                           IN THE SUPREME COURT OF MISSISSIPPI

                                   NO. 2001-IA-01536-SCT

COPIAH MEDICAL ASSOCIATES

v.

MISSISSIPPI BAPTIST HEALTH SYSTEMS

                               ON MOTION FOR REHEARING

DATE OF JUDGMENT:                           09/14/2001
TRIAL JUDGE:                                HON. J. LARRY BUFFINGTON
COURT FROM WHICH APPEALED:                  COPIAH COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:                    RENEE C. HARRISON
                                            JAMES D. SHANNON
                                            ELISE BERRY MUNN
                                            KELLEY M. BERRY
                                            HOLMES S. ADAMS
                                            TODD INMAN WOODS
                                            DAVID A. RUEFF, JR.
                                            OLEN C. BRYANT, JR.
ATTORNEYS FOR APPELLEE:                     MICHAEL B. WALLACE
                                            D. COLLIER GRAHAM
                                            ROBERT O. ALLEN
NATURE OF THE CASE:                         CIVIL - CONTRACT
DISPOSITION:                                REVERSED AND REMANDED - 04/14/2005
MOTION FOR REHEARING FILED:                 06/01/2004
MANDATE ISSUED:



        EN BANC.

        CARLSON, JUSTICE, FOR THE COURT:


¶1.     The motion for rehearing is denied. The original opinion is withdrawn, and this opinion

is substituted therefor.
¶2.    This case involves the question of whether the Copiah County Chancery Court or the

Copiah County Circuit Court is the more appropriate forum to decide the underlying breach

of contract claim.     We authorized this interlocutory appeal after the Specially-Appointed

Chancellor, Honorable J. Larry Buffington, denied a motion to transfer this case to the Copiah

County Circuit Court or, alternatively, to dismiss or stay the proceedings pending resolution

of a previously filed action in the Copiah County Circuit Court. See M.R.A.P. 5. We find that

the suit unquestionably sounds in contract law instead of equity and that the chancellor erred

when he denied the motion to transfer.

                                  FACTS AND PROCEEDINGS

¶3.    Copiah Medical Associates (“Copiah”) is a Mississippi general partnership consisting

of practicing medical physicians operating in two Copiah County clinics, one in Hazlehurst and

the other in Crystal Springs.     Mississippi Baptist Health Systems (“Baptist”) is a Mississippi

not-for-profit corporation engaged in the business of heath care.    Baptist controls a for-profit

subsidiary, Health Care Economics, P.A. (“HCE”) which manages medical practices and

medical clinics.   (At times, Baptist and HCE will collectively be referred to as Baptist.)

Copiah and Baptist entered into a non-binding Letter of Intent on December 8, 1998, which led

to the execution of five additional documents on April 21, 1999.       These documents included:

(1) a Management and Consulting Services Agreement (“Management Agreement”); (2) a Net

Lease Agreement where Copiah would lease a proposed new Hazlehurst clinic from Baptist;

(3) an Adoption Agreement, which activated specific provisions of the Letter of Intent where

Baptist agreed to buy the land and pay the cost of construction of the new facilities; and (4) and

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(5) two Net Leases where Copiah leased the two existing buildings in Hazlehurst and Crystal

Springs from Baptist.

¶4.     On July 17, 2000, HCE notified Copiah that a partial audit revealed evidence of

overbilling of Medicare and Medicaid.     Baptist asserted that it had attempted to persuade

Copiah to cooperate in an audit to determine the extent of any overbilling. No audit occurred,

and Baptist thus determined that Copiah was in breach of § 14 of the Management Agreement.

As a result, on December 14, 2000, Baptist submitted to Copiah a letter terminating the

Management Agreement effective December 31, 2000.        On December 15, 2000, Copiah filed

a breach of contract suit against Baptist and HCE in the Circuit Court of Copiah County. On

January 26, 2001, Copiah moved to amend the Complaint to add counts of breach of good faith

and fair dealing, breach of fiduciary duties, and requested punitive damages and attorneys’ fees.

The amendment also deleted the request for specific performance which was contained in the

original complaint.

¶5.     On February 2, 2001, Copiah notified Baptist and HCE that it repudiated the Net Leases

on the basis that the leases were void because of Baptist’s illegal termination of the

Management Agreement. On February 6, 2001, Baptist then filed suit in the Chancery Court

of Copiah County against Copiah seeking specific performance of the Net Lease regarding the

new Hazlehurst facility.

