IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 8, 2008
No. 07-60379 Charles R. Fulbruge III
Clerk
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, A
Connecticut Corporation
Plaintiff - Appellee
v.
ERNST & YOUNG LLP
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Mississippi
Before JONES, Chief Judge, DAVIS and GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
The district court entered judgment on a jury verdict in favor of Travelers
Casualty and Surety Company of America (“Travelers”) and against Ernst &
Young LLP (“E&Y”). E&Y appeals the district court’s denial of its motion for
judgment as a matter of law and its motion for new trial. For the following
reasons, we affirm.
I
In November 1999, Friede Goldman International and Halter Marine
Group, Inc. merged to form Friede Goldman Halter, Inc. (“FGH”). FGH
constructed oil rigs, vessels, and other large maritime equipment. Shortly after
the merger, FGH hired E&Y, to audit its 1999 year-end financial statements,
No. 07-60379
and to provide the necessary audit opinion for its 1999 Form 10-K filing with the
Securities and Exchange Commission (“SEC”). FGH filed its 1999 10-K with the
SEC on March 31, 2000. E&Y’s opinion letter, filed as part of the 10-K, stated
that it had “conducted [its] audit in accordance with auditing standards
generally accepted in the United States,” and that it believed that its audit
provided a “reasonable basis” for its opinion that the financial statements
“present fairly, in all material respects, the consolidated financial position of
Friede Goldman Halter, Inc. and Subsidiaries at December 31, 1999.” E&Y did
not qualify its audit opinion or issue any disclaimers in its opinion letter
indicating that it lacked necessary information for its audit. Nor did the opinion
letter raise any question as to FGH’s viability as a going concern.1
FGH’s 1999 financial statements disclosed two problematic construction
projects for the new corporation: the Ocean Rig and Petrodrill projects. The
projects involved the construction of large oil rigs. The company accounted for
both projects under the “percentage of completion” method, which required FGH
to estimate the total expected revenues and cost for each job, and to recognize
any expected periodic revenue or loss based on the percentage of the project that
had been completed to that point. The statements included projected losses on
Ocean Rig of $37.4 million and $60 million on Petrodrill. While this case
concerns both construction projects, the projected loss on the Petrodrill project
is of central importance. The financial statements included notes regarding the
cause of the loss on the Petrodrill project. According to the notes, problems with
subcontractors, delays in engineering planning, and contract disputes between
1
For a detailed description of the audit process and the different types of opinions that an
auditor may issue, see Jay M. Feinman, Liability of Accountants for Negligent Auditing: Doctrine,
Policy, and Ideology, 31 FLA. ST. U. L. REV. 17, 20-22 (2003). For our purposes it is important to note
that an auditor may issue a “qualified opinion,” which states that the scope of the audit has been
limited, or the auditor is unable to obtain all necessary information, or a “disclaimer opinion,” which
may be issued if the accountant is unable to reach an informed opinion because of limitations in the
audit examination. See id. at 21-22.
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No. 07-60379
an FGH subsidiary and Petrodrill combined to create the anticipated loss of $60
million. The financial statements also provided that “funding these excess costs
could have a significant impact on the Company’s liquidity.” The statements
also included forward-looking warnings regarding the uncertainty generally
associated with the percentage of completion method, and the fact that loss
estimates included in the statements could change in the future.
Because of the size of the construction projects carried out by FGH and the
uncertainties attendant in such lengthy projects, FGH was required to obtain
surety bonds. A surety bond is a third-party guarantee involving an owner, a
contractor, and a surety. The contractor pays a premium for the surety’s bond
which guarantees the contractor’s performance for the owner. If the contractor
cannot complete performance, then the surety is obligated to do so. In early May
2000, FGH approached Travelers and several other surety companies seeking
an extensive $600 million bond program for future construction contracts. After
reviewing FGH’s 1999 financial statements, Travelers determined that it could
not issue any surety credit to FGH because the company presented too high a
risk based on its poor financial outlook. The other companies also declined to
issue surety credit.
A few weeks later, FGH again sought to obtain surety bonds from
Travelers and other surety companies. At this meeting, FGH promised to
revamp its finances and operations such that FGH would be able to bear the
anticipated losses from Ocean Rig and Petrodrill. The other surety companies
again declined, but Travelers decided to proceed with further discussions.
In June 2000, FGH management indicated to Travelers that FGH’s
financial situation was improving. FGH outlined a “liquidity campaign” that
would involve FGH disposing of assets, selling stock, and obtaining a new line
of credit. FGH also anticipated a tax refund. The campaign was a success and
provided approximately $200 million in available liquidity for FGH to use to
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No. 07-60379
cover any potential losses. The liquidity campaign “dramatically changed”
Travelers’ impression as to whether it could possibly issue bonds to FGH.
Travelers still understood FGH to be a “high risk” surety situation.
Nevertheless, Travelers sent a July 2000 memo to FGH tentatively outlining a
proposed surety bond program worth between $200-225 million.
In August, FGH issued its unaudited second quarter Form 10-Q, which
provided an updated picture of the expected losses on Petrodrill and Ocean Rig.
The 10-Q showed that FGH had increased its loss estimate on Ocean Rig by
$28.3 million. The 10-Q provided no change in the Petrodrill loss estimate; it
remained at $60 million. After this announcement, Travelers met with FGH
management on two occasions to address its concerns, especially with respect to
whether Petrodrill’s loss estimates were likely to change. FGH acknowledged
the change in the Ocean Rig project, but assured Travelers that the Petrodrill
estimate remained accurate. FGH provided Travelers with an independent,
third-party engineering assessment of both projects. That assessment confirmed
the accuracy of the percentage of completion estimates to date on Ocean Rig and
Petrodrill. FGH also reassured Travelers that the fruits of its liquidity
campaign would be able to cover the expected losses on both Ocean Rig and
Petrodrill.
In September 2000, Travelers decided to back off of its original $225
million plan and instead issued approximately $70 million in surety bonds to
FGH. These bonds were issued primarily for a vessel construction project known
as the Pasha project. The bonds also covered two other small contracts.2 The
Pasha bond agreement was not a run-of-the-mill arrangement. Travelers
charged a higher bond premium and obtained a special security interest in the
project. Travelers also required initial collateral of $15 million, though the
2
While the bond related to three contracts, the opinion adopts the term used by the parties and
for convenience refers to this as the Pasha bond.
