Biggs, Ingram & Solop attorneys were recently selected by their peers for inclusion in The Best Lawyers in America, 2019.

Christopher Solop was selected for inclusion in the fields of Construction Law, Government Contracts Law and Litigation – Construction

Lynn Patton Thompson was selected for inclusion in the field of Construction Law.

Otis Johnson, Jr. was selected for inclusion in the fields of Oil and Gas Law, Energy Law and Natural Resources Law.

Robert A. Biggs, III was selected for inclusion in the fields of Insurance Law and Personal Injury Litigation – Defendants

Stan T. Ingram was selected for inclusion in the fields of Oil and Gas Law, Energy Law and Natural Resources Law

Recognition by Best Lawyers is based entirely on peer review. Their methodology is designed to capture, as accurately as possible, the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area.

Best Lawyers employs a sophisticated, conscientious, rational, and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services. Their belief has always been that the quality of a peer review survey is directly related to the quality of the voters.

 

One of the most frequently asked questions when a party is faced with litigation is whether or not they will be able to recover attorney fees. The general rule is that attorney fees cannot be awarded unless there is a contract provision or statute permitting their award. An exception to this rule is if there is a finding of bad faith on the part of one of the parties, which is a difficult standard to meet.

The rules in an arbitration administered by the American Arbitration Association (“AAA”) changed this general rule. Under AAA Rule 48 (d)(ii) “[t]he award of the arbitrator may include an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.” (Emphasis added.) This means that if the parties file a demand for arbitration on the AAA Demand for Arbitration form and check the box for attorneys fees and the opposing party files an answer to the demand on the AAA Answering Statement form and also checks the box for attorneys fees or in its answer demands attorney fees, they can be awarded by the arbitrator. At least one state court has determined that this is because both parties have “agreed” to the award of attorney fees.

Under the Mississippi Construction Arbitration Act, Miss. Code Ann. § 11-15-119(4), “An arbitrator may award attorney’s fees and costs to a prevailing party.” This is statutory authority granting the power of the arbitrator to award attorney fees. There is no similar provision in Mississippi’s general arbitration statutes found at Miss. Code Ann. §§ 11-15-1 et seq.

The important point to take away from this information is if both parties demand attorney fees, be prepared to accept the risk of not prevailing on the merits of your case and being compelled to pay attorney fees even where the contract does not require such payment. When you negotiate a contract, know what any arbitration clause in the contract provides and consider whether you need to modify it to write out AAA Rule (d)(ii) and/or Miss. Code Ann. § 11-15-119(4) to limit the award of attorney fees.

Mississippi’s Little Miller Act, Miss. Code Ann. §§ 31-5-51, et seq., which is modeled after the federal Miller Act, 40 U.S.C. §§3131, et seq., requires that a subcontractor file suit on its payment bond claim “within one (1) year after the day on which the last labor was performed or material was supplied by the person bringing the action and not later.” Miss. Code Ann. § 31-5-53(b). This language appears to be straight forward. Nonetheless, the majority of appellate circuit courts have taken the position that “labor” or “material” furnished for minor work (e.g., punch list, remedial, or warranty-related work) does not toll the statute of limitation. Only “significant” work (relative to the nature of the subcontract work) constitutes “labor” under the Miller Act. Even where the subcontractor has a remaining contractual obligation to perform punch list items or minor corrective work, such work will not toll the 1-year statute of limitation. This means that a subcontractor should carefully monitor the date the last of its labor or material was furnished that rendered their portion of the work functional or substantially complete.

 

If you have been involved in a construction related arbitration and received an award, you should know it can only be challenged under the limited grounds set forth in the Mississippi Construction Arbitration Act, Miss. Code Ann. §§ 11-15-101, et seq. One of the grounds for challenging an arbitration award is there has been an “evident miscalculation” by the arbitrator. Miss. Code Ann. § 11-15-135(1)(a).

The Mississippi Supreme Court, in a case of first impression, was recently asked what qualifies as an “evident miscalculation” in D.W. Caldwell, Inc. v. W.G. Yates & Sons Construction Company [click here for the Supreme Court decision]. In that case, D.W. Caldwell, Inc. (“Caldwell”) had secured an arbitration award against W.G. Yates & Sons Construction Company (“Yates”). When Caldwell went to confirm the arbitration award, Yates objected claiming that there was an “evident miscalculation” in the arbitration award. The circuit court, over the objection of Caldwell, allowed Yates to offer documents from the arbitration and testimony to establish the “evident miscalculation” and reduced the arbitration award.

