IN THE SUPREME COURT OF MISSISSIPPI
NO. 2007-CA-01926-SCT
CLAUDIA A. LIMBERT, INDIVIDUALLY AND IN H ER O FFICIAL CAPACITY; M ISSISSIPPI UNIVERSITY FOR WOMEN AND BOARD OF TRUSTEES OF MISSISSIPPI STATE INSTITUTIONS OF HIGHER LEARNING
v.
M ISSISSIPPI U NIV ER SIT Y FO R WOMEN ALUMNAE ASSOCIATION, INC.
DATE OF JUDGMENT: 09/28/2007 TRIAL JUDGE: HON. DOROTHY WINSTON COLOM COURT FROM WHICH APPEALED: LOWNDES COUNTY CHANCERY COURT ATTORNEYS FOR APPELLANTS: J. CAL MAYO, JR. PAUL B. WATKINS, JR. DAVID L. SANDERS ATTORNEYS FOR APPELLEES: JULIE LEMAYE HUSSEY KIMBERLY GOLDEN GORE NATURE OF THE CASE: CIVIL - STATE BOARDS AND AGENCIES DISPOSITION: REVERSED AND RENDERED - 11/20/2008 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC.
CARLSON, JUSTICE, FOR THE COURT:
¶1. Dr. Claudia A. Limbert, the Mississippi University for Women (MUW), and the
Board of Trustees of Mississippi State Institutions of Higher Learning (IHL),1 appeal to us
from an October 1, 2007, injunction wherein the Lowndes County Chancery Court ordered
1 Dr. Limbert, MUW, and IHL are sometimes referred to herein collectively as “Appellants.” Dr. Limbert to continue to honor the October 25, 2006, affiliation agreement between the
Mississippi University for Women Alumnae Association (Association) and MUW, and that
Dr. Limbert do so in good faith for the duration of the agreement. The injunction further
ordered rescission of any affiliation agreements made by Dr. Limbert and IHL with any other
alumni group. The Appellants likewise assign as error the chancery court’s denial of
injunctive relief, which had the practical effect of allowing the Association’s continued use
of the University’s names, marks, and symbols following termination of the affiliation
agreement.
FACTS AND PROCEEDINGS IN THE TRIAL COURT 2
¶2. The relationship between the Association and the MUW has existed for more than one
hundred years. According to MUW President Limbert, this relationship between the
Association and MUW became strained as soon as she was hired in 2002.3
2 The facts in today’s case are mostly gleaned from the Opinion and Judgment entered on October 1, 2007, by the Chancery Court of Lowndes County. 3 Dr. Limbert testified that before she arrived at the university, she was accompanied by Association members on the plane, each of whom had strong suggestions about whom she should discharge and whom she should hire. Furthermore, Dr. Limbert stated that she received multiple complaints from university departments stating that they did not want to work with the alumnae group. In Spring 2006, a controversy surrounding a university official, MUW Foundation Director Scott Rawls (hired by Dr. Limbert), surfaced. Alumnae leaders made various allegations of sexual harassment, racial discrimination, and theft against Mr. Rawls. This controversy involved a series of emails sent by alumnae. As a result, Dr. Limbert had the hard drives of the Office of Alumni Relations’ computers copied. Dr. Limbert’s testimony was that after a costly investigation by MUW, these allegations proved to be false. Moreover, Dr. Thomas Meredith, former IHL Commissioner, testified that various alumnae expressed to him a clear desire for IHL to terminate Dr. Limbert.
2 ¶3. In August 2006, IHL mandated that all public universities in Mississippi enter into an
operating agreement with its affiliated entities.4 Among other things, IHL policy required
that the operating agreements, and any changes to them, be reviewed by IHL. Under this
provision, alumni associations are such entities. On October 25, 2006, Dr. Limbert entered
into an affiliation agreement with the Association, which was approved by IHL. According
to the testimony of Association President Betty Lou Jones, the Association had retained
counsel prior to signing this agreement to aid in its negotiation and in response to MUW
having retained counsel. This agreement contained a provision that required the Association
to draft a new constitution and bylaws that met Dr. Limbert’s approval, a provision that
allowed the University Alumni Director to appoint members of the Association’s
nominations committee, and a provision that either party could terminate the agreement upon
sixty days’ notice. At the heart of the affiliation-agreement controversy between the parties
was the provision in the agreement that gave the University Alumni Director the power to
appoint members to the Association’s nominations committee. Dr. Limbert sought to have
this change to the electoral procedure reflected in the Association’s constitution and bylaws.
