Pike County , MS v. Indeck Magnolia, LLC
Filing
42
Memorandum Opinion and Order granting 17 MOTION for Summary Judgment as to Tort and Related Counterclaims on Grounds of Immunity. Defendant Indeck's claims for breach of the implied duty of good faith and fair dealing, and conspiracy to interfere with contractual relations, are dismissed. Signed by District Judge Tom S. Lee on 8/5/11 (LWE)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
PIKE COUNTY, MISSISSIPPI
BY ITS BOARD OF SUPERVISORS
VS.
PLAINTIFF
CIVIL ACTION NO. 3:11CV57TSL-MTP
INDECK MAGNOLIA, LLC
DEFENDANT
MEMORANDUM OPINION AND ORDER
This cause is before the court on the motion of plaintiff/
counterdefendant Pike County, Mississippi for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure on the
tort and implied breach of contract counterclaims asserted against
it by defendant/counterplaintiff Indeck Magnolia, LLC (Indeck).
Indeck has responded in opposition to the motion and the court,
having considered the memoranda of authorities, together with
attachments, submitted by the parties, concludes the motion is
well taken and should be granted.
The present litigation concerns a certain parcel of land
owned by Indeck and located in Pike County, Mississippi.
Indeck
purchased the property from Pike County for the purpose of
constructing and operating a wood pallet manufacturing facility.
On December 22, 2010, Pike County filed suit against Indeck in the
Chancery Court of Pike County, Mississippi, alleging that under
the terms of the parties’ contract, Indeck had two years within
which to construct the said facility, failing which Pike County
had the right to re-purchase the property for Indeck’s original
purchase price, $128,400; the County sought specific performance
of Indeck’s alleged obligation to convey title to the property to
Pike County.
Contemporaneously with filing suit, the County filed
a Lis pendens notice in the Chancery Court land records.
Indeck removed the case to this court on the basis of
diversity jurisdiction, then filed its answer, along with a
counterclaim against the County for breach of contract, breach of
the implied duty of good faith and fair dealing, and conspiracy to
interfere with contractual relations.
Indeck alleged that Pike
County’s actions in filing the lawsuit and Lis pendens notice
violated the contract, as the County had agreed to a modification
extending the two-year completion deadline, and alleged further
that the County’s actions were undertaken in an effort to block
Indeck’s planned sale of the subject property to a third party,
Investar Redevelopment LLC.
By the present motion, the County seeks dismissal of
Indeck’s counterclaims for breach of the implied duty of good
faith and fair dealing and conspiracy to intentionally interfere
with contractual relations, on the basis of sovereign immunity.1
1
The breach of contract counterclaim is not at issue on
the present motion; the County has no immunity to claims for its
alleged breach of contract. See Gulfside Casino P'ship v.
Mississippi State Port Auth., 757 So. 2d 250, 256 (Miss. 2000)
2
The Mississippi Tort Claims Act (MTCA), Miss. Code Ann. § 11-46-1
et seq., defines the parameters for sovereign immunity within this
state.
Jackson v. Estate of Stewart ex rel. Womack, 908 So. 2d
703, 709 (Miss. 2005).
The MTCA initially provides in § 11-46-3
that governmental entities, like Pike County,2 “always have been
and shall continue to be immune from suit at law or in equity on
account of any ... tortious act or omission or breach of implied
term or condition of any warranty or contract ... by the state or
its political subdivisions....,” Miss. Code Ann. § 11-46-3; then,
§ 11-46-5 effects a limited waiver of sovereign immunity “from
claims for money damages arising out of the torts of such
governmental entities and the torts of their employees while
acting within the course and scope of their employment,” Miss.
Code Ann. § 11-46-5.
In its motion, Pike County originally asserted that its
sovereign immunity from suit “on account of any ... breach of
implied term or condition of any ... contract...,” as set forth in
(“The general rule is that when the legislature authorizes the
State's entry into a contract, the State necessarily waives its
immunity from suit for a breach of contract.”); see also Jackson
v. Estate of Stewart ex rel. Womack, 908 So. 2d 703, 711 (Miss.
