UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
____________
No. 00-60150
____________
COOPER INDUSTRIES, INC,
Plaintiff - Appellee - Cross - Appellant,
versus
TARMAC ROOFING SYSTEMS, INC; ET AL,
Defendants.
TARMAC ROOFING SYSTEMS, INC,
Defendant - Counter Defendant - Cross
Defendant - Cross Claimant -
Appellant - Cross - Appellee,
versus
INTERNATIONAL FIDELITY INSURANCE COMPANY,
Defendant - Counter Claimant - Cross
Claimant - Cross Defendant -
Appellee - Appellant,
MOISTURE PROTECTION ASSOCIATES, INC,
Cross Defendant - Appellee.
Appeals from the United States District Court
For the Southern District of Mississippi
January 7, 2002
Before EMILIO M. GARZA and PARKER, Circuit Judges, and HINOJOSA*, District Judge.
EMILIO M. GARZA, Circuit Judge:
Cooper Industries, Inc. (“Cooper”) sued Tarmac Roofing Systems, Inc. (“Tarmac”) and
International Fidelity Insurance Co. (“IFIC”) for damages arising from the installation of a roof on
Cooper’s Vicksburg, Mississippi manufacturing plant. A jury found Tarmac liable to Cooper for
negligence, breach of contract and warranty, and IFIC liable to Cooper for negligence and breach of
contract. Tarmac and IFIC each contest their liability and the amount of damages awarded. We
REVERSE the district court’s decision on Tarmac’s Rule 50 motion, but AFFIRM the district court’s
decisions as to IFIC.
I
Cooper hired Moisture Protection Associates, Inc. (“MPA”), a roofing consulting firm, to
advise it regarding the roof’s installation, and to monitor the installation process. MPA, inter alia,
assisted Cooper in soliciting bids for the roofing contract and devising the following conditions for
prospective contractors: (1) prove that they were trained by one of the membrane manufacturers to
install the membrane; (2) agree to install the membrane in accordance with the manufacturer’s
specifications, and obtain the manufacturer’s approval; (3) promise to procure a twelve-year labor
*
District Judge of the Southern District of Texas, sitting by designation.
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and materials warranty from the membrane manufacturer; and (4) obtain performance and payment
bonds. Castro, the contractor chosen by Cooper, identified Tarmac as the manufacturer of the
membrane Castro planned to use. Castro provided proof that Tarmac certified Castro as trained to
install the Tarmac product, and Tarmac agreed that the project was satisfactory to proceed. Castro
also obtained performance and payment bonds from IFIC.2
Shortly after the project began, Castro’s owners died. While Castro continued to perform
under the contract, IFIC hired a consultant to monitor the payment of Castro’s bills. What occurred
next is subject to dispute. IFIC asserts that it was informed that Castro had not made timely payment
to some suppliers, and subsequently learned that Castro could not meet its payroll obligations.
Thereaft er, IFIC entered into an assignment agreement with Castro in which it received Cooper’s
payments to Castro in return for providing financial assistance to Castro. As a consequence of the
financial assistance provided by IFIC, Castro was able to complete the project through its
subcontractor, Weatherguard. Cooper, however, contends that aft er demands for payment were
made, Castro defaulted and IFIC took over the contract, entering into a subcontract with
Weatherguard to complete the project.
Under either theory, problems arose regarding the quality of Weatherguard’s work. At one
point, Cooper requested that IFIC remove Weatherguard from the project, but IFIC refused. IFIC’s
consultant, however, responded to Cooper’s complaints by informing Cooper that IFIC remained
committed to completing the project, that it would monitor Weatherguard’s daily progress, and
would procure another contractor to assist Weatherguard. IFIC then hired Canton Sheet Metal &
2
Other membrane manufacturers also certified Castro as a trained installer of their
product, and the bid documents did not require the use of a certain manufacturer’s product.
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Roofing to complete the drainage system on the roof, and to perform any warranty work under the
contractor’s two-year “Roofing Guarantee,” which was executed in IFIC’s name as Castro’s surety.