Dr. Limbert testified that this desired change stemmed from her disdain for the current
nominations procedures that invariably kept the same small group of alumnae (whom she
believed to be undermining the objectives of MUW) in positions of leadership. The
Association, despite characterizing this provision as restrictive and punitive, signed the
4 See IHL Policy 301.0806.
3 agreement. The Association submitted the proposed constitution and bylaws within the
requisite sixty days, as required by the agreement. Negotiations regarding the constitution
and bylaws continued by and through counsel through January 31, 2007. On February 1,
2007, Dr. Limbert, through counsel, sent a letter to the Association, giving it the requisite
sixty days’ notice to terminate the agreement, disaffiliating MUW and the Association.
¶4. An action was commenced on March 29, 2007, four days prior to the disaffiliation,
via a complaint filed by “The National Executive Board” against Dr. Limbert, seeking a
preliminary injunction to prevent the termination of the affiliation agreement. Dr. Limbert
filed a motion to dismiss, alleging that The National Executive Board was not a legal entity,
and thus no relief could be granted. In lieu of dismissing the complaint, the chancery court
allowed the Association to amend its complaint and serve the proper parties.
¶5. On April 5, 2007, the Association filed an Amended Complaint for Preliminary
Injunction, Permanent Injunction and Other Relief against the Defendants/Appellants Dr.
Limbert and IHL. The Appellants filed their Answers and Motions to Dismiss. Additionally,
Dr. Limbert, on behalf of MUW, filed a counterclaim seeking to enjoin the Association from
using the name “Mississippi University for Women.” The Association thereafter filed its
Answer to the Counterclaim. Hearings were held on May 8, 2007, and June 5, 2007, on the
request of both parties for permanent injunctions. At the conclusion of the hearings, the
chancery court requested trial briefs, which were received on or before July 29, 2007.
¶6. The chancery court concluded that Dr. Limbert’s decision to disaffiliate with the
Association over its bylaws was in violation of IHL policy and was in bad faith. Therefore,
4 the chancery court, on October 1, 2007, entered “[a]n injunction mandating that Dr. Limbert
uphold the existing and valid affiliation agreement between the Association and the
University, dated October 25, 2006, and that Dr. Limbert operate under the affiliation
agreement in good faith for the duration of the Agreement . . . .” In addition, the chancery
court held “[s]ince the actions of Dr. Limbert in terminating the agreement were in bad faith,
actions taken by her to form a new alumnae association and enter into a new affiliation
agreement were also in bad faith.” Thus, Dr. Limbert and IHL were “mandated to rescind any
affiliation agreements made by Dr. Limbert with any other alumni group.” Finally, the
chancellor denied the injunctive relief requested by the Appellants.
¶7. On October 26, 2007, Dr. Limbert, MUW, and IHL appealed to this Court seeking
relief from specific performance of the affiliation agreement and from the injunction from
affiliating with any other alumni groups, as well as reconsideration of their motion that the
Association be enjoined from using MUW’s names, symbols, logos and/or marks.
DISCUSSION
¶8. The Appellants present seven issues for review by this Court: (1) whether the
constitutional principle of separation of powers prohibits a court from second-guessing a
policy decision made by IHL and a public university concerning higher education
administration; (2) whether the constitutional principle of separation of powers requires a
court to defer to an executive-branch agency in the interpretation and implementation of that
agency’s rules and regulations; (3) whether a court can mandate that a public university
president exercise her judgment in a particular matter concerning the goals and nature of the
5 university’s relationship with affiliated entities; (4) whether a party to an agreement can act
in “bad faith” if she is exercising a contractual right to terminate the agreement; (5) whether
a university president can act in “bad faith” if her action was in the best interests of that
university consistent with IHL’s directions; (6) whether the chancery court improperly
granted a specific-performance remedy where the contract required an ongoing, affiliated
relationship between the parties as opposed to the occurrence of a particular act or
transaction; (7) whether the chancery court failed to protect the university’s property interest
in its names, marks, and symbols.