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No. 07-60379
agreement provided that half of the collateral would be released once certain
security agreements received final sign-off. Soon thereafter, final sign-off
occurred and Travelers released half of the $15 million back to FGH.
In November 2000, FGH’s agent again approached Travelers to discuss the
original $200-225 million bonding program. Travelers declined, stating that it
wanted to be more certain about the success of the Ocean Rig and Petrodrill
projects before issuing any more bonds.
In March 2001, FGH released its year-end 2000 10-K which revealed new,
much higher loss estimates. The new numbers reflected an anticipated loss of
$121 million on Petrodrill, double what was reflected in the 1999 10-K, and
double what Travelers assumed the loss to be when it issued the Pasha bond.
The Ocean Rig estimate also increased dramatically.
Subsequent to issuing the bond, Travelers learned that FGH had diverted
somewhere between $17-35 million from the Pasha project towards other work
in an attempt to keep the company viable. This diversion depleted the Pasha
project further, and it did not help to keep FGH afloat. Based on insufficient
cash and reserves to cover its losses, FGH filed for bankruptcy shortly after the
release of its 2000 10-K. FGH was unable to continue construction on the
projects under the Pasha bond, and Travelers was required to fulfill its
obligation as surety. Travelers paid out approximately $58 million to complete
the projects covered by the Pasha bond.
Travelers sued FGH, its officers and directors, as well as E&Y in an
attempt to recoup the $58 million it lost as a result of paying out on the Pasha
bond. Travelers alleged that FGH’s management had misrepresented FGH’s
financial position and breached its fiduciary duty towards Travelers during the
bond negotiation process. Travelers alleged that E&Y was negligent in
conducting its audit of FGH’s 1999 year-end financials. The FGH officers and
directors settled, leaving E&Y as the only remaining defendant. Travelers’ claim
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No. 07-60379
against E&Y was tried to a jury. Travelers alleged that E&Y was negligent in
failing to conduct the necessary inquiries and perform proper audit tests to
confirm and substantiate the Petrodrill loss estimates in the 1999 10-K, leading
to a gross under-estimate of the Petrodrill loss estimate. Travelers contended
that E&Y’s negligence was a substantial factor in causing Travelers to issue the
Pasha bond because the estimated loss on the Petrodrill contract was of central
importance to FGH’s viability going forward, and Travelers relied on the
accuracy of the loss figure in issuing the bond. The jury found that E&Y was
negligent in conducting its audit and that E&Y’s negligence proximately caused
25% of Travelers’ harm. In apportioning fault, the jury found FGH 75% at fault
and E&Y 25% at fault. The district court entered judgment against E&Y in the
amount of $14,443,210.87.
E&Y filed multiple post-trial motions, including a motion for judgment as
a matter of law under FED. R. CIV. P. 50, and a motion for a new trial under FED.
R. CIV. P. 50 & 59. E&Y argued that judgment as a matter of law was proper
because the evidence was insufficient to allow a the jury to conclude that: (1)
Travelers reasonably relied on the 1999 audited financials in making the
decision to issue the Pasha bond in September 2000; or that (2) E&Y’s negligence
was the proximate cause of Travelers’ damage. E&Y sought a new trial, arguing
that the verdict was contrary to the great weight of the evidence with regard to
the issues of reasonable reliance and proximate cause. E&Y also argued that a
new trial was necessary because the district court erred in denying its requested
jury charges and verdict form which would have allowed the jury to allocate fault
to Travelers. The district court denied E&Y’s post-trial motions. The district
court found sufficient evidence to support findings of reasonable reliance and
proximate causation. The district court refused a new trial on the allocation of
fault issue, holding that E&Y could not prove Travelers’ negligence because E&Y
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No. 07-60379
had not offered the necessary expert testimony to establish the applicable
standard of care. This appeal ensued.
II
We review de novo the district court’s denial of a motion for judgment as
a matter of law, applying the same standard as the district court. See Foradori
v. Harris, 523 F.3d 477, 485 (5th Cir. 2008). After a case has been tried to a jury,
a motion under Rule 50 is a challenge to the legal sufficiency of the evidence.
See id. Because we are wary of upsetting jury verdicts, “[a] jury verdict must be
upheld unless there is no legally sufficient evidentiary basis for a reasonable
jury to find as the jury did.” Id. (internal quotation marks omitted); see FED. R.
CIV. P. 50(a)(1). “[W]e draw all reasonable inferences and resolve all credibility
determinations in the light most favorable to the nonmoving party.” Id.
Accordingly, we will reverse the district court’s denial “only if the evidence
points so strongly and so overwhelmingly in favor of the nonmoving party that
no reasonable juror could return a contrary verdict.” Id.
"Our review of the district court's denial of a motion for a new trial is more
deferential than our review of a motion for judgment as a matter of law. We will
reverse the trial court's denial of a motion for a new trial only when there is a
clear showing of an abuse of discretion." Id. at 497.
In reviewing the district court’s rulings in this diversity case, we apply the
substantive law of Mississippi. See Erie v. Tompkins, 304 U.S. 64, 78-79 (1938).
III
E&Y raises three issues on appeal, two challenges to the sufficiency of the
evidence supporting the jury’s verdict and one challenge to the district court’s
jury instructions. First, E&Y argues that the evidence was insufficient for a
rational jury to conclude that Travelers reasonably relied on the 1999 financials
prepared by E&Y—specifically the $60 million Petrodrill loss figure—when
Travelers issued the Pasha bond in September 2000. Second, conceding that it
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No. 07-60379
was negligent in conducting its audit, E&Y argues that the evidence was
insufficient for a reasonable jury to find that its negligence proximately caused
Travelers’ harm. Third, with respect to the jury instructions, E&Y argues that
the district court reversibly erred in preventing the jury from apportioning fault
to Travelers. We consider and reject each of these arguments in turn.
A
We first conclude that E&Y has not overcome the high hurdle of
establishing that the evidence presented in this case, when viewed in the light
most favorable to Travelers, was insufficient for a rational jury to conclude that
Travelers reasonably relied on the 1999 financials and, specifically, the
Petrodrill loss estimate. There is no dispute that Travelers relied on the 1999
financials, and that E&Y was negligent in auditing those financials. Rather,
E&Y’s challenge focuses exclusively on the “reasonableness” of Travelers’
reliance.