2005) (Mississippi Tort Claims Act limited waiver of sovereign
immunity “does no violence to the reasoning in prior decisions
which refused to allow the state and its political subdivisions to
invoke sovereign immunity to escape its written contractual
obligations.”).
2
See Miss. Code Ann. § 11-46-1(g) (defining “governmental
entity” to include the state and political subdivisions); § 11-461(i)(defining “political subdivision” to include counties).
3
§ 11-46-3, is not waived by § 11-46-5(1), which by its express
terms waives sovereign immunity only from claims “arising out of
the torts of governmental entities and the torts of their
employees....”
See § 11-46-5(1) (emphasis added).
In its
response, however, Indeck pointed out that in Estate of Stewart,
supra, the Mississippi Supreme Court held that § 11-46-5(1)’s
waiver of tort immunity applied to a claim for breach of implied
contract and thus permitted the plaintiff therein to proceed
against a governmental entity on a breach of implied contract
theory.
See Estate of Stewart, 908 So. 2d 703, 711 (Miss. 2005)
(holding that while § 11-46-3 grants immunity to the state and its
political subdivisions for “breach of implied term or condition of
any warranty or contract,” § 11-46-5 provides a limited waiver of
this immunity); see also Whiting v. University of Southern
Mississippi, 62 So. 3d 907, 919 (Miss. 2011) (holding that MTCA
waived university’s sovereign immunity as to plaintiff’s claim for
breach of implied contractual term or warranty) (citing Estate of
Stewart).
In rebuttal, Pike County has implicitly acknowledged
that under the court’s holding in Estate of Stewart, and more
recently in Whiting, its immunity as to Indeck’s claim for breach
of the implied duty of good faith and fair dealing is likely
considered to have been waived by § 11-46-5(1).
It submits,
however, that if this claim is covered by the MCTA’s waiver of
4
immunity, then it is subject to dismissal for the reason that
Indeck failed to provide presuit notice, as required by the Act.
In light of Estate of Stewart, this court must conclude that
the MTCA’s waiver of sovereign immunity, as interpreted by the
Mississippi Supreme Court, applies to Indeck’s claim for breach of
the duty of good faith and fair dealing.3
3
However, the court
While the waiver of immunity in § 15-46-5(1) would
readily extend to a tortious breach of implied term or condition
of any warranty or contract, it is not apparent to this court that
a waiver of immunity for the torts of governmental entities and
their employees was intended to effect a waiver of immunity from a
claim for the nontortious breach of implied term or condition of
any warranty or contract; yet that is evidently what the court
held in Estate of Stewart, with no explanation of its reasoning.
See 21st Avenue, Ltd. v. City of Gulfport, 988 So. 2d 412, 417,
417 n.3 (Miss. Ct. App. 2008) (observing that “[w]hile [the
§ 15-46-5(1)] waiver contains no explicit reference to implied
warranty and implied-contract claims against governmental
entities, the supreme court in Estate of Stewart determined,
without explanation, that the section 11-46-5 waiver applied to a
breach of implied contract claim” and specifically held that “the
breach of the implied term or condition of warranty or contract
does not have to be tortious”). The 21st Avenue Court, after
noting it was “bound to uphold and apply all precedent handed down
from the supreme court” and was not “empowered to reverse the
precedent surrounding the issue presented,” id. at 417 n.3
(citation omitted), held based on Estate of Stewart that a
plaintiff’s implied-contract causes of action were governed
exclusively by the MTCA. Id.
It may be that a claim for breach of the implied duty of good
faith and fair dealing would be properly categorized as a claim
for tortious breach of an implied contract term. See Braidfoot v.
William Carey College, 793 So. 2d 642, 651 (Miss. Ct. App. 2000)
(“The tort of breach of a duty of fair dealing, which emanates
from the law on contracts, provides that ‘[a]ll contracts contain
an implied covenant of good faith and fair dealing in performance
and enforcement.’”) (citation omitted); cf. Bobby Kitchens, Inc.
v. Mississippi Ins. Guar. Ass'n, 560 So. 2d 129, 134-135 (Miss.