The Court, citing its past decisions, reminded the circuit court that its review of arbitration awards was extremely limited and restricted to the exceptions identified in Miss. Code Ann. § 11-15-135. Based upon the language of the statute, the Court concluded that “the ‘evident’ (plain, obvious, or clearly understood) miscalculation must be apparent from nothing more than the four corners of the award and the contents of the arbitration record.” Otherwise, “[l]ooking to evidence beyond ‘the face’ of the award or the arbitration record allows the parties to retry the matter in front of a trial judge.” The Court went on to provide guidance as to what might be considered by the circuit court in a proceeding to confirm an arbitration award holding “courts requested to confirm, modify and/or vacate arbitration awards are not at liberty to permit the examination of witnesses.” The Court therefore reversed the decision of the circuit court and remanded the case directing it to confirm Caldwell’s arbitration award.

The significance of this decision is that parties to arbitration should make sure that the hearing record is complete. However, even if the record is complete, thoughtful consideration should be given as to whether there are sufficient grounds to seek modifying or vacating the arbitration award before making such a request to a court.

 

The Mississippi Legislature has passed and on April 2, 2018, sent to the Governor HB 1306 for his signature. [Click here for link to House Bill 1306.] This legislation provides that "[a] provision in any contract, subcontract, or purchase order for the improvement of real property in this state or to provide materials therefor, is void and against public policy if it makes the contract, subcontract, or purchase order subject to the laws of another state, or provides that the exclusive forum for any litigation, arbitration or other dispute resolution process be located in another state." This means that Mississippi residents do not have to travel to foreign jurisdictions to have disputes resolved on projects located in Mississippi or have the laws of a foreign jurisdiction apply to a dispute arising out of or related to the improvement [construction or repair] of real property in this state.

This legislation provides Mississippi residents with a "home court" advantage that previously did not exist. HB 1306 will be effective for contracts entered into on or after July 1, 2018.

On January 10, 2018, the Department of Veterans Affairs (VA) issued its proposed regulation to implement the requirement in the National Defense Authorization Act for Fiscal Year 2017 (NDAA) that only the Small Business Administration (SBA) determine whether concerns are "unconditionally owned and controlled" by veterans or disabled veterans for purposes of veteran-owned and service-disabled veteran owned small businesses programs (VOSB and SDVOSB).

Currently, the VA and SBA maintain separate VOSB and SDVOSB set-aside programs, and their divergent regulations and findings on what constitutes the requisite "ownership and control" have caused inconsistencies and confusion for contractors. For example, in Veterans Contracting Group, Inc. v. United States, No. 17-1188C, issued by the Court of Federal Claims on December 11, 2017, the Court upheld a ruling by the SBA’s Office of Hearings and Appeals that left a concern eligible for the VA’s SDVOSB program but ineligible to participate in the SBA’s SDVOSB program. The Court references that the agencies’ respective programs "have materially diverged" and, as in this case, have produced "draconian and perverse" results.

The NDAA’s requirement that only the SBA issue the regulations and determinations for ownership and control, and the VA’s proposed rule implementing it should remedy this inconsistency and confusion. The VA’s proposed rule and be reviewed here. Comments are due not later than March 12, 2018.

Representative Bell has introduced House Bill No. 1306 [Click here to view House Bill No. 1306] that would require construction claims for projects located in Mississippi be litigated or arbitrated in Mississippi. This requirement would apply regardless of whether or not the contract had a provision that required the claims to be resolved in another jurisdiction. This is an important bill for Mississippi contractors since many foreign contractors frequently include a venue provision forcing Mississippi contractors to litigate or arbitrate their claims in the foreign contractor’s home state. Without this legislation, the cost to pursue a claim against a foreign contractor could be cost prohibitive and potentially force Mississippi contractors to settle their claim for pennies on the dollar. Mississippi Contractors should keep their eye on this litigation and encourage its passage.

On February 2, 2009, I posted a blog on forum selection clauses and their enforceability. [Link to prior blog article] On May 10, 2016, in Rigsby v. American Credit Counselors, Inc., the Mississippi Court of Appeals found a forum selection clause included in American Credit Counselors, Inc.’s Program Guidelines unenforceable. In so doing, the Court provides an excellent analysis of when forum selection clauses may be found to be unenforceable. [Link to Decision]

Ms. Rigsby was in serious financial problems and decided to engage the assistance of American Credit Counselors, Inc. ("ACCI") to assist in managing the payment of her debts. She was provided "Program Guidelines" which included a forum selection clause. The clause provided in pertinent part as follows:

…the parties agree that any arbitration brought with respect to this Agreement shall be brought exclusively in The State of Florida, County of Palm Beach, and the parties irrevocably submit to the jurisdiction of Palm Beach County, Florida.