Mississippi courts have provided no guidance as to the specific point at
which a plaintiff’s reliance on negligent misrepresentations in audited financial
statements becomes unreasonable as a matter of law.3 When state law provides
no definitive answers to the question presented, we must make an educated
“Erie guess” as to how the Mississippi Supreme Court would resolve the issue.
3
In the seminal Mississippi case establishing the scope of an auditor's duty toward third
parties, Touche Ross & Co. v. Comm. Union Insur. Co., 514 So. 2d 315 (Miss. 1987), the Mississippi
Supreme Court held that "an independent auditor is liable to reasonably foreseeable users of [its] audit,
who request and receive a financial statement from the audited entity for a proper business purpose,
and who then detrimentally rely on the financial statement, suffering a loss, proximately caused by the
auditor's negligence." Id. at 322. We could find no Mississippi case since dealing with an auditor’s
liability in negligence to third parties. We note that the Touche Ross case does not, by its express
terms, include a “reasonable reliance” requirement. Nevertheless, neither party objected to the district
court’s jury instruction on reasonableness, and neither party has raised an issue with the
reasonableness requirement on appeal. At any rate, for the reasons explained in the text, we have no
doubt that the Mississippi Supreme Court would place a limit on the extent to which a third party can
rely on negligent misrepresentations in audited financial statements))this is true whether that
limitation is called reasonableness of reliance, or whether the limit is imposed in Touche Ross terms,
by limiting the scope of those third-party users who constitute “reasonably foreseeable” users of an
audit. In this opinion, we speak in terms of reasonable reliance, as that is how the district court and
the parties have presented the matter to us.
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No. 07-60379
See Leonard v. Nationwide Mut. Ins. Co., 499 F.3d 419, 431 (5th Cir. 2007). “In
making an Erie guess, we defer to intermediate state appellate court decisions,
‘unless convinced by other persuasive data that the highest court of the state
would decide otherwise,’” Herrmann Holdings Ltd. v. Lucent Tech., Inc., 302 F.3d
552, 558 (5th Cir. 2002), and “we may consult a variety of sources, including the
general rule on the issue, decisions from other jurisdictions, and general policy
concerns.” Audler v. CBC Innovis Inc., 519 F.3d 239, 249 (5th Cir. 2008).
While Mississippi courts have not considered the allowable scope of
reasonable reliance in the context of financial statements, analogous Mississippi
cases make clear that a party cannot reasonably rely on a misstatement when
the error is obvious to the party or the party knows the truth of the matter. See
Waters v. Allegue, 980 So. 2d 314, 318 (Miss. Ct. App. 2008) (holding that home
buyers could not, as a matter of law, reasonably rely on real estate agent’s
representation as to square footage of home when buyers knew the
representation to be inaccurate); cf. Little v. Miller, 909 So. 2d 1256, 1260 (Miss.
Ct. App. 2007) (affirming summary judgment because plaintiff-buyer could not
prove that he relied on a misrepresentation of defendant-seller concerning
drainage problems on property when plaintiff was “well aware of the
problems . . . and only completed the purchase after making their own
observations.”) This rule is ubiquitous and appears in a host of other contexts
where a plaintiff’s recovery depends on the plaintiff’s reasonable or justifiable
reliance on a defendant’s misrepresentation. See Tom Hughes Marine, Inc. v
Am. Honda Motor Co., Inc., 219 F.3d 321, 326 (4th Cir. 2000) (“There can be no
reasonable reliance on a misstatement if the plaintiff knows the truth of the
matter.”) (applying South Carolina law of negligent misrepresentation); see also
In re Mercer, 246 F.3d 391, 416 n. 33 (5th Cir. 2001) (“An investor cannot close
his eyes to a known risk. If the investor possesses information sufficient to call
the representation into question, he cannot claim later that he relied on or was
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No. 07-60379
deceived by the lie.” (quoting Mayer v. Spanel Int’l Ltd., 51 F.3d 670, 676 (7th
Cir. 1995)); Semerenko v. Cendant Corp., 223 F.3d 165, 181 (3d Cir. 2000)
(holding that securities fraud plaintiffs could not prove reasonable reliance on
financial statements after they were informed that the statements contained
accounting irregularities); RESTATEMENT (SECOND) OF TORTS § 541 (1977) (“The
recipient of a fraudulent misrepresentation is not justified in relying on its truth
if he knows that it is false or its falsity is obvious to him.”). While it has not yet
had the opportunity to do so, we have no doubt that the Mississippi Supreme
Court would apply a similar principle in this context to prevent a plaintiff from
recovering when her loss stems from reliance on apparent or known inaccuracies
in a financial statement. Cf. Touche Ross, 514 So. 2d at 322 (noting that
imposing upon auditors a negligence duty towards third parties was not
intended to turn auditors into guarantors of a financial statement’s content).
Based on the above, we believe the Mississippi Supreme Court would analyze
the reasonableness of Travelers’ reliance by looking at the extent of Travelers’
knowledge that the Petrodrill loss estimate was no longer accurate at the time
Travelers relied on the estimate in issuing the Pasha bond. The more obvious
the inaccuracy of the Petrodrill estimate, and the more information Travelers
had suggestive of inaccuracy, the more likely it is that Travelers reliance was
unreasonable as a matter of law.
As the jury already found Travelers’ reliance to have been reasonable, we
ask only whether, when taking the evidence and all reasonable inferences in
favor of Travelers, the jury made a rational finding of reasonableness. Under
this deferential standard applied to our review of jury verdicts, we believe that
there was sufficient evidence to support a finding of reasonable reliance.
Travelers’ underwriter Fred Schwait testified that underwriters typically rely
on audited financial statements until those statements are superseded by the
next set of audited financial statements. The other main Travelers’ underwriter
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No. 07-60379
working on the Pasha bond was Michael Pete. Both he and Schwait testified
that all of the post-audit information they received on the Petrodrill estimate
echoed the same $60 million number from the 1999 audited financials. The
second-quarter 10-Q that informed Travelers of the $28 million increase in loss
on Ocean Rig continued to reflect the same $60 million loss estimate for
Petrodrill. After Travelers raised concern over the $28 million increase on
Ocean Rig and whether Petrodrill might also suffer an increase, FGH provided
Travelers with an independent engineering report confirming FGH's percentage
of completion estimates for both Petrodrill and Ocean Rig. Also, an internal
E&Y memo dated June 30, 2000 reflected the $28 million increase in Ocean Rig
but stated that E&Y’s audit team believed there remained a reasonable basis for
the $60 million loss estimate on Petrodrill. While Travelers did not see or rely
upon this memo, the jury was free to assess the reasonableness of Travelers’
reliance with the knowledge that E&Y’s accountants still believed the $60
million Petrodrill estimate to have a reasonable accounting basis on June 30.