¶6.     Immediately thereafter, on February 14, 2001, Copiah moved to amend the circuit court

complaint adding a declaratory action that the Net Lease was void.       Copiah also moved to

amend, changing the request for specific performance to a request for damages.           After a

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hearing on February 26, 2001, the circuit court granted Copiah’s motion to amend and denied

Baptist’s motion to dismiss or, alternatively, to transfer the case to Copiah County Chancery

Court.

¶7.      Copiah moved the chancery court to transfer Baptist’s lawsuit to circuit court on March

5, 2001.     On March 19, 2001, Baptist filed an answer in the circuit court and counterclaimed

for an accounting. Then, on March 22, 2001, Copiah again moved to amend the complaint in

circuit court to add the lease claim and a breach of contract claim concerning the Management

Agreement.     On the same date, Baptist filed in the chancery court action its Opposition To

Motion to Transfer [to Circuit Court].     Copiah filed its responsive pleading to the chancery

court case on April 20, 2001, and asserted as a defense that Baptist’s illegal termination of the

Management Agreement voided the Net Lease and that, as a result, Copiah was discharged from

its obligations.   Baptist then filed an Answer and Affirmative Defenses in the circuit court

case.

¶8.      On May 2, 2001, Chancellor Buffington was appointed by this Court as Special

Chancellor after Chancellor Edward Patten, Jr., for the Fifteenth Chancery Court District

recused himself.    On July 3, 2001, Baptist filed in the chancery court action a motion for

judgment on the pleadings, seeking a permanent injunction requiring Copiah to occupy the new

Hazlehurst clinic and liquidated damages at a rate of $513.25 per day since May 2, 2001, with

costs and attorney’s fees.   The circuit court granted Copiah’s motion for trial setting on July

16, 2001, scheduling trial for November 26, 2001.




                                                    4
¶9.     On August 30, 2001, Copiah filed in the chancery court an amended motion to transfer

and a request for alternative relief including dismissal or stay pending resolution of the circuit

court matter.    After an August 30, 2001 hearing, Special Chancellor Buffington subsequently

entered an order denying all requested relief, and setting the case for trial on October 19,

2001.   Prior to the entry of the order, Copiah requested reconsideration. The reconsideration

was denied by order dated September 18, 2001.             These last two orders are at issue in this

interlocutory appeal.

¶10.    Copiah states the issue on appeal as: “Whether, as a matter of law, the special

chancellor erred when he denied the transfer of the parallel action to circuit court, or in the

alternative, in not staying the chancery action until trial on the pending circuit court action.”

Copiah’s argument is two-prong:       (1) that Baptist’s claims in chancery court are compulsory

counterclaims to Copiah’s first-filed circuit court action, and (2) that the circuit court is the

more appropriate forum to hear all claims. Claiming that Copiah “has approached the problem

backwards,” Baptist restates the issues as follows:

        1.      Whether § 162 of the Constitution precludes transfer to circuit court of
                a complaint which, like Baptist’s, states a claim within the jurisdiction
                of the chancery court.

        2.      Whether the chancery court acquired priority jurisdiction over claims
                regarding the Net Lease which could not be divested by subsequent
                proceedings in circuit court.

        3.      Whether Baptist’s claim for specific performance of the Net Lease was
                a compulsory counterclaim in Copiah’s circuit court action concerning
                the separate Management and Consulting Services Agreement,
                particularly where the Net Lease expressly provided that it would survive
                the termination of the latter agreement.

                                                      5
                                              DISCUSSION

¶11.    Jurisdiction is a question of law which this Court reviews de novo. Briggs & Stratton

Corp. v. Smith, 854 So.2d 1045, 1048 (¶ 9) (Miss. 2003). An order concerning a motion to

transfer from chancery court to circuit court involves a question of jurisdiction and, therefore,

is reviewed de novo. Id. at 1048 (¶ 9) (citing United States Fid. & Guar. Co. v. Estate of

Francis, 825 So.2d 38 (Miss. 2002)).

        I.      Jurisdiction of Chancery Court

¶12.    This Court must decide whether the chancery court is the more appropriate forum for

the present action. The Mississippi Constitution of 1890, Article 6, § 159, limits the

jurisdiction of chancery courts to the following areas: (a) all matters in equity; (b) divorce and

alimony; (c) matters testamentary and of administration; (d) minor’s business; (e) cases of

idiocy, lunacy, and persons of unsound mind; and (f) all cases of which the said court had

jurisdiction under the laws in force when the Constitution was put in operation.        “All causes

that may be brought in the chancery court whereof the circuit court has exclusive jurisdiction

shall be transferred to the circuit court.” Id. § 162.

