Cyndy Howarth v. M & H Ventures, LLC

• Court: Mississippi Supreme Court
• Decided: November 2, 2017
• Docket: 2016-CA-00742-SCT
• Status: Published

Opinion

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2016-CA-00742-SCT

CYNDY HOWARTH, INDIVIDUALLY, WIFE, WRONGFUL DEATH BENEFICIARY, AND AS EXECUTRIX OF THE ESTATE OF RICHARD HOWARTH, JR., DECEASED, JULIET HOWARTH McDONALD, INDIVIDUALLY, DAUGHTER, AND AS WRONGFUL DEATH BENEFICIARY OF RICHARD HOWARTH, JR., DECEASED, AND CYNDY HOWARTH, AS GUARDIAN, NATURAL MOTHER AND NEXT FRIEND OF CYNTHIA HOWARTH, A MINOR AND WRONGFUL DEATH BENEFICIARY OF RICHARD HOWARTH, JR., DECEASED

v.

M & H VENTURES, LLC

DATE OF JUDGMENT: 02/11/2016 TRIAL JUDGE: HON. VERNON R. COTTEN TRIAL COURT ATTORNEYS: RICHARD L. KIMMEL WILLIAM WYATT SIMMONS RONNIE L. WALTON WAYNE E. FERRELL, JR. RICHARD BENJAMIN McMURTRAY GLENN F. BECKHAM COURT FROM WHICH APPEALED: NESHOBA COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: WAYNE E. FERRELL, JR. BRADLEY S. CLANTON WILLIAM WYATT SIMMONS ATTORNEYS FOR APPELLEE: GLENN F. BECKHAM RICHARD L. KIMMEL NATURE OF THE CASE: CIVIL - WRONGFUL DEATH DISPOSITION: AFFIRMED - 11/02/2017 MOTION FOR REHEARING FILED: MANDATE ISSUED: BEFORE WALLER, C.J., KITCHENS, P.J., AND BEAM, J.

KITCHENS, PRESIDING JUSTICE, FOR THE COURT:

¶1. Richard H. Howarth, Jr., died in an airplane crash on January 16, 2012. Howarth was

piloting the plane, which was the property of M&H Ventures, LLC (“M&H Ventures” or

“the LLC”). The sole member of M&H Ventures was Howarth. On December 6, 2013,

Howarth’s widow, Cyndy Howarth, as executrix of Howarth’s estate, wrongful death

beneficiary of Howarth, and next friend of minor daughter Cynthia Howarth, along with adult

daughter Juliet Howarth McDonald (the wrongful death beneficiaries), filed suit against the

LLC in the Circuit Court of Neshoba County, alleging that Howarth’s death had been caused

by the negligence, gross negligence, and recklessness of M&H Ventures and others.

¶2. M&H Ventures filed a motion to dismiss, and, subsequently, a motion for summary

judgment, arguing that the wrongful death beneficiaries could not recover because the

success of their claims depended on proving that Howarth’s own negligence had caused his

death. In response, the wrongful death beneficiaries argued that, because M&H Ventures, an

LLC, had owned the aircraft and all of Howarth’s negligent actions had been performed as

a member of this LLC, they could recover from M&H Ventures for Howarth’s negligence.

The trial court granted summary judgment in favor of M&H Ventures. Because the

comparative negligence statute, Mississippi Code Section 11-7-15, prevents a plaintiff from

recovering for negligence attributable to the injured person, and here Howarth’s wrongful

death beneficiaries were seeking recovery for Howarth’s own negligence, we affirm.

2 FACTS

¶3. On January 16, 2012, Howarth was taking off from the Philadelphia Municipal

Airport in Philadelphia, Mississippi, when his airplane crashed, causing his death. Howarth

was the sole occupant of the plane. Approximately six years before the crash, Howarth had

created M&H Ventures, a Montana limited liability company. According to M&H Ventures’

Operating Agreement, the LLC’s purpose was investment in real and personal property. The

Operating Agreement provided that the “Member (Owner)” of M&H Ventures was Howarth.

In October 2011, M&H Ventures purchased the plane that later was involved in the crash.

