American Investors Life Insurance v. TCB Transportation, Inc.

David Newbern, Justice. The issue in this appeal is whether a Chancellor who has determined the Chancery Court lacks jurisdiction of a suit begun there may enjoin the parties to retain the status quo until the merits of the case are decided in a Circuit Court. We hold a Chancellor has the authority to do so if it appears that the remedy at law might otherwise be inadequate. American Investors Life Insurance Company (American Investors), the appellant, provided health insurance to employees of appellee TCB Transportation, Inc. (TCB). Premiums were paid by individual employees through withholdings from wages. A dispute arose over late payment of the past-due medical bills of ■ Steve Turner who was an insured under the policy as the spouse of one of the TCB owners. Turner had contracted Hodgkins disease. A notice of cancellation of the policy was sent by Fewell & Associates, administrator for American Investors, to the Turners. TCB and its eight employees sought an injunction in Jackson County Chancery Court requiring that insurance coverage be continued until a determination could be made whether cancellation was proper. The petition alleged irreparable harm would result if coverage was terminated because the cost of replacing Steve Turner’s health insurance, assuming replacement coverage could be obtained, would increase by over 200%. A consent order was entered in which Fewell & Associates agreed to withdraw its notice of cancellation and continue coverage until the action could be determined on the merits. TCB’s petition for an injunction was held in abeyance. American Investors moved for summary judgment, arguing TCB and its employees were no longer qualified to be insured under the terms of the group policy and, therefore, cancellation was proper. The motion also requested that the petition for injunctive relief be dismissed or transferred to Circuit Court as there was an adequate remedy at law for breach of contract. In response, TCB argued there were material questions of fact presented as to whether cancellation was proper. TCB recognized, however, that the case involved breach of contract issues and that the Chancellor should not decide them on the merits. TCB thus had no objection to transferring the claims to Circuit Court provided the prior consent order remained in effect pending the outcome of the litigation. The Chancellor denied the summary judgment motion and transferred the case to the Circuit Court, stating he lacked subject matter jurisdiction. The consent order was left in effect, and American Investors was ordered to maintain coverage for TCB and its employees pending a final determination in the Circuit Court. A common function of a temporary restraining order or a preliminary injunction is to maintain the status quo until the merits of a controversy are decided. See Citizens’ Pipeline v. Twin City Pipeline, 183 Ark. 1006, 39 S.W.2d 1017 (1931). In some instances we have observed that a Chancery Court entered a temporary order to preserve the status quo although the merits of an underlying controversy were to be decided in a Circuit Court. Mills v. Patton, 233 Ark. 755, 346 S.W.2d 689 (1961); Coffelt v. Nicholson, 224 Ark. 176, 272 S.W.2d 309 (1954); Special School Dist. No. 58 v. Deason, 181 Ark. 208, 255 S.W.2d 23 (1930). A party must show lack of an adequate remedy at law to obtain relief in equity, Compute-A-Call v. Tolleson, 285 Ark. 355, 687 S.W.2d 129 (1985); however, in Honor v. Yamuchi, 307 Ark. 324, 820 S.W.2d 267 (1991), we stated, “Regardless of whether the appellant is entitled to bring an action of law, the mere existence of that right does not deprive the equity court of jurisdiction unless the legal remedy is clear, adequate and complete [emphasis in original].” We hear chancery cases de novo, and we may affirm if we find the result reached by the chancellor was correct for any reason. May v. Bob Hankins Distributing Co., 301 Ark. 494, 785 S.W.2d 23 (1990). We lack assurance that the remedy for breach of contract is complete in this situation. If Turner or some other insured were denied health care as a result of inability to pay it might not matter at all whether there was a remedy in contract, for it could prove to be wholly inadequate. It was not improper for the Chancellor to transfer the case to the Circuit Court. Nor do we find error in his order requiring temporary maintenance of the insurance coverage in view of our conclusion that the remedy at law would otherwise have been incomplete. Affirmed. Glaze, Corbin, and Brown, JJ., dissent.