¶13.    In the case sub judice, Baptist filed its “Complaint For Specific Performance and

Damages” in the chancery court. According to the complaint, the parties entered into a “Net

Lease Agreement” and accompanying amendments whereby Baptist agreed to build a medical

facility and Copiah agreed to lease the 12,500 square foot facility for fifteen years at a rental

rate of $15.00 per gross square foot.            Baptist further alleged that Copiah repudiated and



                                                         6
abandoned the lease.       In Count I, Baptist sought an order of specific performance against

Copiah. In Count II, Baptist sought compensatory damages.

¶14.      Raised as an affirmative defense to the complaint, Copiah asserted that the chancery

court case included the same issues arising from the same circumstances as alleged in the

circuit court case. Eight days after Baptist filed the chancery court action, Copiah moved to

amend its circuit court complaint to include a request for declaratory judgment that the Net

Lease was void as a result of Baptist’s breach of the Management Agreement. The circuit court

granted that motion on March 1, 2001, and the amended complaint was filed on March 22,

2001.

¶15.      Baptist asserts that the case should remain in chancery court because “only the equitable

remedy of specific performance can make Baptist whole.” Baptist relies on Osborne v.

Bullins, 549 So.2d 1337, 1340 (Miss. 1989). However, Osborne involved a breach of a land

sales contract, not a fifteen-year lease agreement. Moreover, we have also said:

          [T]he principle nevertheless seems to be well-settled in our own State as well
          as other jurisdictions that specific performance of a provision in a
          lease-contract for the continued occupancy and use of the premises by the
          lessee for a specified purpose, and for a definite period of time, will not be
          ordered where the continued operation of the business of the lessee would
          require the superintendence of the court from time to time during the period of
          such lease.

Sec. Builders, Inc. v. Southwest Drug Co., 244 Miss. 877, 885-86,147 So.2d 635, 639

(1962).

¶16.      We have consistently advised our trial courts that one must look at the substance, and

not the form, of a claim to determine whether the claim is legal or equitable. Trustmark Nat’l

                                                  7
Bank v. Johnson, 865 So.2d 1148, 1152 (Miss. 2004); Briggs & Stratton Corp. v. Smith, 854

So.2d at 1049; Tillotson v. Anders, 551 So.2d 212, 214 (Miss. 1989); Thompson v. First

Miss. Nat'l Bank, 427 So.2d 973, 976 (Miss. 1983); Dixie Nat'l Life Ins. Co. v. Allison, 372

So.2d 1081, 1085 (Miss. 1979). We have recently said:

        We have indicated that, if some doubt exists as to whether a complaint is legal
        or equitable in nature, that case is better tried in circuit court. Southern Leisure
        [Homes, Inc. v. Hardin], 742 So.2d [1088,] 1090 [(Miss. 1999)]. In
        McDonald's Corp. v. Robinson Indus., Inc., 592 So.2d 927, 934 (Miss. 1991),
        we stated that "[i]t is more appropriate for a circuit court to hear equity claims
        than it is for a chancery court to hear actions at law since circuit courts have
        general jurisdiction but chancery courts enjoy only limited jurisdiction."

Burnette v. Hartford Underwriters Ins. Co., 770 So.2d 948, 952 (¶ 14) (Miss. 2000). This

position was reiterated in Burch v. Land Partners, L.P., 784 So.2d 925, 929 (¶ 13) (Miss.

2001), where we found that “[t]he circuit court is more adept to handle equity cases, rather than

the chancery court to handle legal claims.”

¶17.    We find that this breach of contract claim should have been brought in circuit court

rather than chancery court and that an interlocutory appeal was the proper procedure for

resolving the jurisdictional issue.

        II.      Compulsory Counterclaim

¶18.    Copiah asserts that the claims brought by Baptist in chancery court are compulsory

counterclaims to Copiah's previously filed circuit court action.    Baptist contends that it could

not have asserted its claim concerning the Net Lease in response to Copiah’s original action

because Copiah did not repudiate the agreement until        February 2, 2001.     Under M.R.C.P.



                                                 8
13(e), “[a] claim which either matured or was acquired by the pleader after serving his pleading

may, with the permission of the court, be presented as a counterclaim by supplemental

pleading.” (emphasis added).    Baptist further contends that the Management and Consulting

Services Agreement and the Net Lease agreement are separate and distinct from each other.