Upon completion of the project, IFIC obtained the Tarmac twelve-year workmanship and
material warranty for Cooper. The warranty covered defects in the roof as long as the roof was
installed in accordance with Tarmac’s specifications. The Weatherguard representative signed the
warranty application “[f]or Castro Roofing / International Fidelity Insurance Company” and listed
“Castro Roofing C/O dba Castro RFG International Fidelity Insurance Company” as the contractor.
On the warranty, “Castro Rfg Co. c/o Int’l Fidelity Ins. Co.” was identified as the contractor. Tarmac
asserts that it issued the warranty based on Weatherguard’s representations, as it did not inspect the
roof.
Less than a year after the roof was completed, it began to blister. For the first two years that
the roof required repair, IFIC fulfilled its obligations under the contractor’s warranty by paying to
have the roof repaired. After the contractor’s warranty expired, Cooper continued to make repairs.
Thereafter, Cooper informed Tarmac that the Tarmac warranty covered the roofing repairs. After
re-inspecting the roof, Tarmac denied liability, concluding that the contractor’s failure to follow
Tarmac’s installation procedures necessitated the repair work. Next, Cooper informed IFIC that it
would seek “liability damages against [IFIC], as surety for Castro.”
Cooper repaired and replaced parts of the roof, and sued IFIC and Tarmac for the repair and
replacement costs. The district court denied Tarmac’s and IFIC’s motions for summary judgment and
judgment as a matter of law. The jury found IFIC liable for breach of contract and negligence, and
Tarmac liable for breach of contract, negligence, and breach of warranty. The jury denied IFIC and
Tarmac’s cross claims for indemnification, and awarded damages of $1,640,000 for the repair and
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replacement costs less betterments. The district court entered judgment against IFIC and Tarmac for
$1,130,402. The court arrived at this amount by deducting the value of Cooper’s use of the defective
roof from the amount awarded by the jury.
II
We review a district court’s Rule 50 determination de novo, “applying the same legal standard
as the trial court.” Flowers v. So. Reg’l Physician Servs. Inc., 247 F.3d 229, 235 (5th Cir. 2001).
Judgment as a matter of law is proper if “a party has been fully heard on an issue and t here is no
legally sufficient evidentiary basis for a reasonable jury to find for the party on that issue.” Fed. R.
Civ. P. 50(a); see Reeves v. Sanderson Plumbing Prods. Co., 530 U.S. 133, 149, 120 S.Ct. 2097,
2109, 147 L.Ed.2d 105 (2000). As the conduct giving rise to this action occurred in Mississippi, and
our jurisdiction is predicated on the parties’ diverse citizenship, we apply Mississippi substantive law.
See McKee v. Brimmer, 39 F.3d 94, 96 (5th Cir. 1994).
A
Cooper charges Tarmac with negligence and breach of contract under a theory that Castro
and Weatherguard were Tarmac’s agents, making Tarmac liable for their acts and omissions. Tarmac
contends that Cooper failed to produce any evidence that Castro and Weatherguard were Tarmac’s
agents, or should be treated as such. In Mississippi, “[t]he burden of proving an agency relationship
is on the party asserting it.” Booker v. Pettey, 770 So.2d 39, 45 (Miss. 2000). Cooper argues that
the controlling law in Mississippi on the issue of whether Tarmac should be held responsible for
Castro and Weatherguard’s conduct is found in Fedders Corp. v. Boatright, 493 So.2d 301 (Miss.
1986). In Fedders, the Mississippi Supreme Court held a manufacturer of a heat pump liable for
breach of an implied warranty of merchantability. The consumer in that case purchased the pump from
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the manufacturer’s authorized dealer, and the dealer installed the pump. According to the court,
“Fedders manufactured and placed on the market a machine which required personnel of special skill
and knowledge to install. Fedders[,] contracted with. . .[,and represented that] OH & CC [w]as its
authorized dealer, . . . to sell and install its machines in residences[,] [and] OH & CC carried the
Fedders sign.” Id. at 307. The court noted that the “heat pump was not sold directly by Fedders to
a consumer, with the consumer having the responsibility for its proper installation, but through an
authorized dealer which made the installation.” Id. at 308.
