Tyson v. Quality Homes of McComb, Inc. et al
Filing
71
ORDER granting in part and denying in part 67 Motion for Default Judgment; granting in part and denying in part 68 Motion for Default Judgment. Signed by Honorable David C. Bramlette, III on November 24, 2014. (AA)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
SAMUEL TYSON
VS.
PLAINTIFF
CIVIL ACTION NO: 3:13-cv-887-DCB-MTP
QUALITY HOMES OF MCCOMB, INC.
FRESH START TRANSPORT, INC., AND
CAPPAERT MANUFACTURED HOUSING, INC.
DEFENDANTS
ORDER GRANTING IN PART AND DENYING IN PART
MOTIONS FOR DEFAULT JUDGMENTS
This cause is before the Court on Plaintiff’s, Samuel Tyson,
Motion for Default Judgment as to Fresh Start Transportation, Inc.,
[docket entry no. 67] and Motion for Default Judgment as to Quality
Homes of McComb, Inc. [docket entry no. 68]. Having reviewed the
motions and the record in this case, the Court finds as follows:
I. Factual and Procedural Background
In late June of 2012, Plaintiff Samuel Tyson entered into a
contract with Defendant Quality Homes of McComb, Inc., (“Quality
Homes”) for the purchase of a new manufactured home. Tyson made a
down payment of $60,000 and selected a 28' x 80' home on June 13,
2012, but he did not sign a contract that day. Shortly thereafter,
however, Tyson found a used home through a private seller and
requested a refund of his down payment. Quality Homes instead asked
Tyson to select a different home, and on June 27, 2012, Tyson
signed a contract with Quality Homes for the purchase of a home
1
different from the one he had originally selected. Quality Homes
agreed then that the home would not be delivered until Tyson’s lot
was prepared.
The contract he signed was blank. It “contained only a stamped
signature, and did not contain the serial number of the home Tyson
selected.” Compl. p. 3, ECF No. 1. Tyson alleges that he made his
selection based on his disability because “he could easily climb
the steps at the entrance to the home and he could easily utilize
the bath tub.” Compl. p. 3. At some later time not specified in the
complaint, Quality Homes gave Tyson a second copy of the contract
that contained the serial number of the home that was delivered and
a notary stamp. See Compl. Ex. B., ECF No. 1-2.
On August 13, 2012, Defendant Fresh Start Transportation,
Inc., (“Fresh Start”) delivered and installed a home on Tyson’s
lot, at Quality Homes’s direction. Tyson had informed Quality Homes
the week before that his lot was still not prepared. Tyson was out
of town the day the home was delivered and advised the defendants
by telephone that he did not accept delivery of the home because
the
lot
was
still
not
prepared.
Further,
the
home
that
was
delivered was not the home that Tyson had selected, and it was
damaged and in need of repair. Tyson attributes a number of the
defects to the manufacturer, Defendant Cappaert Manufactured Homes,
Inc. (“Cappaert”).
Tyson filed suit on June 26, 2013. A summons was issued to
2
Quality Homes, Fresh Start, and Cappaert on September 25, 2013.1
Tyson personally served process on Robert A. Yawn, the registered
agent for both Fresh Start and Quality Homes, on October 3, 2013,
in a Burger King parking lot in Hammond, Louisiana. Both Fresh
Start and Quality Homes failed to answer the Complaint within the
twenty-one (21) days required by Federal Rule of Civil Procedure
12(a). Tyson originally filed motions for default judgment on
February 5, 2014. The Court, however, denied these motions as
premature and directed the clerk’s office to make an entry of
default as to both defendants instead. See Order, ECF No. 48. An
entry of default was made as to Fresh Start and Quality Homes on
September 16, 2014. See Clerk’s Entry of Default, ECF No. 49. Tyson
renewed his motions for default judgment on October 7, 2014.
II. Analysis
Federal Rule of Civil Procedure 55 governs default judgments.
“Securing a default judgment is a three-step procedure involving
the defendants’ default, entry of default, and a default judgment.”
Twist & Shout Music v. Longneck Xpress, N.P., 441 F. Supp. 2d 782,
783 (E.D. Tex. 2006) (citing New York Life Ins. Co. v. Brown, 84
F.3d 137, 141 (5th Cir. 1996)). In step one, a defendant defaults
when he “has failed to plead or otherwise defend” a suit against
him. Fed. R. Civ. P. 55(a). In step two, a plaintiff demonstrates
1
Cappaert answered the Complaint on November 4, 2013 and is
not subject to Tyson’s motions for default judgment.
3
that default “by affidavit or otherwise, [and] the clerk . . .
enter[s] the [defendant]’s default.” Id. The Court found in its
previous
order
that
both
Fresh
Start
and
Quality
Homes
had
defaulted and that Tyson had shown their default. Having obtained
the clerk’s entry of default, Tyson continues to step three. In
cases other than certain debt collection actions, a party “must
apply to the court for a default judgment.” Fed. R. Civ. P.