¶19.   Compulsory counterclaims are addressed under M.R.C.P. 13(a) as follows:

       A pleading shall state as a counterclaim any claim which at the time of serving
       the pleading the pleader has against any opposing party if it arises out of the
       transaction or occurrence that is the subject matter of the opposing party's claim
       and does not require for its adjudication the presence of third parties over whom
       the court cannot acquire jurisdiction. But the pleader need not state the claim
       if:

               (1) At the time the action was commenced the claim was the
               subject of another pending action; or

               (2) The opposing party brought suit upon his claim by attachment
               or other process by which the court did not acquire jurisdiction
               to render a personal judgment on that claim and the pleader is not
               stating any counterclaim under this Rule 13; or

               (3) The opposing party's claim is one which an insurer is
               defending.

The Comment to M.R.C.P. 13(a) states as follows:

       The purpose of Rule 13 is to grant the court broad discretion to allow claims to
       be joined in order to expedite the resolution of all the controversies between the
       parties in one suit and to eliminate the inordinate expense occasioned by
       circuity of action and multiple litigation:

               It is, and should be, a paramount concern of the judiciary to
               prevent multiple suits where one suit will suffice. There is a
               tendency, perhaps, to forget that one who undergoes the rigors of
               an action, with all of its traumatic impact, loss of time, delay,
               substantial expense and disruption of his affairs, with consequent
               appeals and possible retrials and still other appeals, should be

                                                   9
                  spared having to do this more often than is strictly necessary.
                  Even the successful party after bearing the expense of one trial
                  and of one appeal is, in many instances, hardly a winner. Magee
                  v. Griffin, 345 So.2d 1027, 1032 (Miss. 1977).

This Court has set up a four-prong test to determine the connection of the claim to the

counterclaim:

       (1)        Whether the same evidence or witnesses are relevant to both claims;
       (2)        Whether the issues of law and fact in the counterclaim are largely the
                  same as those in the plaintiff's claim;
       (3)        Whether, if the counterclaim were asserted in a later lawsuit, it would be
                  barred by res judicata;
       (4)        Whether or not both claims are based on a "common nucleus of operative
                  fact"?

Scruggs, Millette, Bozeman & Dent, P.A. v. Merkel & Cocke, P.A., 804 So.2d 1000, 1004

(¶ 5) (Miss. 2001) (citing Fulgham v. Snell, 548 So.2d 1320, 1322-23 (Miss. 1989) (citing

Robertson, Joinder of Claims and Parties-- Rule 13, 14, 17, and 18, 52 Miss. L.J. 47, 48-63

(1982))). We have further stated:

       In applying the four-prong test stated in Fulgham, the logical relationship test
       is used to determine whether a claim and counterclaim arise from the same
       transaction or occurrence such that a counterclaim is compulsory; it exists when
       the same operative facts serve as the basis of both claims or the aggregate core
       of facts upon which the claim rests activates additional legal rights, otherwise
       dormant. See American Bankers Ins. Co. v. Alexander, 2001 WL 83952, [818]
       So.2d [1073] (Miss.2001).

Reid ex rel. Reid v. Am. Premier Ins. Co., 814 So.2d 141, 146 (¶ 21) (Miss. 2002).

¶20.   Here, both the circuit and chancery court actions involve the same evidence and

witnesses.      Although the Net Lease agreement is a separate contract from the Management

Agreement, these documents are inextricably intertwined with one another.          For this reason,


                                                  10
the first, second, and fourth prongs of the test are met. Both the claims pending in the circuit

and chancery courts arose from the lengthy negotiations resulting in the complex business

arrangement between the parties.

¶21.    Additionally, because the circuit court permitted the amendment to the complaint

adding a declaratory action to determine that the Net Lease Agreement was void, the third

prong of the test concerning res judicata is met as well.

        The requisites for application of the doctrine of res judicata are: (1) identity of
        the thing sued for; (2) identity of the cause of action; (3) identity of the persons
        and parties to the cause of action; and (4) identity of the quality in the persons
        for and against whom the claim is made." Standard Oil Co. v. Howell, 360 So.2d
        1200, 1202 (Miss.1978) (citing Pray v. Hewitt, 254 Miss. 20, 179 So.2d 842
        (1965)). See also Taylor v. Taylor, 835 So.2d 60, 65 (Miss.2003); Pro-Choice
        Miss. v. Fordice, 716 So.2d 645, 655 (Miss.1998); Little v. V & G Welding
        Supply, Inc., 704 So.2d 1336, 1338 (Miss.1997). Res judicata bars litigation
        in a second action "of all grounds for, or defenses to, recovery that were
        available to the parties regardless of whether they were asserted or determined
        in the prior proceeding." Johnson v. Howell, 592 So.2d 998, 1002 (Miss. 1991)
        (quoting Dunaway v. W.H. Hopper & Assocs., Inc., 422 So.2d 749, 751 (Miss.
        1982)).