¶4. The wrongful death beneficiaries sued M&H Ventures; Tracey Easom, an airplane

mechanic; Ted Smith Aerostar Aircraft Corporation, the manufacturer of the airplane; and

fictitious defendants A-M. The trial court granted the wrongful death beneficiaries’ request

to file an amended complaint on January 14, 2015, substituting Aerostar Aircraft

Corporation, Piper Aircraft Corporation, Piper Aircraft Corporation Irrevocable Trust, New

Piper Aircraft, Inc., and Piper Aircraft, Inc. for fictitious defendants A through E. The

plaintiffs alleged that the plane piloted by Howarth had experienced a loss in directional

control on takeoff that had resulted in the deadly crash. While the plaintiffs’ claims in the

complaint were somewhat repetitive, their basic allegations were that the defendants had

been negligent, grossly negligent, and reckless in the maintenance, repair, and inspection of

the aircraft, fuel system, fuel selector switches, exhaust system, and their component parts.

They alleged that M&H Ventures and Easom negligently and recklessly had performed

engine modifications, repairs, maintenance, and inspection, and also that they had certified,

3 serviced, repaired, tested, inspected, overhauled, rebuilt, owned, and operated the plane and

its parts. Further, they alleged that M&H Ventures and Easom falsely had certified in engine

logs that the plane was airworthy and not unreasonably dangerous. They also made claims

of defective condition and failure to warn against the manufacturers. The plaintiffs alleged

that “[o]n the occasion in question the negligence of the Defendants, M&H Ventures, Tracey

Easom, and Aircraft Manufacturer[s], was the proximate cause of the accident in question

. . . .”

¶5. M&H Ventures’ defense was provided pursuant to the terms of a liability insurance

policy from which the wrongful death beneficiaries sought to collect in this lawsuit.1 M&H

Ventures filed a motion to dismiss on grounds including failure to state a claim, followed by

a motion for summary judgment. The wrongful death beneficiaries responded and requested

a continuance to allow them to obtain discovery under Mississippi Rule of Civil Procedure

56(f). The trial court denied the motion for a continuance and granted summary judgment to

M&H Ventures. The trial court found that, under the comparative negligence statute,

Mississippi Code Section 11-7-15, the wrongful death beneficiaries could not recover for the

negligence of M&H Ventures, because M&H Ventures only could have acted through its sole

member, Howarth, and a wrongful death beneficiary cannot recover for the decedent’s own

negligence. The trial court further denied the wrongful death beneficiaries’ request for a

continuance for further discovery because there was no possibility of unearthing any

1 At the hearing on the motion to dismiss, M&H Ventures asserted that the liability policy’s purpose was to protect M&H Ventures and Howarth from liability to third persons incurred during aeronautical activities.

4 evidence that would have created a genuine issue of material fact. Finding that there was no

just reason for delay, the trial court directed the entry of a final judgment as to M&H

Ventures pursuant to Rule 54(b) of the Mississippi Rules of Civil Procedure.

DISCUSSION

I. WHETHER THE TRIAL COURT ERRED BY FINDING THERE WAS NO GENUINE ISSUE OF MATERIAL FACT AND M&H VENTURES WAS ENTITLED TO A JUDGMENT AS A MATTER OF LAW.

A. Standard of Review

¶6. The moving party is entitled to summary judgment “if the pleadings, depositions,

answers to interrogatories and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is entitled to

a judgment as a matter of law.” M.R.C.P. 56(c). The movant has the burden to show that no

genuine issue of material fact exists. Price v. Purdue Pharma Co., 920 So. 2d 479, 483

(Miss. 2006). In determining whether the movant is entitled to summary judgment, the trial

court must view all of the evidence in the light most favorable to the nonmoving party. Id.

This Court applies de novo review to the trial court’s ruling on summary judgment. Ready

v. RWI Transp., LLC, 203 So. 3d 590, 593 (Miss. 2016).

B. Because the wrongful death beneficiaries’ claims depended on their proving Howarth was negligent, no genuine issue of material fact exists.

¶7. It was undisputed that Howarth was the sole member of M&H Ventures, and that

M&H Ventures had no employees.2 Thus, as the trial court found, all of the allegations of

2 The wrongful death beneficiaries admitted in their summary judgment response that M&H had no employees; at the summary judgment hearing, they admitted that Easom, the airplane’s mechanic, probably was an independent contractor.

