H. Kenneth Lefoldt, Jr v. Donald Rentfro
241 So. 3d 565
| Miss. | 2017Background
- Natchez Regional Medical Center (NRMC), a public community hospital owned by Adams County, filed Chapter 9 bankruptcy; a liquidation trustee (Lefoldt) was appointed and authorized to pursue NRMC's claims.
- Lefoldt sued NRMC's former directors and officers for breach of fiduciary duty (care, loyalty, good faith) and gross negligence, alleging failures in billing, audit responses, credentialing, and regulatory oversight that caused multi‑million dollar losses.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6), asserting immunity under the Mississippi Tort Claims Act (MTCA), which the district court accepted and dismissed the suit.
- The Fifth Circuit certified two questions to the Mississippi Supreme Court: (1) whether the MTCA is the exclusive remedy for a bankruptcy trustee standing in the hospital’s shoes against its employees/directors; and (2) if so, whether the trustee may pursue the pleaded claims against defendants personally.
- The Mississippi Supreme Court (majority) answered the first question: No — the MTCA does not bar the sovereign (or its representative) from pursuing civil claims; it concluded the MTCA governs claims against governmental entities, not actions brought by them, and is inconsistent with constitutional provisions that statutes of limitation do not run against the State.
- Chief Justice Kitchens dissented, arguing the MTCA (and §41‑13‑11(5) applying MTCA to community hospitals) provides the exclusive remedy and, because the alleged conduct was within the course and scope of employment and did not allege fraud/malice/criminality, the defendants would be shielded from personal liability under §11‑46‑7(2).
Issues
| Issue | Plaintiff's Argument (Lefoldt) | Defendant's Argument | Held |
|---|---|---|---|
| 1. Does MTCA furnish the exclusive remedy for a bankruptcy trustee suing a public hospital's employees/directors? | MTCA’s definitional language ("claim", "claimant", "injury") shows it applies to private persons suing the government; it was not meant to restrict suits brought by the sovereign or its representatives. | MTCA is the exclusive remedy; §41‑13‑11(5) expressly subjects community hospitals and their employees to the MTCA. | No. The MTCA governs claims against governmental entities, not suits brought by the sovereign; statutes of limitations in MTCA conflict with constitutional protection that limits do not run against the State. |
| 2. If MTCA is exclusive, can the trustee pursue breach of fiduciary duty and gross negligence claims against officers personally? | Trustee contends directors/officers breached fiduciary duties and were grossly negligent, seeking personal recovery for NRMC’s creditors. | Defendants argue MTCA bars personal liability for acts within course and scope of employment unless fraud, malice, defamation, or criminal conduct is alleged. | (Majority did not reach this as a binding bar because it held MTCA not exclusive as to suits by the sovereign. Dissent: No — MTCA would bar personal liability absent allegations of fraud/malice/criminal conduct.) |
| 3. Does the MTCA’s one‑year limitations period apply to suits by the State or its subdivisions? | Trustee: MTCA limitations and notice provisions are nonsensical if applied to the sovereign; Constitution prohibits statutes of limitation running against the State. | Defendants: MTCA procedures and limits should apply to community hospitals under §41‑13‑11(5). | The Court: Statute of limitations under MTCA conflicts with Miss. Const. art. 4 §104; constitutional provision indicates the State is not constrained by MTCA time bars. |
| 4. Does §41‑13‑11(5) (making community hospitals subject to MTCA) control over MTCA’s general language? | Trustee: MTCA language shows it was not intended to be used by governmental entities as plaintiff. | Defendants/Dissent: §41‑13‑11(5) is a specific statute applying MTCA to community hospitals and should control where conflicts arise. | Majority: §41‑13‑11(5) does not change that MTCA addresses claims against governmental entities; it did not conclude §41‑13‑11(5) compels MTCA exclusivity for suits by the sovereign. Dissent: §41‑13‑11(5) controls and makes MTCA exclusive. |
Key Cases Cited
- Lefoldt v. Rentfro, 853 F.3d 750 (5th Cir. 2017) (Fifth Circuit certified questions to Mississippi Supreme Court)
- Brantley v. City of Horn Lake, 152 So.3d 1106 (Miss. 2014) (MTCA’s scope includes immunity where employees act within course and scope)
- Sandoz, Inc. v. State, 190 So.3d 829 (Miss. 2015) (statutory caps and "any civil action" language construed to apply to the State)
- Union Nat'l Life Ins. Co. v. Crosby, 870 So.2d 1175 (Miss. 2004) (breach of fiduciary duty recognized as tort)
- Duncan v. Chamblee, 757 So.2d 946 (Miss. 1999) (immunity where alleged tort occurred within course and scope absent allegations of fraud/malice/criminality)
- Lenoir v. Madison Cty., 641 So.2d 1124 (Miss. 1994) (special statute controls over general statute on same subject)
- Roberts v. Miss. Republican Party State Exec. Comm., 465 So.2d 1050 (Miss. 1985) (statutes in pari materia should be harmonized)