At first blush, Fedders appears to control this case, as the facts underlying that opinion are
somewhat similar to the facts in this case. A close read of Fedders, however, indicates that the two
cases are factually distinguishable. First, the consumer in Fedders purchased a specific product, i.e.,
a heat pump. To acquire this product, the consumer went to a dealer authorized by Fedders to carry
its product, and bear its insignia. In the present case, the purchaser, Cooper, sought a new roof for
its plant, and, therefore, shopped for a roofing contractor to perform roofing services—it did not shop
for a product. Second, unlike the authorized dealer in Fedders, there was no evidence presented that
Castro was a “dealer” in Tarmac’s products, as Castro’s business was selling a service not a product,
and Castro was certified by a number of different manufacturers. Third, in Fedders, the court noted
that the heat pump was sold by the manufacturer’s dealer to a consumer to be used in a residence.
Here, the Tarmac membrane was sold through a dealer to the plaintiff’s contractor to be used in a
commercial setting, and the plaintiff hired a roofing consulting firm to monitor the installation. Thus,
the concerns that animated the court’s holding in Fedders— that a manufacturer not avoid liability
when its aut horized dealer sells a piece of machinery, which requires special skill to install, to a
consumer—do not arise in the case sub judice.
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As Fedders does not control the outcome of this case, the district court’s ruling denying
Tarmac’s Rule 50 motion is only proper if Cooper proved that under Mississippi’s general agency law
there was a legally sufficient evidentiary basis regarding the existence of an agency relationship
between Tarmac and Castro/Weatherguard. We have previously noted that under Mississippi law,
“[a]n agency relationship may be express or de facto. A de facto agency may be proven by the
presence of three elements at the time of contracting: (1) ‘[m]anifestation by the alleged principal,
either by words or conduct, that the alleged agent is employed as such by the principal,’ (2) ‘[t]he
agent’s acceptance of the arrangement,’ and (3) ‘[t]he parties understood that the principal will
control the undertaking.’” Stripling v. Jordan Prod. Co., 234 F.3d 863, 870 (5th Cir. 2000)
(quoting Forest Oil Corp. v. Tenneco, Inc., 626 F.Supp. 917, 921 (S.D. Miss. 1986)).
Cooper presented the following evidence regarding Castro/Weatherguard’s alleged agency
status: (1) Tarmac certified installers; (2) Tarmac sent a letter to Cooper stating that a number of its
certified installers were bidding on the project and that a warranty would issue on the condition that
the membrane was installed according to Tarmac’s specifications; (3) Tarmac sent a letter to MPA
confirming Tarmac’s review of the site, stating that the project was satisfactory to proceed, and that
Tarmac was sure MPA was “headed for a successful project”; (4) Tarmac visited the site a few times;
and (5) Tarmac circulated a brochure within the roofing industry indicating that professionals installed
the Tarmac product.
This evidence failed to establish a legally sufficient evidentiary basis as to whether Tarmac
manifested that Castro/Weatherguard were its agents, or that Castro/Weatherguard agreed to serve
as Tarmac’s agents. The evidence showed that installers could be certified by numerous
manufacturers, that Castro was certified by a variety of manufacturers, and that Tarmac certified its
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installers because it issued a warranty for its product. The Tarmac brochure also does not suggest
that Castro/Weatherguard were Tarmac’s agents, as the brochure did not mention
Castro/Weatherguard or state that Tarmac’s certified installers were its agents. Further, there was
no evidence presented that the individuals at Cooper who decided to hire Castro knew or relied on
the brochure.
The evidence also failed to establish the exercise of control by Tarmac over
Castro/Weatherguard. Although Tarmac sent letters to Cooper and MPA regarding its installers, the
information contained in these letters was either related to the Tarmac warranty, or required by
Cooper in its bid documents.3 Moreover, there was no evidence that Tarmac received any revenue
on the Cooper project apart from the revenue it received from the sale of the membrane, or that
Tarmac could select the projects for its certified installers to perfo rm. Finally, while a Tarmac
employee visited the site a few times, the visits were for customer relations reasons. Cooper did not
present evidence that during these visits Tarmac exercised any control over the installers. Therefore,
there did not exist a legally sufficient evident iary basis to submit the agency issue to the jury, and
Tarmac’s Rule 50 motion should have been granted.