Finally, the jury had before it the expert report of George Beuttner.4 Beuttner's
report stated that Travelers' reliance on the 1999 financial statements, along
with the new information provided by FGH, was "well within accepted and
expected surety underwriting standards.”
To depict Travelers’ reliance as unreasonable, E&Y argues that Travelers
knew that the loss number on the Petrodrill project had already deteriorated to
$60 million in a short period of time. E&Y points out that Travelers knew that
the estimate could change. E&Y also states that Travelers knew that, in the
second quarter of 2000, FGH increased by $28 million its loss estimate on Ocean
Rig. According to E&Y, this drastic change in Ocean Rig should have made it
clear that it was unreasonable to rely on the Pertodrill figures in the 1999
4
Travelers retained Beuttner as an expert in the field of surety underwriting. He was never
called to testify at trial. However, his expert report was admitted into evidence by E&Y.
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No. 07-60379
financial statement.
While the change in Ocean Rig and the other facts pointed out by E&Y
raise questions as to the wisdom of Travelers’ continued reliance on the
Petrodrill estimate in the 1999 financials, we are not free to substitute our own
judgment for that of the jury. Rather, we are limited to determining whether the
jury’s verdict was rational in light of the evidence presented. Faced with
conflicting evidence on the issue of whether Travelers’ reliance was reasonable,
the jury made a rational finding based on the evidence that it was. We conclude
that the evidence was sufficient such that a rational jury could find that
Travelers reasonably relied on the audited financial statements, and specifically
the Petrodrill loss estimate, when deciding to issue the Pasha bond.
B
E&Y’s argument that the evidence was insufficient for a rational jury to
find that its negligent audit proximately caused Travelers financial harm also
fails. “In order for an act of negligence to proximately cause the [plaintiff’s]
damage, the fact finder must find that the negligence was both the cause in fact
and legal cause of the damage.” Glover v. Jackson St. Univ., 968 So. 2d 1267,
1277 (Miss. 2007). To be held liable, a defendant’s negligence “need not be the
sole cause of an injury,” Foster v. Bass, 575 So. 2d 967, 992 (Miss. 1990), but the
defendant’s negligence must be a “substantial factor in producing the injury.”
New Orleans & N. E. R. Co. v. Burge, 2 So. 2d 825, 826 (Miss. 1941); see Ogburn
v. City of Wiggins, 919 So. 2d 85, 91 (Miss. App. 2005). Still, a negligent
defendant may be shielded from liability if a superseding cause is found))“[a]
superseding cause is an act of a third person or other force which by its
intervention prevents the [defendant] from being liable for harm to another
which his antecedent negligence is a substantial factor in bringing about.”
Southland Management Co. v. Brown, 730 So. 2d 43, 46 (Miss. 1998) (quoting
Restatement (Second) of Torts § 440 (1965)).
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No. 07-60379
After hearing the evidence, the jury found that E&Y’s negligent audit
proximately caused Travelers’ harm, apportioning 25% of the fault to E&Y.
Viewing the evidence in the light most favorable to Travelers, we cannot
conclude that the jury was unreasonable in finding that E&Y’s audit proximately
caused 25% of Travelers’ harm.
1
E&Y first contends that its negligent audit was not a cause in fact of
Travelers’ decision to issue the bonds. E&Y argues that Travelers failed to prove
causation because it provided insufficient evidence that the Petrodrill loss
estimate should have been higher than $60 million as of December 31, 1999. In
order to prove that the Petrodrill loss estimate should have been much higher,
Travelers admitted into evidence two internal FGH documents that estimated
the cost to complete the Petrodrill project, one from December 1999 and one from
March 2000))these two documents provided loss estimates for Petrodrill in the
$100-110 million range. Still, E&Y focuses on Travelers’ accounting expert,
Mark Murovitz, who testified that he was unable to reconstruct what the loss
number in the 1999 financials should have been. Even accepting, arguendo,
E&Y’s position that Travelers did not provide sufficient evidence as to what the
estimate should have been in December 1999, the inability of Murovitz to attest
to a higher estimate does not undermine the jury's conclusion that E&Y’s
negligence was a substantial factor in causing Travelers’ loss. Murovitz testified
that E&Y failed to subscribe to the applicable standard of care because no loss
estimate should, or could, have been verified for Petrodrill. Murovitz also
testified that E&Y breached the applicable standard of care by failing to obtain
necessary documentation to support the Petrodrill estimate. Murovitz testified
that the applicable accounting standards required an auditor to obtain sufficient
evidentiary matter to ensure the validity of the figures presented in a company’s
financial statements. Based on E&Y’s failure to conduct interviews with FGH
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No. 07-60379
employees closely associated with the Petrodrill project, holes in E&Y’s
paperwork associated with the Petrodrill project, and the engineering problems
facing the Petrodrill project, Murovitz stated that E&Y could not have
determined whether any Petrodrill estimate was reasonable. According to
Murovitz, to comply with the applicable standard of care, E&Y should have
admitted that it did not have enough information to determine the
reasonableness of the Petrodrill loss estimate or that E&Y did not determine the
reasonableness of the loss estimate. Both Schwait and Pete testified that
Travelers requires a "clean" or "unqualified" audit before issuing a bond, and
that the Pasha bond would never have been issued if E&Y’s audit opinion
reflected any qualification, or if E&Y had indicated that there was no reasonable
accounting basis for the $60 million Petrodrill loss estimate.
E&Y next points to two events that it claims sever the causal chain
between its negligence and Travelers’ decision to bond. First, E&Y argues that
Travelers initially declined to issue any bonds to FGH based on the 1999
financials. According to E&Y, the only decision by Travelers “based on” the 1999
financials was to deny coverage in May. E&Y insists that it was Travelers’
independent judgment in response to FGH’s representations that led to
Travelers’ later decision to bond the Pasha project in September. According to
E&Y, Travelers’ decision to decline bonds in May, and its later reliance on FGH’s
representations both served to break the chain of causation between E&Y’s
negligence and the bond decision.5
5
E&Y analogizes to the Mississippi case of Sample v. Haga, 824 So. 2d 627 (Miss. Ct. App.
