that regular visits were a part of the open-adoption agreement she reached with K.H. However, there is no indication that the mother played any role in providing care for the child.

The mother also contends that the evidence does not indicate that she failed to provide for the child. She states that she has continued to provide health insurance for the child since the child's birth. The mother does not contend that she provided any other form of financial support for the child.

The mother also insists that there is no evidence indicating that she could not properly parent the child. However, the mother's ability to parent the child was not at issue during the dependency hearing. Rather, the issue at the dependency hearing was whether the mother was willing to parent the child and had instead left all parenting responsibilities for the child to K.H. Even at the time of the dependency hearing, the mother was not willing to assume the duties of providing for and caring for the child. Rather, the mother admitted that if the juvenile court awarded her custody of the child, the child would be with her only temporarily while she arranged for a different family to adopt the child. Thus, unlike in T.E.W. v. T.S., supra, there is no evidence in this case tending to indicate that the mother is"ready and willing to appropriately parent and care for the child." 97 So.3d at 163.

This action did not proceed as an adoption action to which the mother might revoke her consent to an adoption. The mother contends that she did not intend to transfer custody of the child to K.H. and J.H. and that she did not fail to claim the rights of, or perform the duties of, a parent. However, the juvenile court interpreted the mother's conduct following the child's February 4, 2016, birth, as an abandonment of the child. The juvenile court was in the best position to observe the mother as she testified and to assess her demeanor. See J.S.M. v. P.J., 902 So.2d 89, 96 (Ala. Civ. App. 2004). Given the evidence in the record, as well as the findings of the juvenile court, we cannot say that the mother has demonstrated that the juvenile court erred in reaching its dependency determination and in making the custody award to K.H.

We note that, in her brief on appeal, the mother also asserts a due-process argument concerning the fundamental right of a parent to make decisions concerning their children. We do not reach that issue, because that argument was not presented to the juvenile court. " 'It has long been the law in this state that constitutional questions not raised in the court below will not be considered for the first time on appeal.' " S.J. v. Limestone Cty. Dep't of Human Res., 61 So.3d 303, 306 (Ala. Civ. App. 2010) (quoting Smith v. State Dep't of Pensions & Sec., 340 So.2d 34, 37 (Ala. Civ. App. 1976) ). The judgment of the juvenile court is affirmed.

AFFIRMED.

Pittman, Thomas, Moore, and Donaldson, JJ., concur.

Thompson, P.J., dissents, with writing.

In this case, it is undisputed that M.M.("the mother") intended to allow K.H. and J.H. to adopt the child. The hospital forms signed by the mother had no legal effect with regard to the custody of the child; rather, they relieved the hospital of liability for releasing the child into the care of K.H. and J.H. The hospital forms, while not conclusive or sufficient in themselves to transfer custody to K.H. and J.H., indicate the mother's intention to allow them to adopt the child. However, soon after the child left the hospital in the care of K.H. and J.H., the two decided to divorce. After she learned of the impending divorce between K.H. and J.H., the mother continued to visit the child regularly, and she soon sought a return of custody of the child. The Jefferson Circuit Court, which was presiding over the mother's divorce action, awarded the mother custody of the child, and, the next day, K.H. initiated this dependency action.

The record indicates that, although the mother's conduct was far from ideal, she maintained contact with the child and provided limited support in the form of providing health insurance for the child. It is undisputed that the mother wanted the child to be adopted into a two-parent, Christian home, and I conclude that it was her right to select the home in which her child is to be reared. This action involves a close question, and it has been difficult for this court to resolve. However, parents have a fundamental right "to make decisions concerning the care, custody, and control of their children." Troxel v. Granville, 530 U.S. 57, 66, 120 S.Ct. 2054, 147 L.Ed.2d 49 (2000). Given the evidence, and considering the fundamental rights of the mother to the child, I cannot agree with the juvenile court that the evidence supports a determination that the mother abandoned the child, as that term is defined in § 12-15-301, Ala. Code 1975, so as to cause the child to be dependent under the AJJA and § 12-15-102(8), Ala. Code 1975. Accordingly, I would reverse the juvenile court's judgment. For that reason, I respectfully dissent.