Dunn v. Dunn, 853 So.2d 1150, 1155 (¶ 17 ) (Miss. 2003). Because both cases involve the

alleged breach of the same lease agreement, the parties are identical, and each action seeks to

determine the parties’ contractual rights and responsibilities under the contract, the elements

of res judicata are met. Although the cause of action was acquired after the filing of the circuit

court case, Baptist had not yet filed its answer to that complaint. Baptist filed its first answer

to the circuit court case over one month after initiating the chancery court case.    Because the

Net Lease Agreement at issue in this case arises from the same complex business arrangement



                                                    11
made by the parties, the claims asserted by Baptist in the chancery court action should have

been submitted as a compulsory counterclaim in the circuit court action.

        III.    Priority Jurisdiction

¶22.    Copiah next asserts that the circuit court has priority jurisdiction because its first-filed

complaint was amended to include a declaratory action that the Net Lease is void as a result

of Baptist’s breach of the Management Agreement and that the amendment “relates back” to

the date of the original filing under M.R.C.P. 15(c). We agree.

        This Court has repeatedly stated that it is a "well established rule in this
        jurisdiction that where two (2) suits between the same parties over the same
        controversy are brought in courts of concurrent jurisdiction, the court which
        first acquires jurisdiction retains jurisdiction over the whole controversy to the
        exclusion or abatement of the second suit." Beggiani, 519 So.2d at 1210. See
        Hancock v. Farm Bureau Ins. Co., 403 So.2d 877 (Miss.1981); Huffman v.
        Griffin, 337 So.2d 715 (Miss.1976). In Huffman, 337 So.2d at 719, this Court
        also stated that "in this state priority of jurisdiction between courts of
        concurrent jurisdiction is determined by the date the initial pleading is filed,
        provided process issues in due course." See Euclid-Mississippi v. Western Cas.
        & Sur. Co., 249 Miss. 547, 559-60, 163 So.2d 676 (1964); Shackelford v. New
        York Underwriters Ins. Co., 189 Miss. 396, 407-08, 198 So. 31 (1940). "The
        court which first acquires jurisdiction retains jurisdiction over the whole
        controversy to the exclusion or abatement of the second suit. Huffman, 337
        So.2d at 719; see Lee v. Lee, 232 So.2d 370, 373 (Miss.1970), 20 Am.Jur.2d
        Courts § 128, at 481 (1965); 1 C.J.S. Abatement and Revival § 33, at 58-59
        (1936); 21 C.J.S. Courts § 492, at 745 (1940). Further, it has been stated, in
        regard to the "priority of jurisdiction" rule that:

                In order that the rule may be applicable which prevents
                interference by another court with the jurisdiction of the court
                first assuming it, the second action should be between the same




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                 parties, seeking on the one hand, and opposing on the other, the
                 same remedy, and should relate to the same questions.[1]

        Beggiani, 519 So.2d at 1210 (emphasis added).

Scruggs, Millette, Bozeman & Dent, P.A. v. Merkel & Cocke, P.A., 804 So.2d at 1006 (¶ 15).

¶23.    As previously discussed, the matter pending in the chancery court is identical to the

matter pending in the circuit court. The parties are exactly the same. The parties’ rights and

responsibilities under the Net Lease are at issue in both cases.              Because the circuit court

acquired jurisdiction over this matter through the first-filed complaint on December 15, 2000,

the chancery court action should be transferred to the circuit court.

                                            CONCLUSION

¶24.    Based upon the foregoing reasons, we reverse the chancellor’s denial of Copiah’s

motion to transfer, and we remand with instructions to transfer this case to the Copiah County

Circuit Court.

¶25.    REVERSED AND REMANDED.

     SMITH, C.J., WALLER AND COBB, P.JJ., GRAVES AND DICKINSON, JJ.,
CONCUR. EASLEY, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION. DIAZ
AND RANDOLPH, JJ., NOT PARTICIPATING.




        1
          This should not be confused with our recent declaration that the prior jurisdiction doctrine as it
relates to annexation litigation was antiquated, thus enabling our chancellors to consolidate competing
annexation petitions for one trial. In re Enlargement and Extension of the Mun. Boundaries of the
City of D’Iberville, 867 So.2d 241, 251 (Miss. 2004).

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