Opinion
No. 1:98cv51-D-D
March 2, 2000
OPINION
Presently before the court is the Plaintiff's Motion for Summary Judgment and the Defendant's Motion for Summary Judgment, or in the Alternative, for Partial Summary Judgment and to Decertify the Class. After considering the motions, the court finds that the Plaintiff's motion should be denied and the Defendant's motion should be granted in part and denied in part. Specifically, the Defendant's motion will be granted regarding the voluntary payment doctrine and unjust enrichment. The Defendant's motion will be denied as to the Plaintiff's claim of breach of the duty of good faith and fair dealing; further, the class will not be decertified.
Factual and Procedural Background
In 1997, Galaxy became Mr. Hill's cable service provider. Galaxy sent Mr. Hill a monthly billing statement which designated the 10th of the month as the due date for payment for services. Additionally, the billing statement stated that a five dollar late payment would be assessed on Mr. Hill's bill if payment was not received by the 10th of the month. Mr. Hill asserts that the five dollar late fee did not reasonably reflect Galaxy's cost in processing late payments, but rather was arbitrary and simply served as a penalty. Additionally, Mr. Hill claims that Galaxy was unjustly enriched by these payments and that Galaxy breached its duty of good faith and fair dealing.
The court certified this cause as a class action on January 12, 1999. See Hill v. Galaxy Telecom, L.P., 184 F.R.D. 82 (N.D.Miss. 1999). Both parties have now moved for summary judgment and the Defendant has requested the court decertify the class.
Summary Judgment Standard
A 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 judgment as a matter of law." Fed.R.Civ.P. 56(c). On a motion for summary judgment, the movant has the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Under Rule 56(e) of the Federal Rules of Civil Procedure, the burden then shifts to the non-movant to "go beyond the pleadings and by . . . affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp., 477 U.S. at 324. That burden is not discharged by "mere allegations or denials." Fed.R.Civ.P. 56(e). While all legitimate factual inferences must be viewed in the light most favorable to the non-movant, Rule 56(c) mandates the entry of summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Celotex Corp., 477 U.S. at 322. Before finding that no genuine issue for trial exists, the court must first be satisfied that no reasonable trier of fact could find for the non-movant. Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).
Discussion
A. Liquidated Damages, Penalties and the Voluntary Payment Doctrine
The Defendant asserts that the voluntary payment doctrine entitles it to judgment as a matter of law regarding the Plaintiff's claim that the late fee served as an unlawful penalty instead of a valid liquidated damages provision. The court agrees.
The voluntary payment doctrine holds that a voluntary payment cannot be recovered so long as the payment was made "without compulsion, fraud [or] mistake of fact" and it is a payment which "the payor does not owe, and which is not enforceable against him." McDaniel Bros. Constr. Co. v. Burk-Hallman Co., 175 So.2d 603, 605 (Miss. 1965). Assuming, arguendo, that the late fees at issue are not enforceable against the Plaintiff due to the fees being penalties and not valid liquidated damages provisions, there are only three circumstances under which the Plaintiff may recover the late fees he has paid to the Defendant: compulsion (duress), fraud and mistake of fact.
This rule is followed in every state where the Defendant provides cable television service. See e.g., Greenfield v. Manor Care, Inc., 705 So.2d 926, 929 (Fla.Dist.Ct.App. 1997); Smith v. Prime Cable of Chicago, 658 N.E.2d 1325, 1329-30 (Ill.App.Ct. 1995).
The crux of the Plaintiff's case is that the late fees constitute unlawful penalties rather than valid liquidated damages.
The Plaintiff argues that the voluntary payment doctrine does not apply because the late payments were made under a mistake of fact. While the Plaintiff admits to voluntarily paying the late fees, he claims that because he did not realize that the late fee was a profit making device — as opposed to being a reasonable estimate of the Defendant's costs in servicing late paying customers — he was operating under a mistake of fact sufficient to overcome the voluntary payment doctrine. In making this argument, the Plaintiff is in essence asserting that he lacked sufficient information to allow him to determine how much he actually owed (i.e., the amount of the five dollar late fee that was not profit).