55(b)(2).
“[A] ‘party is not entitled to a default judgment as a matter
of right, even where the defendant is technically in default.’”
Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (quoting Ganther
v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996)). “Default judgments are
a drastic remedy, not favored by the Federal Rules [of Civil
Procedure] and resorted to by courts only in extreme situations.”
Sun Bank of Ocala v. Pelican Homestead & Sav. Ass’n, 874 F.2d 274,
276 (5th Cir. 1989). “The Federal Rules[] are designed for the
just, speedy, and inexpensive disposition of cases on their merits,
not for the termination of litigation by procedural maneuver,” and
default judgment is only available “when the adversary process has
been halted because of an essentially unresponsive party.” Id.
(internal quotation omitted).
But by defaulting, the defendant “admits the plaintiff’s wellpleaded allegations of fact . . .,” and if those facts entitle a
plaintiff to relief, then the plaintiff is entitled to a default
4
judgment. Nishimatsu Const. Co., Ltd. v. Houston Nat’l Bank, 515
F.2d 1200, 1206 (5th Cir. 1975) (“There must be a sufficient basis
in the pleadings for the judgment entered.”). Thus, the Court will
look at each of the counts in Tyson’s complaint to see whether he
is entitled to default judgment against either Quality Homes or
Fresh Start.
A. Count I: “Breach of Fiduciary Duties”2
The Court must first determine whether the facts establish a
fiduciary relationship between Tyson and either Quality Homes or
Fresh Start. Under Mississippi law, a fiduciary relationship may
arise out of a contractual relationship in four circumstances:
(1) the activities of the parties go beyond their
operating on their own behalf, and the activities are for
the benefit of both; (2) where the parties have a common
interest and profit from the activities of the other; (3)
where the parties repose trust in one another; and (4)
where one party has dominion or control over the other.
Holland v. Peoples Bank & Trust Co., 3 So. 3d 94, 101 (Miss. 2008).
The Court finds that the facts do not establish a fiduciary
relationship between Tyson and either Quality Homes or Fresh Start,
and, therefore, Tyson is not entitled to default judgment on this
claim.
B. Count II: “Breach of Contract”
In a claim for breach of contract in Mississippi, a plaintiff
must prove: (1) the existence of a valid contract and (2) breach by
2
The Court will use the same titles that Tyson gave to his
separate counts for the subheadings in this order.
5
the defendant. Bus. Commc’ns, Inc. v. Banks, 90 So. 3d 1221, 122425 (Miss. 2012). Tyson has attached a document entitled “Bill of
Sale and Purchase Agreement” to his complaint. See Compl. Ex. A,
ECF No. 1-1. The Court accepts this as proof of the existence of a
valid contract. It is signed by Tyson and a representative of
Quality Homes. Having found a valid contract, the Court now turns
to whether Quality Homes or Fresh Start, acting as Quality Homes’s
agent, breached the agreement. However, the contract as signed does
not contain all of the terms of the agreement. Crucially, it does
not contain a serial number for a home, and it does not contain the
parties’ agreement about delivery–that delivery would not occur
until Tyson’s lot was prepared. Because the serial number is
missing from the written agreement, the Court finds that the
parties did not intend it to “constitute a complete integration of
the agreement between the parties” and that the parol evidence rule
does not apply here. F. R. Hoar & Sons, Inc. v. McElroy Plumbing &
Heating Co., 680 F.2d 1115, 1117 (5th Cir. 1982). Therefore, the
Court accepts Tyson’s evidence about the missing terms of the
agreement.
Tyson avers two instances of breach: (1) that the wrong home
was delivered and (2) that the home was delivered before his lot
was prepared. Based on Tyson’s evidence the Court finds that Fresh
Start delivered the wrong home and at an inappropriate time under
the terms of the contract. Therefore, Tyson is entitled to default
6
judgment on this claim.
C. Count III: “Breach of Implied Covenants of
Good Faith and Fair Dealing”
“Mississippi law recognizes an implied covenant of good faith
and fair dealing
in every
contract.”
Baldwin
v.
Laurel
Ford
Lincoln-Mercury, Inc., 32 F. Supp. 2d 894, 898 (Miss. S.D. 1998)
(citing Cenac v. Murry, 609 So. 2d 1257, 1272 (Miss. 1992)); Miss.
Dep’t of Envtl. Quality v. Pac. Chlorine, Inc., 100 So. 3d 432, 441
(Miss. 2012); Miss. Code Ann. § 75-1-304 (2010).3 However, this
duty
arises
only
in
the
performance
of
a
contract,
not
the
negotiation of its terms. Baldwin, 32 F. Supp. 2d at 899; Miss.