B
Cooper also charged Tarmac with breach of express warranty. Tarmac moved for judgment
as a matter of law pursuant to Rule 50(a), (b). Tarmac contended that it did not breach its warranty
3
Although Tarmac only notes that the first letter contained information required by
Cooper in its bid documents, our review of the bid documents suggests that the second letter also
contained information that was required by Cooper in its bid documents, i.e., requiring the
manufacturer to approve aspects of the installation process. Even if this were not the case, this letter
would not have constituted a legally sufficient evidentiary basis to submit the case to the jury, as it
does not suggest the purpose of Tarmac’s review.
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because Cooper’s witnesses testified that the membrane was installed improperly, and Section 2 of
Tarmac’s warranty provides: “[t]he original installation of the roofing membrane must be installed
in accordance with Tarmac’s published specifications in order for this warranty to be effective.” The
district court denied Tarmac’s motions, reasoning that Sect ion 2 of the warranty was void as an
unenforceable attempt to limit liability based on Miss. Code Ann. § 75-2-315.1(2), and Fedders.
As previously noted, Fedders does not control our decision in this case. Likewise, we find
that § 75-2-315.1(2) does not dictate the result here. Section 75-2-315.1(2) provides: “[a]ny oral
or written language used by a manufacturer of consumer goods, which attempts to limit or modify
a consumer’s remedies for breach of the manufacturer’s express warranties, is unenforceable.”
(emphasis added). By its own terms, § 75-2-315.1(2) does not preclude our giving effect to Section
2 of the warranty because Cooper is a merchant, not a consumer. Cooper is considered a merchant
because it hired a roofing consulting firm to monitor the roof installation. Under Miss. Code Ann.
§ 75-2-104, the expertise of the roofing firm is imputed to Cooper. See Miss. Code Ann. § 75-2-104
(“‘Merchant’ means a person who deals in goods of the kind or otherwise by his occupation holds
himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction
or to whom such knowledge or skill may be attributed by his employment of an agent or broker or
other intermediary who by his occupation holds himself out as having such knowledge or skill.”)
(emphasis added). Further, the goods in question are not consumer goods, i.e., goods “used or
bought for use primarily for personal, family, or household purposes.” Miss. Code Ann. § 75-9-109;
see Miss. Code Ann. § 75-2-103(3) applying Miss. Code Ann. § 75-9-109 to Chapter 2 of the
Uniform Commercial Code. Consequently, § 75-2-315.1(2) does not prevent the limitation in the
warranty from applying.
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Cooper makes two arguments as to why the limitation in the warranty should not be read as
an obstacle to its claim against Tarmac. First, Cooper claims that the contractor did not violate
Tarmac’s installation specifications. Cooper avers that the contractor was not required to follow
Tarmac’s specific procedures for installing the membrane, but rather, was only required to follow
Tarmac’s general outline for membrane installation.4 Cooper argues that to hold otherwise would
render the warranty provision covering claims arising from faulty workmanship useless.
Cooper’s argument fails, as the testimony presented by Cooper’s experts unequivocally
established that Tarmac’s installation procedures were violated. Therefore, pursuant to the terms of
the warranty, the warranty was ineffective due to faulty workmanship. The workmanship provision
of the warranty is not rendered meaningless because it covers only a narrow class of problems, i.e.,
workmanship defects that occur despite the fact that the contract or installed the material in
accordance with the installation procedures set forth by Tarmac.