5 negligence made by the wrongful death beneficiaries against M&H Ventures necessarily

rested upon the actions or inactions of Howarth himself. The comparative negligence statute,

Mississippi Code Section 11-7-15, provides:

In all actions hereafter brought for personal injuries, or where such injuries have resulted in death, or for injury to property, the fact that the person injured, or the owner of the property, or person having control over the property may have been guilty of contributory negligence shall not bar a recovery, but damages shall be diminished by the jury in proportion to the amount of negligence attributable to the person injured, or the owner of the property, or the person having control over the property.

Miss. Code Ann. § 11-7-15 (Rev. 2004) (emphasis added). The trial court found that, because

Howarth was the sole member of M&H Ventures, the LLC could act or fail to act only

through him. Therefore, the trial court found, the assertions in the amended complaint of

negligence by M&H Ventures could only be the negligence of Howarth. Because, under

Section 11-7-15, damages are reduced in proportion to the decedent’s own negligence, the

wrongful death beneficiaries’ damages for Howarth’s negligence would have to be reduced

to nothing. Therefore, the trial court found that the wrongful death beneficiaries had failed

to show a genuine issue of material fact for trial.

¶8. On appeal, the wrongful death beneficiaries argue that genuine issues of material fact

exist on whether Howarth was totally responsible for his own death. First, they argue that

the trial court’s holding essentially pierced the veil of M&H Ventures by focusing on the acts

of Howarth rather than on the acts of the LLC. An LLC member cannot be individually liable

for the LLC’s debts solely by virtue of his being a member. However, under extraordinary

circumstances a court may “pierce the corporate veil” and disregard limited liability when

6 certain facts are proven. Restaurant of Hattiesburg, LLC v. Hotel & Restaurant Supply,

Inc., 84 So. 3d 32, 39 (Miss. Ct. App. 2012) (applying to LLCs the three-prong test for

piercing the corporate veil, established in Gray v. Edgewater Landing, Inc., 541 So. 2d

1044, 1047 (Miss. 1989)). The wrongful death beneficiaries do not seek to shield Howarth

from individual liability for the debts of M&H Ventures. Thus, whether to pierce M&H

Ventures’ corporate veil is not at issue. Rather, the wrongful death beneficiaries seek to

impose liability upon M&H Ventures based upon Howarth’s negligent acts. And that

endeavor implicates Section 11-7-15, which must reduce the wrongful death beneficiaries’

damages by the amount attributable to Howarth’s negligence. The wrongful death

beneficiaries cannot use a piercing-the-veil argument to evade the application of Section 11-

7-15.

¶9. Second, they aver that, under Malone v. Capital Correctional Resources, Inc., 808

So. 2d 963 (Miss. 2002), the corporate owner of an aircraft shares responsibility for

negligence of the pilot. In Malone, an airplane’s pilot negligently failed to lower the landing

gear after the plane was cleared to land. Id. at 964. The injured passengers sued both the

plane’s pilot and its corporate owner. The owner’s only involvement with the crash was

having lent the plane to the pilot to transport the passengers to a football game. Id. The trial

court granted the owner’s motion for summary judgment. Id.

¶10. In determining whether the owner could be held liable, this Court reviewed two

Mississippi statutes governing the operation of aircraft, Mississippi Code Section 61-1-3(j)

and Section 61-11-1(1). Id. at 965-66. Section 61-1-3(j) provides that:

7 (j) “Operation of aircraft” or “operate aircraft” means the use of aircraft for the purpose of air navigation, and includes the navigation or piloting of aircraft. Any person who causes or authorizes the operation of aircraft, whether with or without the right of legal control (in the capacity of owner, lessee, or otherwise) of the aircraft, shall be deemed to be engaged in the operation of aircraft within the meaning of the statutes of this state . . . .

Miss. Code Ann. § 61-1-3(j) (Rev. 2013). “Person” is defined as “any individual, firm,

partnership, corporation, company, association, joint stock association, or body politic, and

includes any trustee, receiver, assignee or other similar representative thereof.” Miss. Code

Ann. § 61-1-3(k) (Rev. 2013). Section 61-11-1(1) provides that:

It shall be unlawful for any person to operate an aircraft in the air or on the ground or water, while under the influence of intoxicating liquor, narcotics or other habit-forming drug, or to operate an aircraft in the air or on the ground or water, in a careless or reckless manner so as to endanger the life or property of another. In any proceeding charging careless or reckless operation of aircraft in violation of this section, the court in determining whether the operation was careless or reckless shall consider the standards for safe operation of aircraft prescribed by federal statutes or regulations governing aeronautics.