¶9. Among these issues, we find two issues to be dispositive of today’s case: (1) whether
Dr. Limbert acted in bad faith by terminating the agreement and (2) whether the
constitutional principle of separation of powers requires a court to defer to an agency’s
interpretation and implementation of its own rules and regulations. Accordingly, we will
discuss only these two assignments of error.
I. WHETHER A PARTY TO AN AGREEMENT CAN ACT IN “BAD FAITH” IF SHE IS EXERCISING A CLEAR C ON TR AC TU AL R IG H T TO TERM IN ATE TH E AGREEMENT.
¶10. In reviewing judgments of the chancery court, “[w]e will not disturb the findings of
a chancellor when supported by substantial evidence unless the chancellor abused his
discretion, applied an erroneous legal standard, was manifestly wrong, or was clearly
erroneous.” Hamilton v. Hopkins, 834 So. 2d 695, 699 (Miss. 2003) (citing Cox v. F-S
Prestress, Inc., 797 So. 2d 839, 843 (Miss. 2001); Holloman v. Holloman, 691 So. 2d 897,
6 898 (Miss. 1996)). On the other hand, the proper standard of review for issues of contract
construction are questions of law that are reviewed de novo. Dixie South Indus. Coating,
Inc. v. Miss. Power Co., 872 So. 2d 769, 772 (Miss. Ct. App. 2004) (citing City of Grenada
v. Whitten Aviation, Inc., 755 So. 2d 1208, 1214 (Miss. Ct. App. 1999)).
¶11. All contracts contain an implied covenant of good faith and fair dealing in
performance and enforcement. Morris v. Macione, 546 So. 2d 969, 971 (Miss. 1979). Good
faith has been defined as “the faithfulness of an agreed purpose between two parties, a
purpose which is consistent with justified expectations of the other party.” Cenac v. Murry,
609 So. 2d 1257, 1272 (Miss. 1992). Bad faith has been defined by this Court as requiring
“a showing of more than bad judgment or negligence; rather, ‘bad faith’ implies some
conscious wrongdoing ‘because of dishonest purpose or moral obliquity.’” Univ. of S. Miss.
v. Williams, 891 So. 2d 160, 170-71 (Miss. 2004) (quoting Bailey v. Bailey, 724 So. 2d 335,
338 (Miss. 1998)).
¶12. The Appellants claim that Dr. Limbert cannot have acted in “bad faith” because she
exercised a clear contractual right pursuant to Section 7.2 of the affiliation agreement to
terminate the agreement upon sixty days’ written notice. The Association contends that Dr.
Limbert exercised this termination provision in a manner that violates the “inherent covenant
of good faith and fair dealing” contained therein, thus acting in bad faith. However, the
Association offers nothing in the way of evidence of bad faith other than Dr. Limbert’s
termination of the agreement and the decision to affiliate with another alumni entity. The
chancery court based its finding of bad faith on the fact that Dr. Limbert’s termination of the
7 agreement was a result of Dr. Limbert’s refusal to approve the bylaws that were submitted
by the Association because those bylaws did not contain Dr. Limbert’s desired procedures
for nominating Association officers. Pursuant to Section 5.2 of the affiliation agreement,5 Dr.
Limbert reserved the right for the University Alumni Director to appoint four members of
the nominating committee.