Second, Cooper asserts that a Tarmac representative stated that the warranty would issue if
the installation was accomplished according to Tarmac’s specifications. Accordingly, Cooper
contends that regardless of whether the provisions of the warranty were met, when Tarmac issued
the warranty, it became effective. We disagree. The fact that Tarmac issued a warranty does not
undercut the provisions of the warranty detailing whether the warranty is operative. The warranty
provides that its validity is contingent upon proper installation, and the warrantor is not bound by any
statements not contained in the warranty. Thus, t here did not exist a legally sufficient evidentiary
4
Cooper also argues that because the materials used were defective, Tarmac is liable.
This argument fails, as Section 2(c) of the roofing warranty precludes all coverage if the roof was
improperly installed.
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basis regarding Cooper’s warranty claim, and Tarmac’s Rule 50 motion should have been granted.5
III
A
In the proceedings before the district court, IFIC requested summary judgment on the ground
that Cooper’s claims elapsed because its claims were not filed within the time specified by the
performance bond or Miss. Code Ann. § 85-7-189. The district court denied IFIC’s motion. We
review the district court’s summary judgment decision de novo, acknowledging that summary
judgment is warranted only when there is no genuine issue as to any material fact, and the moving
party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Daniels v. City of Arlington,
246 F.3d 500, 502 (5th Cir. 2001). As all relevant conduct occurred in Mississippi, the law of
Mississippi governs issues of substantive law. See McKee, 39 F.3d at 96.
IFIC argues that the district court erred in denying its motion for summary judgment when
it held that, “IFIC may properly be sued under the Performance Bond and the Roofing Contract for
those duties which were originally incumbent upon Castro as contractor.” The district court arrived
at this conclusion by determining that IFIC took over the contract upon Castro’s default.6 IFIC,
however, asserts that it did not assume the contract, but rather, merely fulfilled its contractual bond
obligation to remedy Castro’s default by meeting Castro’s financial obligations. By doing so, IFIC
5
Due to our decision that Tarmac’s Rule 50 motion should have been granted, we need
not address Cooper’s cross-claim for damages, nor Tarmac’s request for indemnification.
6
Since IFIC complains belatedly in its reply brief that Cooper did not declare Castro
in default, this argument is waived. See Yohey v. Collins, 985 F.2d 222, 224-25 (5th Cir. 1993).
Cooper’s motion to strike is granted.
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allowed Castro to complete the contract through its subcontractor, Weatherguard. Accordingly, IFIC
contends that Cooper’s claim is governed by the one-year statue of limitations prescribed for sureties
in Miss. Code Ann. § 85-7-189, as opposed to the six-year statute of limitations for contractors found
in Miss. Code Ann. § 15-1-41.
IFIC’s argument turns in part on its interpretation of the performance bond. The performance
bond provides:
Whenever Contractor shall be, and declared by Owner to be in default
under the Contract, the Owner having performed Owner’s obligations
thereunder, the Surety may promptly remedy the default, or shall
promptly
1) Complete the Contract in accordance with its terms and conditions,
or
2) Obtain a bid or bids for completing the contract in accordance with
its terms and conditions, and upon determination by Surety of the
lowest possible bidder . . . arrange for a contract between such bidder
and Owner, and make available as work progresses . . . sufficient
funds to pay the cost of completion less the balance of the contract
price.
Any suit under this bond must be instituted before the expiration of
two (2) years from the date on which the final payment under the
contract falls due. No right of action shall accrue on this bond to or
for the use of any person or corporation other than the Owner named
herein. . ..
IFIC reads the performance bond as affording IFIC three options upon Castro’s default: (1) IFIC may
remedy the default; or IFIC shall (2) take over and complete the contract; or (3) obtain a new
contract for Cooper. IFIC does not contend that it obtained a new contract for Cooper, but asserts
that it remedied Castro’s default. For this to be correct, the default must have been one that, once
remedied, allowed Castro to continue to perform under the contract. Any other interpretation of the
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first option would render superfluous IFIC’s other two options, i.e., completing the contract or
obtaining a new contract for Cooper. See L&A Contracting Co. v. So. Concrete Servs. Inc., 17 F.3d
106, 109 (5th Cir. 1994) (“A bond is a contract, and, therefore, a bond is subject to the general law
of contracts.”); Glantz Contracting Co. v. Gen’l Elect. Co., 379 So. 2d 912, 917 (Miss. 1980)
(“Courts must construe contracts so they give effect to all provisions.”). Therefore, if Castro was
unable to complete the contract, even with IFIC’s financial assistance, then IFIC was required to
complete the contract or obtain a new contract for Cooper.