2001). Sample involved two decedents, Sample and Williams, who died in a house fire. Both escaped
the house at different times but then re-entered the house to look for each other. The plaintiffs alleged
that Sample and Williams died because of the landlord’s failure to install smoke detectors. See id. at
629-30. The Mississippi Court of Appeals granted summary judgment in favor of the landlord on this
issue holding that, “the cause-in-fact of the deaths of Sample and Williams was the voluntary act of
each in re-entering the house in an attempt to find the other.” Id. at 632.
We find unpersuasive E&Y’s comparison between the Sample case and the facts before us.
Travelers’ continued reasonable reliance on the negligently audited financial statements distinguishes
Sample, where the lack of smoke detectors played no causal role in Sample’s and Williams’ decision to
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No. 07-60379
E&Y’s claim that the only decision “based on” the negligently audited
financials was the May declination ignores the trial testimony of Pete and
Schwait indicating that Travelers continued to rely on the audited financials up
until it issued the Pasha bond. And even if Travelers also relied upon
representations from FGH management, this would not necessarily prevent
E&Y’s negligent audit from being a cause in fact of Travelers’ harm. See
Entrican v. Ming, 962 So. 2d 28, 32 (Miss. 2007)(noting that a defendant’s
negligence need not be the sole cause of injury to be considered a proximate
cause). Travelers’ underwriters testified that had they known that no
reasonable loss estimate could be generated for Petrodrill (i.e., absent E&Y’s
negligence), they would not have issued the Pasha bond, even taking into
account the positive developments from FGH’s liquidity campaign. The jury was
free to believe this testimony and thus reasonably conclude that E&Y’s negligent
audit was a cause in fact of Travelers’ decision to issue the bond.
2
Next, E&Y argues that FGH’s lobbying campaign and later
misrepresentations made by FGH management were a superseding cause of
Travelers’ decision to issue the Pasha bonds.6 In describing the superseding
re-enter the house. While the 1999 financial statements’ depiction of FGH’s financial status may have
led Travelers to a “place of safety” in May, this does not preclude E&Y’s negligent audit from later
leading Travelers back into the burning house in September. Moreover, E&Y’s negligence could be said
to mask the danger presented upon re-entry.
6
E&Y also argues that Travelers’ decision to reverse course and issue the Pasha bond in
September 2000 was "unforeseeable." While this argument is placed under the heading "proximate
cause," the argument simply attacks the wisdom of Travelers' decision to issue the Pasha bond. For
example, E&Y states that “no one could have foreseen that a reasonable surety would do what Travelers
did here.” (emphasis added). E&Y then points out that "Travelers knew well that [FGH] had poor
operating results, fragile capital structure, small liquidity ratio, inept management, and a low rating
by Moody's and S&P." In the proximate cause context, the proper foreseeability inquiry is whether “the
plaintiff’s injuries and damages fall within a particular kind or class of injury or harm which reasonably
could be expected to flow from the defendant’s negligence.” Glover, 968 So. 2d at 1278-79. What E&Y
labels the "foreseeability" of Travelers’ bond decision is nothing more than an argument that Travelers
should be held at fault because it made a poor decision by issuing the Pasha bond. We address the issue
of Travelers’ fault in Part IV, infra.
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No. 07-60379
cause doctrine, the Mississippi Supreme Court has stated, "an original actor's
negligence may be superceded by a subsequent actor's negligence, if the
subsequent negligence was unforeseeable." Entrican, 962 So. 2d at 35.
However, "if an antecedent negligent act puts in motion an agency which
continues in operation until an injury occurs it would appear to be more like a
second proximate cause than a remote and unactionable cause." Eckman v.
Moore, 876 So. 2d 975, 981 (Miss. 2004). Put another way, "[t]he question is, did
the facts constitute a succession of events so linked together as to make a
natural whole, or was there some new and independent cause intervening
between the alleged wrong and the injury?" Miss. City Lines v. Bullock, 13 So.
2d 34, 36 (Miss. 1943). Perhaps recognizing the difficulty of applying the above
formulations to reach a conclusion as a matter of law, the Mississippi Supreme
Court has stated that “the question of superceding intervening cause is so
inextricably tied to causation, it is difficult to imagine a circumstance where
such issue would not be one for the trier of fact.” O’Cain v. Harvey Freeman &
Sons, Inc., 603 So. 2d 824, 830 (Miss. 1991) (emphasis added). E&Y contends
that this case constitutes a “difficult to imagine . . . circumstance” where the
superseding nature of FGH’s intervening actions may be decided as a legal
matter. We disagree.
To support its superseding cause argument, E&Y attempts to analogize
the facts presented here to the Touche Ross case. In Touche Ross, Commercial
Union Insurance Company, relying on a Touche Ross audit opinion, provided a
bank with insurance coverage against employee fraud. Touche Ross, 514 So. 2d
at 315. The bank eventually failed because the bank’s president engaged in
fraud. Relying on § 448 of the Restatement, the Supreme Court held that the
bank president’s “criminal conduct” was a “remote possibility” that Touche Ross
was not required to anticipate. Id. at 323-24 (noting that “absent special
circumstances” criminal conduct qualifies as a superseding cause). According
16
No. 07-60379
to the court, “[t]o hold Touche Ross liable for losses, stemming from criminal
conduct which began four months after completion of the audit, based solely
upon the accounting firm’s alleged negligence during the time of its preparation,
is too remote for the imposition of liability.” Id. at 324. The court also recognized
that no failing of Touche Ross’s led to the bank president’s committing fraud.
See id. Because the bank president’s fraud was a superseding cause of
Commercial Union’s loss, the Court rendered judgment in favor of Touche Ross.
See id. at 325.