¶13. In interpreting the terms of a contract, this Court has stated the first step is to apply
“the ‘four corners’ test,” and in doing so the court looks to the plain language of the parties
used to express their agreement. Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc.,
857 So. 2d 748, 752 (Miss. 2003) (citing Pursue Energy Corp. v. Perkins, 558 So. 2d 349,
352 (Miss. 1990); Pfisterer v. Noble, 320 So. 2d 383, 384 (Miss. 1975)). “Our concern is
not nearly so much with what the parties may have intended, but with what they said, since
the words employed are by far the best resource for ascertaining the intent and assigning
meaning with fairness and accuracy.” Id. (citing Simmons v. Bank of Miss., 593 So. 2d 40,
42-43 (Miss. 1992)). The Association does not argue the termination clause was invalid, or
5 Affiliation Agreement Section 5.2 states:
The process for nominations for the Association Officers shall be an inclusive process designed to achieve representation that reflects the membership of the alumni. The Association’s Constitution and By-Laws shall set forth a nominating process that includes, among other provisions, a seven member nominating committee with four members appointed by the University Alumni Director and three members appointed by the Association’s President. This committee will present candidates for each office for approval by the Association. The Constitution and By-Laws could include a method for additional nominations from the floor at the Association’s annual meeting.
8 that the affiliation agreement was an invalid contract, or that the contract was signed as a
result of duress. To the contrary, both parties negotiated this agreement at arms’ length,
represented by counsel, and with full knowledge that the agreement provided for termination
without cause upon sixty days’ notice, as well as approval by Dr. Limbert of the nomination
process in the Association’s constitution and bylaws.
¶14. Article 7, Section 7.2 of the affiliation agreement states in its entirety that “[t]his
Agreement may be terminated by either party upon at least 60 days written notice.” 6 In
looking to the clear, unambiguous language of the termination clause, the inescapable
conclusion is that Dr. Limbert was exercising her contractual right to terminate the affiliation
agreement upon sixty days’ notice. This Court has held that a party has not breached the
implied covenant of good faith and fair dealing when the party “took only those actions
which were duly authorized by the contract.” GMAC v. Baymon, 732 So. 2d 262, 269 (Miss.
1999). Thus under the rule promulgated in Baymon, Dr. Limbert could not have acted in bad
faith when she exercised a contractual right. By ordering Dr. Limbert to uphold the
agreement, the chancellor essentially rewrote the agreement, excluding the termination
clause. In doing so, the learned chancellor unfortunately failed to apply the unambiguous
language of the contract and, as a result, committed reversible error.
6 Article 7, Section 7.4 of the affiliation agreement states in pertinent part that “[w]ithin 30 days of termination of this Agreement for any reason, the University may . . . .” (Emphasis added).
9 II. WHETHER THE CONSTITUTIONAL PRINCIPLE OF SEPARATION OF POWERS REQUIRES THAT A MISSISSIPPI COURT DEFER TO AN EXECUTIVE-BRANCH AGENCY IN THE INTERPRETATION AND IMPLEMENTATION OF THAT AGENCY’S RULES AND REGULATIONS.
¶15. This Court agrees with the Appellants’ assertion that the judicial branch should not
engage in policy decisions, particularly in those areas delegated by constitution and by statute
to a specific agency. The Mississippi Constitution provides the three branches of government
(legislative, judicial, and executive) with distinct powers and dictates no one branch “shall
exercise any power properly belonging to either of the other.”Miss. Const. art 1, § 1 (1890).
Furthermore, it is the role of the judiciary to determine when the executive and legislative
branches have overstepped their boundaries. Albritton v. City of Winona, 181 Miss. 75, 96,
178 So. 799, 803 (1938). However, we cannot find that either Dr. Limbert, acting with the
approval of IHL, or IHL acted beyond the scope of its authority. Thus, by not affording
deference to IHL’s interpretation and implementation of its own policy regarding the
independence of affiliated entities, the chancellor violated the doctrine of separation of
powers.