In its motion for summary judgment, IFIC states that “Castro . . . began [installation], but it
was unable to complete the work. Therefore, in accordance with the terms of the performance bond,
International engaged Weatherguard, Inc., a roofing contractor, to complete the work using the
Tarmac roofing system.” Likewise, in Cooper’s response to summary judgment, Cooper maintains
that Castro was unable to complete the contract, and IFIC took over the contract. Although in its
supplemental affidavits IFIC includes an affidavit of David Pletcher, IFIC’s consultant, who contends
that IFIC merely financed Cast ro’s work on the project, it also included as an exhibit a report by
Cooper’s expert that states that Castro was unable to finish the project, and, therefore, IFIC retained
Weatherguard to perform the work. From IFIC’s admissions and the evidence, the district court did
not err in denying IFIC’s motion for summary judgment on the ground that IFIC did not take over
the contract.
IFIC also contests the time period within which Cooper could bring its claims against IFIC,
if IFIC took over the contract. We have not found, and the parties have not cited, any Mississippi
cases that identify what time period governs a situation in which a surety takes over a construction
contract, and the owner sues the surety/contractor for damages arising from construction
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deficiencies.7 We are therefore required to make an Erie guess as to how the Mississippi Supreme
Court would decide this question. We concur with the district court’s well-reasoned decision t
o
apply the period set out in Miss. Code Ann. § 15-1-41,8 which relates to claims arising from
deficiencies in construction. If IFIC took over the contract, rather than invoking its contractual right
to re-bid the contract, then IFIC subjected itself to liabilities associated with serving as contractor,
such as claims arising from construction deficiencies. See Hanberry Corp. v. State Bldg. Comm’n,
390 So. 2d 277, 281 (Miss. 1980) (stating that surety that “assumed completion of [principal’s]
contract . . . stepped into the shoes” of its principal). In Mississippi, claims arising from construction
deficiencies may be brought for six years from the time the owner accepts the property.
Consequently, if IFIC took over the contract, then Cooper’s claim is not time barred because Cooper
filed its claim within § 15-1-41’s six-year window.
IFIC asserts that Cooper’s claim is not governed by § 15-1-41’s six-year limitations period,
7
In their brief, IFIC cites Mississippi cases stating that a surety may stand on the terms of
its surety contract. We do not find that maxim in tension with our decision that § 15-1-41 provides
the limitations period for Cooper’s claims. Here, IFIC was held liable for injuries arising from its
voluntary takeover of the contract, and, therefore, was not subject to duties or liabilities it did not
willingly accept.
8
Section 15-1-41 provides:
Actions arising from construction deficiencies
No action may be brought to recover damages for injury to property, real or
personal, o r for an injury to the person, arising out of any deficiency in the
design, planning, supervision or observation of construction, or construction
of an improvement to real property . . . against any person, firm or
corporation performing or furnishing the design, planning, supervision of
construction or construction of such improvement to real property more than
six (6) years after the written acceptance or actual occupancy or use,
whichever occurs first, of such improvement by the owner thereof.
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but rather, is subject to the two-year limitations period set out in the bond. Based on the analysis set
forth above, we disagree that the bond’s period governs. If IFIC elected to takeover the contract, it
voluntarily subjected itself to a new set of liabilities apart from the bond. The liabilities IFIC incurred
by acting as contractor are governed by § 15-1-41. Furthermore, the Mississippi legislature
determined that the period set out in § 15-1-41 cannot be altered through contract. See Miss. Code
Ann. § 15-1-5 (rendering “null and void” any contractual change to the limitations period.)
Therefore, the limitations period in the bond is inapplicable.
