Construction Law Toolbox : Mississippi Construction Lawyer & Attorney : Biggs, Ingram, Solop & Carlson, PLLC : MS & Southeast Construction Law Toolbox

Arbitration has found some favor in the construction industry with parties over the last decade in part because of its finality. Unlike civil litigation, the right to appeal an arbitrator’s award is extremely limited under the Mississippi Construction Arbitration Act, Miss. Code Ann. §11-15-101, et seq. The specific grounds for vacating an arbitrator’s award are set forth in Miss. Code Ann. § 11-15-133(1).  Click here to read Miss. Code Ann. § 11-15-133(1).

The Mississippi Court of Appeals recently considered a challenge to an arbitrator’s award which was confirmed by the circuit court. (It appears from the opinion that the arbitration was governed by the Construction Industry Arbitration Rules for the American Arbitration Association.) The appellant objected to the arbitrator’s decision not to grant appellant a continuance when requested and also prohibiting appellant from introducing evidence that it had not produced during discovery. The Court found that the refusal to grant the continuance was justified by the appellant’s dilatory conduct in refusing to pay its half of the arbitration cost and its four changes in legal counsel. The Court also found the arbitrator acted within its authority when it denied appellant’s admission of evidence where it failed to produce any documents during the discovery period or prior to the arbitration.

Once again, the lesson to be learned is that while arbitration is a more informal proceeding than litigation, there are procedural rules that govern arbitration. When an arbitrator renders a decision on these procedural matters, the courts will be inclined to enforce such decision because of the extremely narrow scope of appellate review.

• Email This
• Print
• Comments
• Trackbacks

On April 12, 2012, United States Magistrate Judge S. Allan Alexander issued an order and opinion finding Mississippi’s "stop payment" statute, Miss. Code Ann. §85-7-181 (1972) unconstitutional stating:

[T]he court is compelled to hold that Mississippi’s stop notice statute violates due process by authorizing what is in practical effect the prejudgment attachment of funds without prior notice and hearing, or an acceptable post-seizure remedy.  Consequently, §85-7-181 is facially unconstitutional...

The decision has been appealed.  Because the district court’s decision is based upon an "Erie guess", the State courts in Mississippi are not bound to follow the district court’s decision.  Nonetheless, subcontractors that have previously relied upon "stop payment" rights may see this decision cited by general contractors and owners to challenge a stop payment notice.

It will be interesting to see how this decision develops on appeal. Stay tuned for more information.

• Email This
• Print
• Comments
• Trackbacks

A basic tenet of law is that when one party is injured by another party the innocent party is entitled to be "made whole." This concept in its simplest terms means that the innocent party should be awarded damages sufficient to put the innocent party back in the position it was in before the injury occurred. Often, the innocent party has insurance which will provide compensation to the innocent party until a recovery from the wrongful party can be obtained. The insurance company holds what is called a "right of subrogation" to any funds the innocent party receives from the wrongful party—a concept entitled to prevent the innocent party from double recovery (i.e., recovery from both the insurance company and the wrongful party).

In the case of Armstrong and Hill v. Miss. Farm Bureau Ins. Co., Armstrong and Hill were both injured in an automobile accident. Farm Bureau made payments to Armstrong and Hill under an insurance policy. Armstrong and Hill sued the negligent party and obtained a judgment which they collected from the negligent party. Farm Bureau took the position that it was entitled to receive the funds the negligent party had paid pursuant to Farm Bureau’s right of subrogation. Conversely, Armstrong and Hill took the position that Farm Bureau was not entitled to the money because their damages were higher than what they had been awarded by the jury in the trial and, therefore, they were not "made whole."

In a case of first impression, the Mississippi Supreme Court decided what "made whole" means in a factual setting of this kind. The Court ruled that the jury had decided what dollar amount of damages were necessary to make Armstrong and Hill "whole" when the verdict was rendered. Since it was a jury verdict, Armstrong and Hill could not contend that their damages were higher and re-litigate the issue with Farm Bureau. Thus, since Farm Bureau had already paid Armstrong and Hill, Farm Bureau was entitled to the funds paid by the negligent party.

This decision still leaves unanswered what would happen if the insurance company pays more than the jury awards. We’ll have to await that answer for another Court ruling.

• Email This
• Print
• Comments
• Trackbacks

The Mississippi  courts will enforce forum selection clauses when the intent is clear and unequivocal.  When confronted with challenges to the enforcability of a forum selection clause, the  first step in analysis is whether it is mandatory or permissive. Titan Indemnity Company v. Hood, 895 So.2d 138, 146-47 (Miss. 2005) (.pdf). The determination of what language is considered mandatory as opposed to permissive was carefully examined and discussed in Bently v. Mutual Benefits Corp., 237 F.Supp.2d 699 (S.D. Miss. 2002) (.pdf). In Bently, the district court was tasked with determining whether to enforce a forum selection clause with language strikingly similar to the language found in SCP’s terms and conditions. Its analysis followed the two-step inquiry articulated by the Fifth Circuit in Caldas & Sons, Inc. v. Willingham, 17 F.3d 123 (5^th Cir. 1994) (.pdf). As to whether the forum selection clause was mandatory or permissive, the district court reasoned that "a mandatory forum selection clause has express language limiting the action to the courts of a specific locale which is clear, unequivocal and mandatory." Bently, 237 F.Supp.2d at 702 (emphasis added). The district court when on to cite a number of decisions discussing the importance of limiting language in the forum selection clause to obviate any uncertainty with regard to the exclusivity of the chosen forum.

If the forum selection clause is considered mandatory, the second step in the legal analysis requires the court to consider (1) whether "Its incorporation into the contract was the result of fraud, undue influence or overweening bargaining power; (2) [t]he selected forum is so gravely difficult and inconvenient that the resisting party will for all practical purposes be deprived of its day in court; or (3) [t]he enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decisions." Titan Indemnity Company v. Hood, 895 So.2d 138,146-47 (Miss. 2005).

• Email This
• Print
• Comments
• Trackbacks