In an attempt to liken itself to the auditors in Touche Ross, E&Y argues
that its negligent acts were long complete by the time Travelers capitulated to
FGH and issued the Pasha bonds. But while E&Y’s auditing failures actually
occurred in March of 2000, the causal impact of E&Y’s negligence only arose
once Travelers relied on the negligent audit. The jury concluded that Travelers
continued to reasonably rely on E&Y’s negligent audit up until the Pasha bond
decision was made. Thus, while FGH’s representations and inducements to
Travelers occurred over a period of time after the audit took place, the jury
effectively determined that E&Y’s negligence operated concurrently with the
inducements of FGH’s management in causing Travelers to issue the Pasha
bond, rather than FGH’s representations acting as a superseding cause. This is
consistent with the testimony of Pete and Schwait that they simultaneously
relied on the accuracy of the $60 million Petrodrill estimate along with the
representations as to FGH’s improved financial status in deciding to issue the
bond. And in contrast to Touche Ross, where due care on the part of the auditor
could in no way have prevented the bank president’s fraud, the evidence
presented at trial provided a sufficient basis for the jury to conclude that had
E&Y exercised due care with respect to its audit, then Travelers would not have
17
No. 07-60379
issued the Pasha bond.7
Finally, based on the evidence at trial, the jury could have reasonably
concluded that E&Y’s negligence played a role in enabling some of FGH’s
intervening representations. See Southland Mgmt. Co. v. Brown, 730 So. 2d 43,
46-47 (Miss. 1999) (examining, as part of a superseding cause analysis, whether
the intervening force operates independently of the original negligence). For
example, one reason FGH was able to claim that its liquidity campaign was
sufficient to cover its estimated losses was because it could point back to E&Y's
negligent audit that attested to the accuracy of the Petrodrill loss figure. As
Schwait and Pete testified, when FGH continued to tell them that the Petrodrill
loss estimate was $60 million, the underwriters relied on the fact that the figure
had been tested and found by E&Y to have a reasonable accounting basis in the
1999 financials.
At this stage, the only question we ask is whether there is evidence
sufficient such that a reasonable jury could have reached the conclusion reached
by this jury as to the lack of a superseding cause. While the FGH liquidity
campaign and the representations of FGH management came after the audit,
and played an undeniable role in causing Travelers to issue the Pasha bond, the
jury could have reasonably concluded that the intervening acts of FGH’s
management did not sever the causal chain between Travelers’ harm and E&Y’s
negligent audit. Accordingly, the evidence does not justify our reversing the
jury’s conclusion on this issue that the Mississippi Supreme Court has held to
be uniquely within the province of the fact finder. See O’Cain, 603 So. 2d at
830. In conclusion, we find that there was sufficient evidence to support the
jury’s finding that E&Y’s negligence proximately caused 25% of Travelers’ harm
7
We also note that while the jury eventually attributed fault to FGH, unlike the bank president
in Touche Ross, there is no indication that the representations made by FGH management were
intentionally false, or that they could give rise to criminal liability so as to trigger an analysis under
§ 448 of the Restatement.
18
No. 07-60379
that resulted from issuance of the Pasha bond. As such, the district court
properly denied E&Y’s motion for judgment as a matter of law on this ground.
C
E&Y contends that the jury's verdict as to liability, specifically with
regards to reasonable reliance and proximate causation, was against the great
weight of the evidence and that a new trial is warranted. As noted above, our
review of the district court's denial of a motion for a new trial is more deferential
than our review of a motion for judgment as a matter of law. See Foradori, 523
F.3d at 497. In this context, an abuse of discretion can be shown only if there is
an absolute absence of evidence to support the jury's verdict. See id. As we have
already concluded that the jury's verdict was sufficiently supported to survive
E&Y's motion for judgment as a matter of law, we necessarily find that the
district court did not abuse its discretion in denying the motion for new trial on
these grounds. See id.
IV
E&Y argues that it should be entitled to a new trial because the district
court erred in its jury charge and verdict form in that the jury was not allowed
to assign fault to Travelers.8 Pursuant to MISS. CODE ANN. § 85-5-7, E&Y
contends that the jury should have been able to assign fault to Travelers for
issuing the Pasha bond under such risky circumstances and therefore causing
its own loss.
In a diversity case, “the substance of jury charges is governed by state law,
but the form or manner of giving instructions is controlled by federal law.”
Broad. Satellite Int’l, Inc. v. Nat’l Digital Television Ctr., Inc., 323 F.3d 339, 347
(5th Cir. 2003). Our review of the jury charge and the verdict form are governed
by an abuse of discretion standard. Gen. Universal Sys., Inc. v. Lee, 379 F.3d
8
The jury interrogatory for allocation of fault provided for allocation to FGH and to E&Y, but
did not provide for fault allocation to Travelers.
19
No. 07-60379
131, 153 (5th Cir. 2004). Because district courts have substantial latitude in
crafting jury instructions, “the district court’s refusal to give a requested jury
instruction constitutes reversible error only if the 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 [party’s]
ability to present a given [claim].” Kanida v. Gulf Coast Medical Personnel LP,
363 F.3d 568, 578 (5th Cir. 2004) (internal quotation marks omitted, alterations
in original). The first question is whether E&Y’s requested instruction and
interrogatory allowing allocation of fault to Travelers represented a correct
statement of Mississippi law.
The applicable version of MISS. CODE. ANN. § 85-5-7 provides:
(1) As used in this section, “fault” means an act or omission of a
person which is a proximate cause of . . . economic injury, including,
but not limited to, negligence, malpractice, strict liability, absolute
liability or failure to warn. “Fault” shall not include any tort which
results from an act or omission committed with a specific wrongful
intent.
...
(7) In actions involving joint tort-feasors, the trier of fact shall determine
the percentage of fault for each party alleged to be at fault.
MISS. CODE. ANN. § 85-5-7 (reflecting amendments effective Jan 1, 2003 as
reported in 2003 Miss. Laws 1290; 3d. Ex. Sess., ch. 4, § 3). Section 85-5-7 is an
affirmative defense; the defendant bears the burden of providing proof sufficient
to establish fault attributable to a third party. See Eckman v. Moore, 876 So. 2d
975, 989 (Miss. 2004). E&Y claims that it provided evidence sufficient to prove
Travelers was at fault for its own injury by showing that: (1) Travelers “assumed
the risk” associated with bonding the Pasha project, thus causing a portion of its
own loss; (2) Travelers was negligent in bonding the Pasha project; or (3)
Travelers was at “fault” because it committed acts or omissions which were the
proximate cause of its own loss.
20
No. 07-60379
A
E&Y contends that Travelers should be held at fault because it “assumed
the risk” associated with bonding the Pasha project by making a decision to
proceed with a “high risk surety” situation.9 To prove assumption of the risk, the
defendant must show that the injured party had subjective knowledge of a
specific risk posed by a dangerous condition, that the plaintiff appreciated the
danger associated with that risk, and then deliberately and voluntarily chose to
expose herself to the risk. See Huffman v. Walker Jones Equip. Co., Inc., 658 So.
2d 871, 873-74 (Miss. 1995); Shurley v. Hoskins, 271 So. 2d 439, 443 (Miss.