Miss. Code Ann. § 61-11-1(1) (Rev. 2013).

¶11. The Court in Malone interpreted these statutes to mean that the owner of an aircraft

is also an operator and is vicariously liable for all acts of the pilot. Malone, 808 So. 2d at

966. The Court recognized that, under Section 61-1-3(j), “the owner of a plane will be treated

as an operator just like the pilot actually operating the plane.” Id. at 966. The Court held that,

if an airplane owner authorizes a pilot to use the plane, the owner is vicariously liable for the

pilot’s negligence in operating the plane. Id. Because the passengers had presented evidence

that the corporate owner had authorized the negligent pilot to use the plane, the Court found

8 genuine issues of material fact existed as to the owner’s liability and reversed the grant of

summary judgment. Id. at 966-67.

¶12. The wrongful death beneficiaries argue that, under Malone, Howarth could not be

deemed totally responsible for his own death. They contend that the import of Malone is that

acts of negligence by the pilot, Howarth, mean that M&H Ventures, the airplane’s owner,

also was negligent. Because this argument confuses the distinct concepts of negligence and

liability, we disagree. Malone did not hold that the pilot’s negligence establishes that the

airplane owner committed negligent acts or omissions. Rather, Malone established that an

airplane owner is vicariously liable for the pilot’s negligent acts or omissions, meaning that

an airplane owner can be held legally responsible to pay damages for negligent acts or

omissions committed by the pilot. Malone does not stand for the proposition that, when an

airplane’s pilot is negligent, the airplane’s owner also has committed acts of negligence.3

¶13. In this case, the wrongful death beneficiaries seek to recover from M&H Ventures

based on the negligent acts or omissions of the pilot, Howarth. But because Howarth was the

sole member of M&H Ventures and it had no employees, M&H Ventures could act or fail

to act only through Howarth. Under Section 11-7-15, damages must be reduced in proportion

to the negligence of the person injured. Miss. Code Ann. § 11-7-15 (Rev. 2004). We note

3 We recognize that in Malone, the Court said that “[s]ince the owner also stands as the operator of the plane, then logically if the pilot is found negligent then the owner of the plane will also be determined to be negligent as a co-operator of the plane.” Malone, 808 So. 2d at 966 (emphasis added). As discussed below, Malone clearly held that Section 61-1-3(j) makes an airplane owner vicariously liable for pilot negligence. Id. at 966. We do not read Malone to mean that pilot negligence automatically means that the owner also has committed negligent acts, a conclusion that would be nonsensical. Rather, Malone signifies that the aircraft owner is vicariously liable for negligence of the pilot.

9 that, if Howarth had survived the crash, he would have been unable to recover from M&H

Ventures for his own negligence. Howarth’s wrongful death beneficiaries stand in his shoes

and also cannot recover for his negligence. Because M&H Ventures could act only through

Howarth, and the wrongful death beneficiaries are barred from recovering for Howarth’s

negligence, the trial court properly granted summary judgment to M&H Ventures.

¶14. Another issue requires brief mention. In its order granting M&H Ventures’ motion for

summary judgment, the trial court found that, due to the operation of the comparative

negligence statute, the wrongful death beneficiaries would be unable to prevail against M&H

Ventures whether or not the LLC had been dissolved upon Howarth’s death. But the trial

court also examined the question of whether, upon Howarth’s death, M&H Ventures had

dissolved or had become the property of the estate. Noting the presence of a conflict in the

operating agreement concerning the fate of M&H Ventures upon Howarth’s death, the trial

court made alternative findings that the wrongful death beneficiaries could not recover from

M&H Ventures (1) if M&H Ventures had been dissolved upon Howarth’s death, due to the

comparative negligence statute, or (2) if M&H Ventures had become the property of the

estate upon Howarth’s death, because a party cannot sue itself. On appeal, the wrongful death

beneficiaries devote a substantial portion of their brief to arguing that they were able recover

from M&H Ventures regardless of whether the LLC had been dissolved. Because our holding

that there is no genuine issue of material fact due to the application of the comparative

negligence statute obviates the question of whether the estate owns the LLC or whether it,

in fact, dissolved upon Howarth’s death, we provide no analysis of this issue.

10 II. WHETHER THE TRIAL COURT ERRED BY DENYING THE WRONGFUL DEATH BENEFICIARIES’ REQUEST FOR DISCOVERY UNDER MISSISSIPPI RULE OF CIVIL PROCEDURE 56(f).

