H. Lefoldt, Jr. v. Donald Rentfro
2017 U.S. App. LEXIS 5991
| 5th Cir. | 2017Background
- Natchez Regional Medical Center (NRMC), a county-owned community hospital, filed Chapter 9 bankruptcy in 2014; a trustee (Lefoldt) was appointed to liquidate and pursue NRMC's claims.
- Trustee sued former NRMC directors and officers alleging breaches of fiduciary duty, gross negligence, and mismanagement (failure to bill, respond to audits, oversee credentialing), claiming millions in lost revenue.
- Parties agree NRMC is a "governmental entity" under the Mississippi Tort Claims Act (MTCA), the defendants are MTCA "employees," and the acts occurred within the course and scope of employment.
- Officers moved to dismiss asserting MTCA immunity bars personal liability; the district court granted dismissal, finding the MTCA precludes the Trustee's suit.
- The Fifth Circuit could not find controlling Mississippi precedent on whether the MTCA bars a governmental entity (through its trustee) from suing its own employees, and certified two questions to the Mississippi Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Is the MTCA the exclusive remedy for a bankruptcy trustee suing a public hospital's employees/directors? | Trustee: MTCA's purpose (relief to injured citizens, conserve funds) does not bar a public entity from suing its own employees; applying MTCA here produces absurd results and nullifies exhaustion/notice protections. | Officers: MTCA unambiguously bars such suits; employees immune for acts within course and scope of employment. | Fifth Circuit certified the question to the Mississippi Supreme Court (no definitive holding by Fifth Circuit). |
| 2) If MTCA is exclusive, may the trustee still pursue claims (e.g., breach of fiduciary duty, gross negligence) against officers personally? | Trustee: Claims (fiduciary breaches, gross negligence) are torts or otherwise outside MTCA's protection and should be actionable. | Officers: Allegations, at most, show negligence/mismanagement; MTCA bars personal liability for acts within scope of employment; exceptions (fraud, malice, criminal) do not apply. | Fifth Circuit certified the question to the Mississippi Supreme Court (no definitive holding by Fifth Circuit). |
Key Cases Cited
- Reaves ex rel. Rouse v. Randall, 729 So.2d 1237 (Miss. 1998) (MTCA construed as providing relief to injured citizens).
- Vortice v. Fordice, 711 So.2d 894 (Miss. 1998) (MTCA interpreted with an eye toward conserving public funds).
- Pruett v. City of Rosedale, 421 So.2d 1046 (Miss. 1982) (abolished judicial sovereign immunity; left waiver scope to legislature).
- Jackson v. Daley, 739 So.2d 1031 (Miss. 1999) (discussing MTCA as comprehensive statutory waiver limiting liability).
- Union Nat'l Life Ins. Co. v. Crosby, 870 So.2d 1175 (Miss. 2004) (described breach of fiduciary duty as a tort subject to MTCA analysis).