1973). We find suspect E&Y’s implication that bonding a “high risk” company
constitutes a “dangerous condition,” as no Mississippi case contemplates
applying assumption of the risk to a plaintiff’s “risky” business decision.
Moreover, E&Y submitted no evidence to suggest that Travelers had any
knowledge of E&Y’s negligent audit of the 1999 financials, which was a critical
component adding to the risk involved in bonding the Pasha project.
Accordingly, Travelers could not have fully appreciated or voluntarily assumed
the complete risk of its decision to bond the Pasha project. As such, we do not
believe that Travelers can have its recovery reduced based on an assumption of
9
In Churchill v. Pearl River Basin Dev. Dist., 757 So. 2d 940 (Miss 1999), the Mississippi
Supreme Court subsumed the traditional doctrine of assumption of the risk into its comparative
negligence doctrine:
We take this opportunity to hold once again that the assumption of risk doctrine is
subsumed into comparative negligence. Any actions which might constitute an
assumption of risk should be dealt with only in the context of the comparative
negligence doctrine. A jury is always free to decide that an act which constitutes an
assumption of risk was the sole proximate cause of a plaintiff's injuries. We see no
reason why acts which might constitute an assumption of risk should, as a matter of
law, create a complete bar to recovery. The comparative negligence doctrine gives juries
great flexibility in reaching a verdict. Any fault on the part of the plaintiff should be
considered only in the context of comparative negligence.
Churchill, 757 So. 2d at 943-44. In Churchill, the Mississippi Supreme Court obviously did away with
assumption of the risk as a complete bar to a plaintiff's recovery. However, the court recognized that
an “act” may still constitute an “assumption of risk.” Accordingly, we do not think the opinion meant
to do away with the concept of assumption of the risk as a distinct form of fault, that is the idea of
proving a plaintiff to be at fault for voluntarily assuming a subjectively known risk as opposed to merely
failing to take reasonable precaution (i.e., negligence).
21
No. 07-60379
risk theory.
B
We turn next to E&Y’s argument that it provided sufficient evidence for
a jury to allocate fault to Travelers based on Travelers’ negligence. Mississippi
is a “pure comparative negligence state,” Coho Res., Inc. v. Chapman, 913 So. 2d
899, 911 (Miss. 2005), and Mississippi law provides for reduction of damages “in
proportion to the amount of negligence attributable to the person injured.” See
MISS. CODE. ANN. § 11-7-15. A party is entitled to have the jury instructed as to
genuine issues of material fact regarding a plaintiff’s comparative negligence.
See Hill v. Dunaway, 487 So. 2d 807, 809 (Miss. 1986). The district court refused
to provide for allocation of fault to Travelers based on negligence because E&Y
had not presented expert testimony to establish the requisite standard of care
that a surety should exercise under the applicable circumstances. E&Y first
claims that expert testimony was unnecessary.
“The general rule in Mississippi is that expert testimony is not required
where the facts surrounding the alleged negligence are easily comprehensible to
a jury.” Wal-Mart Stores v. Johnson, 807 So. 2d 382, 388 (Miss. 2001). However,
“[e]xpert testimony is required to support an action for malpractice of a
professional man in those situations where special skills, knowledge, experience,
learning or the like are required.” Lovett v. Bradford, 676 So. 2d 893, 895 (Miss.
1996). E&Y argues that Travelers’ negligence is clear to a layman without the
need for expert testimony because Travelers issued a $70 million bond in the
face of heavy risk, failed to consult E&Y when circumstances changed, failed to
require segregation of funds for the Pasha project, and failed to obtain sufficient
collateral for the bond. Also, E&Y points out that Travelers’ own risk
assessment system (“CSAMS”) scored FGH at a “100," the highest, and riskiest
score available. However, Travelers’ underwriters testified that it was not part
of the normal course of bond issuance to request an interim audit or to require
22
No. 07-60379
segregation of funds by a contractor. Travelers’ underwriters also indicated that
taking a security interest in the Pasha project represented an extra precaution
rather than failure to exercise due care. Finally, Schwait testified that Travelers
had 139 bond accounts with a CSAMS score of 100, and that it was not unusual
for Travelers to bond a company with such a score. While, after the fact, it is
easy to see that Travelers made a bad business decision in bonding the Pasha
project, this does not mean that the evidence showed that decision to be so
obviously unreasonable that a layman could deem Travelers negligent.
In Lovett, the Mississippi Supreme Court found that a jury did not need
expert testimony to find an insurance agent negligent in completing his client’s
fire insurance application. See Lovett, 676 So. 2d at 895. However, the Court
distinguished the uncomplicated case before it from potentially more complex
negligence cases involving issues such as “underwriting or actuarial tables or
anything so complicated as to necessitate the testimony of an expert witness.”
Id. This case fits into those distinguished from the simple case in Lovett: it
involves underwriting decisions related to the issuance of large-scale surety
bonds. The numerous exhibits submitted at trial reflect the complex nature of
the financial calculations and risk analysis that Travelers carried out over the
four months during which it evaluated its decision to bond FGH. Because
Travelers’ bond decision required its professionals to exercise “special skill,
knowledge, experience, [or] learning” in a complex factual scenario likely
unfamiliar to a lay juror, the district court did not err in requiring E&Y to
present expert testimony to establish whether a reasonable surety would have
acted as Travelers did in this case. Cf. Battenfeld of Am. Holding Co., Inc. v.
Baird, Kurtz & Dobson, 60 F. Supp. 2d 1189, 1211 (D. Kan 1999) (holding that,
in a case about “complex business practices” of corporate buyers, “a jury is not
in a position to determine how much diligence is due without the assistance
of . . . an expert witness”); Smith v. Gilmore Mem’l Hosp., Inc., 952 So. 2d 177,
23
No. 07-60379
181 (Miss. 2007) (refusing to apply “layman’s exception” to rule requiring expert
testimony in medical malpractice case because the situation “involv[ed]
judgment calls made by professionals”).
E&Y contends that if expert testimony was required then it provided the
necessary expert testimony to show that Travelers’ conduct unreasonably
deviated from the applicable standard of care. E&Y points to testimony from
Robert Davidson, one of its experts in the field of auditing. Davidson testified
that he had never heard of a surety company issuing a $70 million bond to a
company with “ratios” like those reflected in FGH’s 1999 year-end financials.