¶15. The wrongful death beneficiaries moved for a continuance to obtain discovery for the

purpose of opposing M&H Ventures’ motion for summary judgment. The trial court denied

the motion. Mississippi Rule of Civil Procedure 56(f) provides:

Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such order as is just.

M.R.C.P. 56(f). When a party requests a continuance under Rule 56(f) to obtain additional

discovery, the party “must present specific facts why he cannot oppose the motion and must

specifically demonstrate ‘how postponement of a ruling on the motion will enable him, by

discovery or other means, to rebut the movant’s showing of the absence of a genuine issue

of fact.’” Stanley v. Scott Petroleum Corp., 184 So. 3d 940, 942 (Miss. 2016) (quoting

Prescott v. Leaf River Forest Prods., Inc., 740 So. 2d 301, 308 (Miss. 1999)). This Court

reviews the trial court’s denial of a Rule 56(f) motion for abuse of discretion. Stanley, 184

So. 3d at 942.

¶16. The wrongful death beneficiaries argue that further discovery was necessary for them

to oppose summary judgment and that the trial court should have ordered a continuance

under Rule 56(f). They contend that, when M&H Ventures filed its motion to dismiss, it had

made a mere special appearance for the purposes of determining jurisdiction, and it had not

submitted to the jurisdiction of the court. M&H Ventures eventually submitted to the trial

11 court’s jurisdiction by filing an answer, but then it filed the motion for summary judgment

seven days later. The wrongful death beneficiaries filed a summary judgment response in

which they responded to the arguments in the motion, but also argued that seven days had

been insufficient time for them to conduct discovery to craft an effective response. However,

in their response, they did admit that M&H Ventures had no employees and that it could have

acted or failed to act only through Howarth.

¶17. The trial court denied the motion on the basis that further discovery would have

availed nothing to the wrongful death beneficiaries. They asserted that they requested

discovery to show the history of M&H Ventures’ ownership and maintenance of the airplane

and to investigate the relationship between M&H Ventures and Easom. The trial court found

that the discovery the wrongful death beneficiaries wished to conduct would not have

assisted them in resisting summary judgment. The trial court found that, regarding the history

of M&H Ventures and the airplane, Cyndy Howarth, as the executrix of the estate, had access

to all records of M&H Ventures’ existence as an LLC. Because M&H Ventures could have

acted only through Richard Howarth, the trial court found that maintenance records would

not have assisted the wrongful death beneficiaries. As for the relationship between M&H

Ventures and Easom, the trial court found that, because the wrongful death beneficiaries had

admitted that the LLC had no employees and that it could have acted or failed to act only

through Richard Howarth, any discoverable evidence showing Easom had been negligent in

the maintenance of the aircraft would not have supported the case against M&H Ventures.

12 ¶18. M&H Ventures argues that, because the wrongful death beneficiaries failed to submit

affidavits stating why they could not present facts to oppose summary judgment, the trial

court properly denied a continuance. But as the wrongful death beneficiaries argue, this Court

has held that “[n]either written requests nor affidavits are required” to obtain relief under

Rule 56(f). Id. The wrongful death beneficiaries sufficiently explained their discovery needs

to the trial court at the summary judgment hearing.

¶19. Nonetheless, the trial court’s denial of the motion for a continuance to obtain further

discovery was not an abuse of discretion. On appeal, the wrongful death beneficiaries

provide no argument explaining why the trial court’s reasoning was incorrect. The wrongful

death beneficiaries admitted that M&H Ventures only could have acted or failed to act

through Richard Howarth, and they point to no additional evidence they could have

discovered that could have assisted them in pursuing their claim against M&H Ventures.

Therefore, we hold that the trial court’s denial of the Rule 56(f) motion for a continuance was

not an abuse of discretion.

CONCLUSION

¶20. Because the comparative negligence statute, Mississippi Code Section 11-7-15,

prevents a plaintiff from recovering for the negligence of the injured person, and here the

wrongful death beneficiaries seek to recover for Howarth’s own negligence, this Court

affirms the grant of summary judgment in favor of M&H Ventures. We also affirm the trial

13 court’s denial of the wrongful death beneficiaries’ motion to obtain further discovery under

Rule 56(f).

¶21. AFFIRMED.

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