IFIC also argues that the appropriate limitations period is not set out in § 15-1-41, but rather
in Miss. Code Ann. § 85-7-189. Section 85-7-189 provides:
Suit on Bond; Commencement
When suit is instituted by any such person on a bond, it shall not be commenced until
after the complete performance of said contract, and final settlement thereof and shall
be commenced within one year after the performance and final settlement of said
contract and not later; provided that if the contractor quits or abandons the contract
before its completion suit may be instituted by any such person including the owner
on said bond and shall be commenced within one year after abandonment and not
later. But said period for the limitation of the institution of said action shall not begin
to run until the obligee shall have made said final settlement or determined said
abandonment and published notice thereof in some newspaper in said county, or if
there be none in some newspaper having a general circulation therein. (Emphasis
added).
IFIC reads § 85-7-189’s phrase “including the owner on said bond” to indicate that owners are bound
by § 85-7-189’s limitations period, and, therefore, Cooper’s claims are barred.
The district court determined, and we agree, that the period set out in § 85-7-189 does not
apply to Cooper’s action against IFIC. While IFIC is correct that § 85-7-189 refers to owners, the
subset of owners included in the category of “any such person” is limited, as the statutory section
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preceding § 85-7-189, § 85-7-187, indicates. See Miss. Pub. Serv. Comm’n v. Mun. Energy Agency
of Miss., 463 So. 2d 1056, 1058 (Miss. 1985) (“each section of the Code dealing with the same or
similar subject matter must be read in pari materia”). Section 85-7-187, which provides a statutory
right of action on the bond, makes clear that “any such person” means laborers and materialmen.
See Miss. Code Ann. § 85-7-187 (providing that “any person supplying therein labor or materials shall
have a right of action on said bond”). See also Am. Fid. Fire Ins. Co. v. Athens Stove Works, Inc.,
481 So. 2d 292 (Miss. 1985) (supplier of electric ranges brought suit under § 85-7-189 against
surety); Transamerica Ins. Co. v. Paine Supply Co., 194 So. 2d 490 (Miss. 1967) (materialman’s
claim on bond under a former version of § 85-7-189). Accordingly, § 85-7-189’s reference to owners
as part of the category of “any such person[s]” means owners who have acted as laborers or
materialmen, i.e., owners who have supplied materials or labor to the project. As Cooper did not act
as a laborer or materialman, § 85-7-189 does not apply to its claim. Thus, the district court was
correct to deny IFIC’s motion for summary judgment.
B
IFIC also moved for judgment as a matter of law at the conclusion of Cooper’s case in chief,
arguing that there did not exist a legally sufficient evidentiary basis to submit the case to the jury. The
district court denied this motion. The following evidence was presented: (1) a letter from an IFIC
attorney acknowledging that IFIC had to complete the contract because Castro informed IFIC that
it could not complete it, and admitting that IFIC hired a construction consultant; (2) the warranty
application signed by Weatherguard’s representative as contractor for Castro/IFIC, listing “Castro
Roofing c/o International Fidelity Insurance Company” as the roofing contractor; and (3) testimony
that Castro could not complete the contract and IFIC did not re-bid the contract. While IFIC is
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correct that none of Cooper’s witnesses expressly stated that IFIC took over the contract, we do not
see how this is determinative insofar as IFIC, via its attorney, admitted that it completed the contract
upon Castro’s default.9 Accordingly, a legally sufficient evidentiary basis existed to submit the case
to the jury.
C
IFIC asserts that the district court erred when it refused to give the jury IFIC’s proposed
instruction on damages. According to IFIC, this failure and the district court’s denial of IFIC’s
motions under Rule 50 and 59 were erroneous because the evidence was insufficient to support the
jury’s damage award. We “review[] a district court’s refusal to provide a requested jury instruction
for an abuse of discretion. We will reverse the district court’s decision ‘only if the requested
instruction (1) was a substantially correct statement of the law, (2) was not substantially covered in
the charge as a whole, and (3) concerned an important point in the trial such that the failure to
instruct the jury on the issue seriously impaired the defendant’s ability to present a given defense.’”
United States v. McClatchy, 249 F.3d 348, 356 (5th Cir. 2001) (citations omitted).