However, the district court specifically recognized that Davidson was not offered
as an expert as to surety underwriting, and that he could not testify as to the
reasonableness of Travelers’ bond decision. Accordingly, Davidson could not
provide the necessary expert testimony to establish Travelers’ negligence. See
City of Jackson v. Estate of Stewart, 908 So. 2d 703, 716 (Miss. 2005) (noting that
an expert's testimony should be confined to the expert's area of expertise and
holding that a trial judge abuses his discretion in allowing an expert to testify
outside his proffered area of expertise).
E&Y next contends that Travelers’ own underwriter, Pete, provided
testimony establishing that Travelers failed to exercise reasonable care when
issuing the Pasha bond. See Dickey v. Baptist Mem’l Hosp. - N. Miss., 146 F.3d
262, 265 (5th Cir. 1998) (noting that a medical malpractice defendant’s
testimony may be a source of proof of a breach of the standard of care where the
witness testifies “in such a clear way that the plaintiff has little trouble
demonstrating a deviation from that standard”); Meena v. Wilburn, 603 So. 2d
866, 870 n. 9 (Miss. 1992) (same). E&Y specifically refers to a statement from
Pete’s testimony where he said that he “knew that Friede Goldman Halter was
outside of any box that Travelers or Reliance or any other surety would want.”
This single statement does not establish that Travelers failed to act as a
24
No. 07-60379
reasonable surety in deciding to issue the Pasha bond. The context of Pete’s
testimony does not provide a clear picture of when he felt that FGH was “outside
of any box.” Upon first review of FGH’s financials, Pete admitted that he felt
FGH had “serious problems.” But both Pete and Schwait testified that they
became more comfortable with issuing bonds to FGH as FGH’s liquidity
campaign began to pick up steam. And when FGH eventually secured the extra
$200 million in available liquidity, Pete and Schwait made the decision to issue
the Pasha bond. The single statement identified suggests that, at some point in
time, Pete saw FGH as an undesirable company to bond. But interpreting the
statement as an admission of negligence would run counter to Pete’s testimony
as a whole, which indicated that the decision to bond the Pasha project was
justified based on the positive developments in FGH’s finances between May and
September. Accordingly, we do not believe that Pete’s “outside of any box”
statement constitutes an admission that Travelers acted unreasonably in issuing
the bond for the Pasha project. Cf. Meena, 603 So. 2d at 870 (recognizing that
the defendant continually admitted to breach of a duty to which he was bound).
The district court did not err in concluding that E&Y failed to provide necessary
expert testimony necessary to prove Travelers’ professional negligence.
C
Finally, we address E&Y’s argument that it only need show Travelers to
have been at “fault”))not necessarily that Travelers was guilty of assumption
of the risk or negligence. E&Y focuses on the terms of the statute, and argues
that fault is defined broadly as any “act or omission of a person which is a
proximate cause” of the plaintiff’s injury. Travelers’ responds that the statute
only applies to “joint tort-feasors,” and that to be considered a “tort-feasor,” a
party must be shown to be at least negligent. While no Mississippi court has
addressed the definition of fault in § 85-5-7 as applied to plaintiffs, lower
Mississippi courts have sided with Travelers with regard to non-plaintiffs,
25
No. 07-60379
recognizing that a party’s act or omission will not justify allocation of fault
unless the party could be found, at least, negligent.10 Moreover, interpreting
§ 85-5-7 to allow a plaintiff’s recovery to be reduced by “fault” that does not
amount to negligence would lead to a conflict with the longstanding statutory
source of Mississippi’s comparative negligence regime. See MISS. CODE. ANN.
§ 11-7-15 (providing for reduction to plaintiff’s recovery “in proportion to the
amount of negligence attributable” to the plaintiff (emphasis added)). E&Y
points to no Mississippi case allowing a plaintiff’s recovery to be reduced by
conduct that is less than negligent. Nor does E&Y provide any principled line
that could be drawn to measure “fault” that is less than negligent. While the
Mississippi Supreme Court has not addressed the specific question of the
breadth of “fault” under § 85-5-7, in making an Erie guess, we predict that it
would not require a jury instruction or verdict form allowing for fault allocation
to a plaintiff unless the jury has before it facts that would allow the jury to find
the plaintiff negligent in contributing to her own injury.
In sum, E&Y did not offer evidence sufficient to show that Travelers
assumed the risk of a known danger. As to negligence, the district court did not
err in concluding that E&Y failed to provide the necessary expert testimony to
establish Travelers’ negligence. Finally, Mississippi law does not require
apportionment of fault to a plaintiff absent evidence sufficient to show, at least,
10
See Int’l Paper Co. v. Townsend, 961 So. 2d 741, 763 (Miss. Ct. App. 2007) (holding that trial
court did not err in refusing to allow apportionment of fault to a defendant against whom plaintiff had
not made out a prima facie case of negligence); Jackson Pub. Sch. Dist. v. Smith, 875 So. 2d 1100, 1103
(Miss. Ct. App. 2004) (holding that trial court did not err in failing to allocate fault to the plaintiff’s
mother under § 85-5-7 when trial court had correctly found that mother was not negligent, and thus
not a “tort-feasor”); Miss. Dep’t of Transp. v. Trosclair, 851 So. 2d 408, 417 (Miss. App. 2003 (finding
that trial court erred in not allocating fault to a negligent plaintiff) (“Those who are negligent and
proximately contribute to an injury should be allocated a percentage of fault.” (citing MISS. CODE ANN.
§ 85-5-7(Rev. 1999)); cf. Pearl Pub. Sch. Dist. v. Groner, 784 So. 2d 911, 916 (Miss. 2001) (instructing
trial court on remand to apportion fault “to the extent that any of these other tort-feasors is deemed to
have been negligent thereby contributing to [plaintiff’s] injury and damages”); see also Cooper Indus.
v. Tarmac Roofing Sys., Inc., 276 F.3d 704, 715 n. 10 (5th Cir. 2002) (indicating that apportionment
under § 85-5-7 “only applies to damages incurred due to negligence” but not to damages based on
breach of contract).
26
No. 07-60379
negligence on the plaintiff’s part. Accordingly, the district court did not abuse
its discretion in denying E&Y’s request for an instruction and verdict form that
would have allowed apportionment of fault to Travelers. A new trial is
unwarranted on this ground.
V
For the foregoing reasons, we AFFIRM the district court’s denial of E&Y’s
motions for new trial and judgment as a matter of law.
27