When a dispute developed between Ms. Rigsby and ACCI she filed suit in the County Court of Harrison County, Mississippi. In its answer, ACCI claimed the protection of the forum selection clause and filed a motion to dismiss which was granted by the county court and affirmed on appeal by the circuit court. The Court of Appeals reversed the circuit court finding the forum selection clause unenforceable.

The Court, citing Titan Indem. Co. v. Hood, 895 So. 2d 138, 145 (Miss. 2004), acknowledged that "[a] clause is ‘mandatory’ if it purports to require litigation in the specified forum only and to prohibit litigation in any other forum." It therefore found the use of the word "solely" to be "sufficient to make it [the forum selection clause] mandatory."

Nonetheless, the Court continued with its analysis to determine whether, although mandatory, the clause was enforceable. In doing so, the Court considered the following guidance from the Mississippi Supreme Court:

Forum selection clauses are ‘presumptively valid and enforceable’ unless the resisting party can show:

(1) Its incorporation into the contract was the result of fraud, undue influence or overweening bargaining power;

(2) The 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) The enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decision.

The Court then considered the facts presented to the trial court and decided that there was no evidence of fraud or overreaching associated in the inclusion of the forum selection clause. However, the Court did find that Ms. Rigsby had satisfied the second consideration because of her age and financial condition she ‘will for all practical purposes be deprived of [her] day in court.’ Titan Indem., 895 So. 2d at 146.

The lesson for any contracting party is to consider the forum selection clause in any contract before placing your signature on the dotted line. Verify whether the forum selection clause is mandatory or permissive and that you can follow the requirements if the clause is enforced. Finally, do not assume you will be able to get out of a mandatory clause under the "deprivation of day in court" exception as it is a higher burden to meet and will be easier to negotiate terms you can live with before you ever sign the contract.

A question frequently asked by owners and contractors is when enough is enough and termination is justified. As a preliminary matter, immediate termination for a non-compliant contractor or subcontractor is never a good idea. Mississippi jurisprudence requires that notice (preferably in writing) should be given to the non-compliant party with an opportunity to cure the alleged defect. The decision to terminate is never easy and viewed by the court as an extreme remedy. Nonetheless, the court has also recognized that termination may be warranted where repeated attempts to cure have been ineffective.

Any notice of termination should be in writing identifying the "material breach" justifying the termination and entitlement to damages associated with completing the terminated scope of work. The owner or contractor should also secure a number of quotes/prices to complete the work. This will assist the owner or contractor from being accused of securing an unreasonable or excessive price to complete the terminated scope of work. Remember, any change in the original scope of work or "betterment" could be grounds for the terminated party to challenge all or a portion of the claimed damages.

Generally, most attorneys would say that you do not need a transcript of an arbitration hearing. However, there are exceptions–one of which was made apparent in a recent decision by the Mississippi Court of Appeals. In The City of Hattiesburg v. Precision Construction, LLC [Link to Decision] the City of Hattiesburg ("the City") attempted to challenge an arbitration award to Precision Construction, LLC ("Precision") alleging evident and material miscalculations in the award after Precision had filed a motion to confirm an arbitration award in its favor. Miss. Code Ann. § 11-15-123 provides that a party may request reconsideration of the arbitration award under limited circumstances if the request is made "within twenty (20) days of the receipt of the award". In response to Precision’s motion to confirm, the City filed a motion to amend, modify and/or correct the arbitration award under Miss. Code Ann. § 11-15-135. The trial court affirmed the award to Precision and the City appealed.

The City’s appeal of the award to Precision was unavailing in part due to the absence of a record.

…[T]here is no record of the arbitration hearing, so we cannot know whether the documents on which the City now relies were even presented at the hearing. The arbitrator’s decision indicates that no such argument was made. The concept of an "evident miscalculation" presupposes that the parties presented the arbitrator with evidence from which a "correct" calculation could have been made. If his calculations were consistent with the evidence and argument presented, then there is no miscalculation. Because there is no record of the hearing, it is impossible for us to say that the arbitrator made an "evident miscalculation." See Godeau v. Picheloup Constr. Co., 567 So.2d 697, 800 (La. Ct. App. 1990).

It may, therefore, be prudent to request a transcript of an arbitration hearing as a precautionary measure in the event a challenge to the arbitrator’s award is necessary.