Code Ann. § 75-1-304 (“Every contract . . . imposes an obligation
of good faith in its performance and enforcement.”). Thus, to
whatever extent Tyson alleges bad faith in the negotiation, he is
not entitled to default judgment.
His claims, however, support default judgment on bad faith
performance of the contract. “Good faith is the faithfulness of an
agreed purpose between two parties, a purpose which is consistent
with [the] justified expectations of the other party. The breach of
good faith
is
bad
faith characterized
by
some
conduct which
violates standards of decency, fairness or reasonableness.” Cenac,
3
Several Mississippi cases, including Cenac v. Murry, cite
to Miss. Code Ann. Section 75-1-203 (1972) for statutory support
for the implied covenants of good faith and fair dealing. In
2010, the Mississippi legislature moved this language to Miss.
Code Ann. Section 75-1-304 (2010). Section 75-1-203 now
distinguishes between leases and security interests.
7
609 So. 2d at 1272 (citing Restatement (Second) of Contracts § 205,
100 (1979)). In an en banc opinion, the Mississippi Supreme Court
adopted the bad faith definition in Black’s Law Dictionary. See
Bailey v. Bailey, 724 So. 2d 335, 338 (Miss. 1998). Critical to the
definition in Bailey is that bad faith requires a “state of mind
affirmatively operating with furtive design or ill will” or “the
conscious doing of a wrong because of dishonest purpose,” not “an
honest mistake . . . but . . . some interested or sinister motive.”
Id. (quoting Black’s Law Dictionary 139 (6th ed. 1990)).
The Court finds that the delivery of the wrong home combined
with
the
after-the-fact
completion
of
the
contract
with
the
incorrect serial number violates the duty of good faith and fair
dealing. See
Contracts,
§
Cenac,
7.17,
609
So.
536-27
2d at
(1982))
1272
(quoting
(“Some
Farnsworth,
conduct,
such
as
subterfuge and evasion, clearly violates the duty.”). Quality Homes
delivered the wrong home and attempted to conceal this fact by
falsifying the original contract.4 Therefore, Tyson is entitled to
a default judgment on this claim against Quality Homes.
But Tyson has failed to demonstrate bad faith on the part of
Fresh Start. Fresh Start delivered the home with knowledge that the
lot was not yet prepared, but this does not demonstrate the
4
It is irrelevant whether Quality Homes inserted the
incorrect serial number before or after delivery of the wrong
home. In either case, the same inference of concealment can be
made.
8
requisite state of mind to find bad faith. Even though the facts
establish that Fresh Start intentionally breached the contract,
intentional
breach
is
not
equivalent
to
bad
faith
breach.
Therefore, Tyson is not entitled to default judgment against Fresh
Start on this claim.
D. Count IV: “Fraudulent Misrepresentation and/or Omission”
On a claim for fraudulent misrepresentation, a plaintiff must
prove by clear and convincing evidence:
(1)
(2)
(3)
(4)
(5)
and
(6)
(7)
(8)
(9)
a representation;
its falsity;
its materiality;
the speaker's knowledge of its falsity;
his intent that it should be acted on by the hearer
in the manner reasonably contemplated;
the hearer's ignorance of its falsity;
his reliance on its truth;
his right to rely thereon; and
his consequent and proximate injury.
Brothers v. Winstead, 129 So. 3d 906 (Miss. 2014) (quoting Holland,
3 So. 3d at 100). Looking to the admitted facts from the complaint,
the Court cannot find evidence that the representation (which home
would be delivered) was false at the time it was made or that
Quality Homes had knowledge that the representation was false.5 See
Webb v. Braswell, 930 So. 2d 387, 396 (Miss. 2006) (affirming
summary judgment where “there was no credible or relevant evidence
. . . to indicate that the statements were false at the time [the
5
The key difference between the analysis of the claim for
fraud and the claim for bad faith is when the intent was formed.
The timing of the concealment is irrelevant for bad faith, but it
must be present from the beginning for the fraud claim to stand.
9
defendant] supposedly made them”). Therefore, Tyson is not entitled
to default judgment against Quality Homes on this claim. Further,
the
Court
finds
that
Tyson
has
failed
to
make
a
claim
for
fraudulent misrepresentation against Fresh Start. Tyson is not
entitled to judgment against Fresh Start because there is no
evidence that Fresh Start made any representation to Tyson.
E. Count V: “Negligent Misrepresentation and/or Omission”
On a claim for negligent misrepresentation, a plaintiff must
prove by a preponderance of the evidence:
(1) a misrepresentation or omission of a fact;
(2) that the representation of omission is material or
significant;
(3) that the person/entity charged with the negligence
failed to exercise that degree of diligence and expertise
the
public
is
entitled
to
expect
of
such
persons/entities;
(4) that the plaintiff reasonably relied upon the
misrepresentation or omission; and
(5) that the plaintiff suffered damages as a direct and
proximate result of such reasonable reliance.