The Plaintiff's argument fails because, as a matter of law, when a payor is aware he lacks sufficient information to allow him to determine how much he owes, he is merely ignorant of the facts, but has not made a mistake of fact sufficient for the mistake exception to the voluntary payment doctrine to apply. Mobile Telecomm. Techs. Corp. v. Aetna Cas. and Sur. Co., 962 F. Supp. 952, 955 (S.D.Miss. 1997). Moreover, "uncertainty about the facts, irrespective of the reason for such uncertainty, is not the equivalent of a mistake of fact." Id. at 956. Insufficient knowledge of how to determine what one owes, when he is aware he lacks the knowledge, is mere ignorance of the facts, not a mistake of fact. Horne v. Time Warner Communications, Inc., No. 3:99CV606BN, slip op. at 11 (S.D.Miss. Nov. 10, 1999). Further, lacking sufficient knowledge to determine the validity of the late payment fee or how the amount of the fee was determined is insufficient to overcome the voluntary payment doctrine. Id.
In sum, even assuming that the late fees were not enforceable and that the Plaintiff did not legally owe the fees, the Plaintiff voluntarily paid the fees free of compulsion, fraud or mistake of fact. As such, the Plaintiff's claim that the late fees constituted an illegal penalty succumbs to the voluntary payment doctrine and, as a matter of law, the late fees cannot be recovered. Therefore, no genuine issue of material fact exists as to this issue and the Defendant is entitled to judgment as a matter of law. Accordingly, the court shall grant the Defendant's motion for summary judgment as to this issue.
B. Unjust Enrichment
Unjust enrichment is a quasi-contractual theory that applies only to situations where no express contract exists and where the person sought to be charged is in possession of money or property which in good conscience he should not retain. Hans v. Hans, 482 So.2d 1117, 1122 (Miss. 1986). Therefore, for the Plaintiff to succeed under this theory, he must show both that there is no express contract between the parties and that the Defendant is in possession of property that it should not retain. Even in viewing the facts most favorably to the Plaintiff, and assuming that the Defendant possesses property that it should not retain, it is undisputed that an express contract exists between the parties. For this reason, the Plaintiff's claim of unjust enrichment must fail.
This is the general rule throughout the country, including all of the states in which the Defendant provides cable television service. See e.g., American Family Care, Inc. v. Fox, 642 So.2d 486, 488 (Ala.Civ.App. 1994); DCB Constr. Co., Inc. v. Central City Dev. Co., 965 P.2d 115, 119 (Colo. 1998).
The Plaintiff argues that because he is claiming that the contract between the parties contains an invalid penalty provision, there is no valid contract between the parties as to this provision, and he can pursue his claim for unjust enrichment. He cites no credible authority for this assertion, however, and the authority he cites in support of this proposition actually supports the principle that unjust enrichment is a remedy that is only available when no express contract exists between the parties.
In sum, the existence of an express contract is not in dispute here; as such, the Plaintiff's claim of unjust enrichment fails as a matter of law. No genuine issue of material fact exists as to this claim and the Defendant is entitled to judgment as a matter of law. Accordingly, the court shall grant the Defendant's motion for summary judgment as to this issue.
C. Conclusion
As to the remainder of the Defendant's motion for summary judgment, as well as the Plaintiff's entire motion for summary judgment, both parties have failed to show that they are entitled to judgment as a matter of law. In any event, the court has the discretion, which it exercises here, to allow the plaintiff's remaining claim, namely breach of the duty of good faith and fair dealing, to proceed to trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ("Neither do we suggest . . . that the trial court may not deny summary judgment in a case where there is reason to believe that the better course would be to proceed to a full trial.").
As for the Defendant's request that this class be decertified, the court finds that there is no basis for decertifying the class. Even in light of the fact that the court has partially granted the Defendant's motion for summary judgment, the court finds that, pursuant to Rule 23 of the Federal Rules of Civil Procedure, the prerequisite elements for the maintenance of a class action remain intact as to the remaining claim in this case.
A separate order in accordance with this opinion shall issue this day.
ORDER
Pursuant to an opinion issued this day, it is hereby ORDERED thatthe Defendant's Motion for Summary Judgment, or in the Alternative, for Partial Summary Judgment and to Decertify the Class is GRANTED IN PART and DENIED IN PART;
the Defendant's motion is GRANTED as to (a) the Plaintiff's claim that the late fees constituted an unlawful penalty, and (b) the Plaintiff's claim that the Defendant was unjustly enriched by the late fee payments; as such, these claims are DISMISSED;
the Defendant's motion is DENIED as to the Plaintiff's claim that the Defendant breached its duty of good faith and fair dealing;
the Defendant's motion to decertify the class is DENIED; and
the Plaintiff's motion for summary judgment is DENIED.