1989) (“[T]he ‘tort’ of breach of ‘an implied duty of good faith
and fair dealing,’ being a hybrid of contract, is not a tort in
5
further concludes that this claim must be dismissed on account of
Indeck’s acknowledged failure to comply with the MTCA’s notice of
claim provisions.
Section 11-46-11(1) of the MTCA states:
After all procedures within a governmental entity have
been exhausted, any person having a claim for injury
arising under the provisions of this chapter against a
governmental entity or its employee shall proceed as he
might in any action at law or in equity; provided,
however, that ninety (90) days prior to maintaining an
action thereon, such person shall file a notice of claim
with the chief executive officer of the governmental
entity.
See Kimball Glassco Residential Center, Inc. v. Shanks, 2011 WL
2237604, 2 (Miss. 2011) (“A party instigating a claim under the
MTCA must file a notice of claim with the chief executive officer
of the governmental entity ninety days before maintaining an
action.) (citing § 11–46–11(1)).
While the Mississippi Supreme
Court has recently held that the notice of claim requirement is
not jurisdictional and thus subject to waiver, see Stuart v. Univ.
of Mississippi Med. Ctr., 21 So. 3d 544, 550 (Miss. 2009), the
requirement continues to “‘impose[] a condition precedent to the
right to maintain an action,’” Miss. Dep't of Pub. Safety v.
Stringer, 748 So. 2d 662, 665 (Miss. 1999), so that, absent
the general sense.”) (citation omitted). But under Estate of
Stewart, whether tortious or nontortious, the court must conclude
that the County’s immunity as to such claim is waived by
§ 15-46-5(1).
6
waiver, dismissal is required for noncompliance with the notice
requirement.
Indeck does not dispute that it did not give notice of claim
to the County’s chief executive officer at any time prior to
filing its counterclaim herein.
However, citing Black’s Law
Dictionary, 2d ed. at p. 747 (1950), which states that “[t]o
maintain a suit or action is to commence or institute it,” Indeck
contends it never “commenced” or “initiated” a legal action
against the County.
Instead, the lawsuit was commenced by Pike
County, and Indeck merely asserted its claims via counterclaim
filed in response to the County’s own complaint.
Indeck
concludes, therefore, that it was not required to provide a notice
of claim and that its claim is not subject to dismissal for
failure to provide such notice.
In the court’s opinion, the fact that Indeck’s claim was
asserted via counterclaim and not as an original action commenced
by Indeck does not obviate the notice of claim requirement.
In
Zumwalt v. Jones County Board of Supervisors, 19 So. 3d 672, 688
(Miss. 2009), the claims under consideration were asserted against
the County Board of Supervisors by way of counterclaim.
And while
the court held that the MTCA did not apply to Zumwalt’s
counterclaim for intentional interference with contract, see infra
at 9, it observed that her counterclaim for conversion was
“arguably subject to the MTCA, so pre-suit notice to the
7
governmental entity of such a claim generally is required.”
at 689.
Id.
Although the court ultimately found it “unnecessary to
address whether Zumwalt failed to adhere to the MTCA's notice
requirement for her conversion claim” since she had no ownership
interest in anything she claimed had been wrongfully converted,
the court’s opinion indicates the court considered compliance with
the notice provision was required for Zumwalt’s conversion
counterclaim.4
Since Indeck has effectively conceded it failed to
give the required notice of claim, its counterclaim for breach of
the implied duty of good faith and fair dealing must be dismissed.
The County argues that it is entitled to dismissal of
Indeck’s claim against it for conspiracy to interfere with
Indeck’s contract with Investar since this claim is among the
4
The court notes that other courts, addressing pre-suit
notice requirements in other contexts, have reached different
conclusions on whether pre-suit notice provisions apply to
counterclaims. For example, in Nerbonne, N.V. v. Lake Bryan
International Properties, the court implicitly recognized that a
counterclaim was subject to a notice requirement but denied
summary judgment because the record did not reflect that the
counterclaimant “neglected to make the demand” or that the statute
of limitations would cause him to be “unable to timely comply with
the pre-notice requirements of the statute.” 689 So. 2d 322, 326
(Fla. Ct. App. 5 Dist. 1997). But in Helle v. Brush, 53 Ill.2d
405, 409, 292 N.E.2d 372 (Ill. 1973), the court held that “the
notice sections of (Illinois’) Tort Immunity Act should not be
construed to bar an action by an injured party who failed to serve
notice of injury ... on such entity, if he is first sued by the
entity”). 53 Ill. 2d 405, 409, 292 N.E. 2d 372, 374-375 (Ill.