¶16. In order to maintain the balance between the distinct branches of government, this
Court employs a limited inquiry into administrative-agency decisions. “In reviewing an
administrative agency's findings of fact, the [trial] court and this Court afford great deference
to an administrative agency's construction of its own rules and regulations and the statutes
under which it operates.” Smith v. Univ. of Miss., 797 So. 2d 956, 960 (Miss. 2001) (citing
Board of Supervisors v. Waste Mgmt. of Miss., Inc., 759 So. 2d 397, 400 (Miss. 2000);
10 McDerment v. Miss. Real Estate Comm'n, 748 So. 2d 114, 118 (Miss. 1999)). However,
an agency’s interpretation of its own regulation must be overturned if “so plainly erroneous
or so inconsistent with either the underlying regulation or statute as to be arbitrary,
capricious, an abuse of discretion or otherwise not in accordance with law.” Tower Loan of
Miss. Inc. v. Miss. Tax Comm’n, 662 So. 2d 1077, 1081 (Miss. 1995) (citing Bd. of Tr. of
State Insts. of Higher Learning v. Sullivan, 763 F. Supp. 178, 184 (S.D. Miss. 1991)). This
Court has defined the terms “arbitrary” and “capricious” as follows:
[A]n administrative agency’s decision is arbitrary when it is not done according to reason and judgment, but depending on the will alone. An action is capricious if done without reason, in a whimsical manner, implying either a lack of understanding of or disregard for the surrounding facts and settled controlling principles. Miss. State Dep’t of Health v. Natchez, 743 So. 2d 973, 977 (Miss. 1999); See also Burks v. Amite County Sch. Dist., 708 So. 2d 1366, 1370 (Miss. 1998).
Miss. Dep't of Human Servs. v. McNeel, 869 So. 2d 1013, 1018 (Miss. 2004) (emphasis
added).
¶17. IHL’s authority to govern Mississippi’s public universities is derived from both
constitutional and statutory sources. See Miss. Const. art 8, § 213-A (1890); Miss. Code
Ann. § 37-101-15(c) (Rev. 2007). IHL Policy 301.0806 pertains to universities and their
affiliated entities and states in pertinent part:
[T]he Board of Trustees has responsibility for ensuring the public interest is served by any individual or organization established to support an institution of The Mississippi State Institutions of Higher Learning. While the Board of Trustees cannot control or direct individuals or private organizations, it has the full authority to control the activities of its agents and agencies in their relationships with such individuals or organizations.
11 ¶18. The chancery court found the language of the affiliation agreement to be a usurpation
of the Association’s independence by Dr. Limbert and, as such, a violation of IHL policy.
Despite IHL’s approval of this agreement, the chancery court found IHL to be in violation
of its own policy in that IHL was implementing its policy in an arbitrary manner. Moreover,
the chancellor found that Dr. Limbert’s association with the New Alumni Association was
evidence of bad faith, although IHL likewise approved this agreement. By not requiring Dr.
Limbert to seek its approval of this disaffiliation, and by approving Dr. Limbert’s affiliation
agreement with the new alumni association, IHL essentially sanctioned those decisions in
keeping with its interpretation of its own polices. IHL, as an administrative body, and Dr.
Limbert, acting as its agent, should have been afforded “great deference” by the chancellor
in the “construction of its own rules and regulations and the statutes under which it operates.”
¶19. IHL policy 301.0806 states that the independence of affiliated entities is ensured in
that “. . . . no employee of the Mississippi State Institutions of Higher Learning shall hold a
voting position on an institutionally affiliated entity board . . . . senior administrators of the
institution should only participate on the affiliated entity’s board in an ex-officio capacity.”
As to IHL’s interpretation of this policy, Dr. Meredith testified that IHL’s definition of
“independent” was that it was left up to the university president to define. However, the
chancery court expressly rejected the IHL Board’s construction of the term “independent”
by defining “independent entity” in light of City of Picayune v. S. Reg’l Corp., 916 So. 2d
510, 523 (Miss. 2005), as one possessing “free will to the extent provided by its own articles
of incorporation, bylaws and the laws of the state in which it is incorporated.”
12 ¶20. The Association argues that the chancery court reached the correct result for the
wrong reasons in that the chancellor simply should have applied the plain meaning of the
word “independent” rather than looking to case law for a definition. In the Association’s
argument for applying the plain meaning of “independent,” it cites the Merriam-Webster
definition as: “not subject to control by others,” “self-governing,” “not affiliated with a
larger controlling unit,” and “not looking to others for one’s opinions or for guidance in
conduct.” 7 The Association claims that in the absence of ambiguity, the courts have full
authority to reject an agency’s improper interpretation or application of its own policy and
impose a plain-meaning application of the term. In defining “independent,” however, the
Association neglects to ascertain the plain meaning of “affiliate”: “to bring or receive into
close connection as a member or branch,” “to connect or associate oneself,” “combine.” 8 It
is clear that it was IHL’s intent to require universities and their various affiliations to enter
into formal agreements in an effort to inspire public confidence in these affiliated entities.