The instruction IFIC requested provides:
You are instructed that Cooper has the burden to prove its damages, if any, by
a preponderance of the evidence. You are also instructed that you must return
a verdict against Cooper and in favor of International if you find that Cooper
must resort to speculation or conjecture to determine whether or not the
damages it claims it suffered resulted from the acts which it complains about or
from some other cause or where it is impossible to say what of any portion of the
damages, if any, result from the fault of International, Tarmac or Canton Sheet
Metal and what portion if any, result from the fault of Cooper, including the fault
of Moisture Protection.
9
IFIC also makes a general statement that Cooper offered no evidence of causation.
IFIC did not expand on this argument, and the evidence in the record does not support this
contention.
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IFIC criticizes the district court’s failure to adopt its instruction, maintaining that Cooper was
obligated to prove which damages, if any, were caused by IFIC, as opposed to those caused by
Castro/Weatherguard acting as Tarmac’s agent. Any damages incurred prior to IFIC taking over the
contract, IFIC urges, would be barred by § 85-7-189, or the bond. Furthermore, IFIC claims that its
damage instruction meets the requirements outlined in McClatchy. IFIC avers that its instruction is
a correct statement of the law, that the district court’s instruction did not inform the jury that Cooper
must prove its damages by a preponderance of the evidence, and that the jury was deprived of the
“necessary guidance implicit in” the proposed instruction.
Assuming arguendo that IFIC’s argument is not foreclosed by our decision that Castro/
Weatherguard were not Tarmac’s agents, we disagree that IFIC was entitled to this instruction.
Although the district court’s instruction does not state that damages must be proven by a
preponderance of the evidence, at the beginning of the jury instructions the court informed the jury
of the plaintiff’s burden. See United States v. Eargle, 921 F.2d 56, 58 (5th Cir. 1991) (jury
instructions must be read as a whole). In addition, IFIC’s argument that the charge inappropriately
allows the jury to hold IFIC liable for Castro/Weatherguard’s conduct prior to IFIC taking over the
contract is unavailing. As previously noted, when IFIC took over the contract it stepped into the
shoes of its principal, thereby assuming its principal’s duties, i.e., tendering to Cooper a roof that
comported with the applicable standards. See supra, Section III A. Accordingly, IFIC fails to
demonstrate that the district court erred in refusing to proffer IFIC’s instruction to the jury.
D
IFIC avers that the district court erred by using an incorrect method to calculate Cooper’s
damages. Pursuant to the reasoning of Freeport Sulphur Co. v. S/S Hermosa, 526 F.2d 300 (5th Cir.
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1976) (applying percentage of useful life extension to property that had a longer useful life after
repairs), IFIC moved to alter or amend the judgment under Rule 59 because the judgment failed to
account for the percentage of useful life extension Cooper received by repairing or replacing the
roof.10 The district court denied IFIC’s motion. We review that denial for an abuse of discretion.
Stye v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990). As IFIC never argued to the jury that
the Freeport Sulphur methodology applied, but instead consistently hinged its reduction of damages
argument on a straight line depreciation method, we find the district court did not abuse its discretion
in entering judgment based on the evidence presented by IFIC at trial.
IV
For the reasons set forth above, we REVERSE the district court’s denial of Tarmac’s Rule
50 motion, and AFFIRM the district court’s disposition of IFIC’s motions.
10
IFIC also complains that the district court erred by entering final judgment against
IFIC for the full amount of Cooper’s damages. To the extent that IFIC’s argument survives our
decision regarding Tarmac, we agree that IFIC is liable for the full amount of damages awarded.
Mississippi provides for apportionment of damages among joint-tortfeasors under the circumstances
set out in Miss. Code Ann. § 85-5-7. IFIC is not entitled to apport ionment of the damage award
because IFIC’s liability stemmed not only from its negligence, but also from its breach of contract.
Because IFIC was liable for breach of contract, and § 85-5-7’s apportionment provision only applies
to damages incurred due to negligence, the district court’s decision not to apportion is correct.
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