1973).
8
torts excepted from the MTCA’s waiver of sovereign immunity.5
While the MTCA generally waives a governmental entity’s tort
immunity, § 11-46-5(2) excepts certain intentional torts from this
waiver, providing that “a governmental entity shall not be liable
or be considered to have waived immunity for any conduct of its
employee if the employee’s conduct constituted . . . malice.”
The Mississippi Supreme Court held in Zumwalt v. Jones County
Board of Supervisors that tortious interference with contract
falls within this exception, stating,
Subsection (2) of Mississippi Code Section 11–46–5
provides that torts constituting fraud, malice, libel,
slander, defamation, or any criminal offense other than
traffic violations are not within the course and scope
of employment. Miss. Code Ann. § 11–46–5(2) (Rev.
2002). Thus, these intentional torts are outside the
scope of the MTCA's waiver of immunity, and the MTCA
does not apply.
Tortious interference with business relations and
contracts requires proof of malice as an essential
element. Therefore, the MTCA does not apply to these
torts ....
19 So. 3d 672, 688 (Miss. 2009).
While Indeck does not dispute that the County would be immune
from a claim for intentional interference with contract, it argues
that it has not asserted a claim for intentional interference with
contract and that it has instead asserted a claim for civil
5
Because the MTCA does not apply to all claims against
governmental entities, each claim must be examined for MTCA
application. Zumwalt v. Jones County Bd. of Sup'rs, 19 So. 3d
672, 688 (Miss. 2009).
9
conspiracy to interfere with its contract with Investar, which
Indeck submits does not require proof of malice.
opinion, Indeck’s position is without merit.
In the court’s
As the County notes,
an actionable civil conspiracy must be “a combination of persons
for the purpose of accomplishing an unlawful purpose or a lawful
purpose unlawfully.”
Levens v. Campbell, 733 So. 2d 753, 761
(Miss. 1999) (rejecting claim of conspiracy to tortiously
interfere with contractual relations since the plaintiff
“failed to show that [the defendant] maliciously interfered with
her employment”).
As the County aptly observes, no one can have a
state of mind to “agree” to commit an unlawful act of maliciously
interfering with a contract without themselves having, at the time
of that agreement, a state of mind which includes malice.
See
also Ryals v. Pigott, 580 So. 2d 1140, 1156 (Miss. 1990) (no
agreement to interfere with business enterprise could be
actionable as civil conspiracy because alleged purpose of
agreement did not involve conduct which would itself have been an
actionable tort); cf. McBroom v. Payne, No. 1:06cv1222-LG-JMR,
2010 WL 3942010, 9 (S.D. Miss. Oct. 6, 2010) (holding that claim
for civil conspiracy to use excessive force “constitute[d] some
form of malice,” and therefore, “these alleged acts cannot be
considered ‘within the course and scope of employment’ under the
MTCA).
10
It follows that Pike County’s agreeing with others to
maliciously interfere with Indeck’s contractual relations would
“constitute malice” itself, and the County is as much immune from
Indeck’s conspiracy claim as it is immune from Indeck’s claim of
malicious interference itself.
For this reason, Indeck’s
conspiracy claim is due to be dismissed.6
Based on the foregoing, it is ordered that Pike County’s
motion for partial summary judgment is granted, and Indeck’s
claims for breach of the implied duty of good faith and fair
dealing, and conspiracy to interfere with contractual relations,
are dismissed.
SO ORDERED this 5th day of August, 2011.
/s/Tom S. Lee
UNITED STATES DISTRICT JUDGE
6
Even if the MTCA applied to this claim, the claim would
be dismissed along with the breach of implied duty of good faith
and fair dealing claim, on account of Indeck’s failure to comply
with the notice of claim requirement. See supra 6-8.
11
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