Public confidence is crucial where entities hold themselves out as part of the university
community and receive substantial amounts of money on behalf of these universities. This
Court finds that IHL’s purpose in instilling public confidence by requiring affiliation
agreements would be thwarted if IHL was prevented from giving university presidents
discretion as to which entities were deserving of the university’s close association.
7 citing www.m-w.com (last visited April 1, 2008) (Merriam-Webster website). 8 http://www.merriam-webster.com/dictionary/affiliate (last visited September 16, 2008).
13 ¶21. Given the history between members of the Association and university administrators,
Dr. Limbert’s rejection of the Association’s amended constitution and bylaws based on her
apprehension at continuing to affiliate with an entity whose leadership she perceived as
undermining the mission and objectives of MUW will assuredly be debated among fair-
minded individuals possessing reason and judgment. That which is “‘[f]airly debatable’ is
the antithesis of arbitrary and capricious.” Town of Florence v. Sea Lands, Ltd., 759 So. 2d
1221, 1223 (Miss. 2000) (quoting Saunders v. City of Jackson, 511 So. 2d 902, 906 (Miss.
1987)). IHL, with full knowledge of its own polices requiring independence of affiliated
entities, approved the affiliation agreement entered into by Dr. Limbert and the Association
requiring the Association to amend its constitution and bylaws subject to approval by Dr.
Limbert and allowing Dr. Limbert to retain power to appoint members to the Association’s
nominating committee.
¶22. Moreover, nothing in IHL policy required approval of disaffiliation, but instead only
approval of affiliation agreements. No policy limited the number of alumni associations with
which MUW could affiliate. To this end, we are constrained to find that the chancellor
abused her discretion in ordering the dissolution of the IHL-sanctioned New Alumni
Association Agreement.
¶23. Unable to find that either IHL or Dr. Limbert, as an agent of IHL, superseded their
authority, this Court holds that the administrative decisions at issue in this case are not
subject to a trial court substituting its judgment and discretion for that of Dr. Limbert and
IHL regarding entities or groups which are best suited to affiliate with MUW. In doing so,
14 the chancellor erroneously disturbed the balance of the separation of powers. Finding these
administrative decisions neither arbitrary nor capricious, and failing to find an abuse of
discretion or action otherwise contrary to well-established law, we are constrained as a matter
of law to reverse the chancellor on this issue as well.
¶24. Having resolved the relevant issues in favor of the Appellants, this Court further finds
that MUW and IHL are entitled to retain an exclusive property interest in their names and
symbols. The affiliation agreement expressly required acknowledgment by the Association
that MUW was permitting the Association to use these names and symbols pursuant to the
terms of the affiliation agreement. With the affiliation agreement now dissolved, so too are
the Association’s privileges to use MUW’s names and symbols.
¶25. Based on the disposition of the two issues discussed herein, the remaining issues need
not be addressed.
CONCLUSION
¶26. In sum, we find that the chancellor erroneously found the affiliation agreement
between MUW and the Association was terminated by Dr. Limbert in bad faith. To substitute
the judgment of the trial court for IHL’s interpretation and implementation of its own policies
was an abuse of discretion. Due to the dissolution of the affiliation agreement, MUW is
entitled to injunctive relief as to the exclusive use of its names, symbols, marks, logos, and
insignia. Thus, for the reasons stated, the Lowndes County Chancery Court’s judgment
entered in favor of the Mississippi University for Women Alumnae Association is reversed,
and judgment is rendered here in favor of Claudia Limbert, individually and in her official
15 capacity as President of Mississippi University for Women; the Mississippi University for
Women; and the Board of Trustees of Mississippi State Institutions of Higher Learning.
¶27. REVERSED AND RENDERED.
WALLER, P.J., DICKINSON AND RANDOLPH, JJ., CONCUR. DIAZ, P.J., AND GRAVES, J., DISSENT WITHOUT SEPARATE WRITTEN OPINION. SMITH, C.J., EASLEY AND LAMAR, JJ., NOT PARTICIPATING.