Holland, 3 So. 3d at 101 (quoting Hazlehurst Lumber Co. v. Miss.
Forestry Comm’n, 983 So. 2d 309, 313 (Miss. 2008)). The Court finds
that Tyson has satisfied the elements of a claim for negligent
misrepresentation on these facts. Therefore, he is entitled to
default judgment against Quality Homes on this claim. The Court
further finds that Tyson is not entitled to default judgment
against Fresh Start on this claim for the same reason discussed
above: the lack of a representation made by Fresh Start.
F. Count VI: “Unconscionability”
10
“An unconscionable contract ‘is one such as no man in his
senses and not under a delusion would make on the one hand, and as
no honest and fair man would accept on the other.’” Smith v.
Express Check Advance of Miss., LLC, — So. 3d —, —; No. 2013-CA00369-SCT, 2014 WL 4923169, at *3 (Miss. Oct. 2, 2014) (quoting
Terre Haute Cooperage v. Branscome, 35 So. 2d 537, 541 (Miss.
1948)). “Two strains of unconscionability are recognized—procedural
and substantive.” Caplin Enters., Inc. v. Arrington, 145 So. 3d
608, 614 (Miss. 2014) (citing E. Ford, Inc. v. Taylor, 826 So. 2d
709, 714 (Miss. 2002)). Tyson does not specify in his complaint
whether
the
contract
is
substantively
or
procedurally
unconscionable, so the Court will examine both.
A contract is procedurally unconscionable if one party can
show: “(1) lack of knowledge; (2) lack of voluntariness; (3)
inconspicuous print; (4) the use of complex, legalistic language;
(5) disparity in sophistication or bargaining power of the parties;
and/or (6) lack of opportunity to study the contract and inquire
about the terms.” Id. (citing MS Credit Ctr., Inc. v. Horton, 926
So. 2d 167, 177 (Miss. 2006)). The facts do not establish any of
these factors.
A contract is substantively unconscionable if its terms “are
so unreasonably favorable to one party that the contract imposes
oppressive terms on the weaker party.” Express Check Advance,
—
So. 3d at —; 2014 WL 4923169 at *4 (citing Covenant Health &
11
Rehabilitation
of
Picayune,
LP
v.
Estate
of
Moulds
ex
rel.
Braddock, 14 So. 3d 695, 699 (Miss. 2009)). Looking at the contract
and the additional terms established by Tyson, the Court cannot
find it so one sided as to “affront[] the sense of decency.” See
id. Even if the Court were to find that the terms were more
favorable to Quality Homes, “the fact that one provision of a legal
contract is more favorable to one party than to the other, does not
ordinarily render it ‘unconscionable.’” Terre Haute Cooperage, 35
So. 2d at 503 (internal quotation omitted).
The Court finds that the facts do not establish that the
contract
was
unconscionable–either
procedurally
or
substantively–and, therefore, Tyson is not entitled to default
judgment on this claim against Quality Homes. The Court further
finds that this claim was not made against Fresh Start because
there was no contract between Tyson and Fresh Start.
III. Order
IT IS HEREBY ORDERED that plaintiff’s Motion for Default
Judgment against Quality Homes of McComb, Inc., is GRANTED IN PART
and DENIED IN PART.
FURTHER ORDERED that plaintiff’s Motion for Default Judgment
against Fresh Start Transportation, Inc., is GRANTED IN PART and
DENIED IN PART.
FURTHER ORDERED that plaintiff’s claim for breach of fiduciary
duties is DENIED as to both motions.
12
FURTHER ORDERED that plaintiff’s claim for breach of contract
is GRANTED as to both motions.
FURTHER ORDERED that plaintiff’s claim for breach of implied
covenants of good faith and fair dealing is GRANTED as to the
motion against Quality Homes of McComb, Inc., and DENIED as to the
motion against Fresh Start Transportation, Inc.
FURTHER
ORDERED
that
plaintiff’s
claim
for
fraudulent
misrepresentation and/or omission is DENIED as to both motions.
FURTHER
ORDERED
that
plaintiff’s
claim
for
negligent
misrepresentation and/or omission is GRANTED as to the motion
against Quality Homes of McComb, Inc., and DENIED as to the motion
against Fresh Start Transportation, Inc.
FURTHER ORDERED that plaintiff’s claim for unconscionability
is DENIED as to both motions.
FURTHER
ORDERED
that
the
Court
will
hold
a
hearing
to
determine the amount of damages attributable to each claim under
Federal Rule of Civil Procedure 55(b)(2)(B).
SO ORDERED this the 24th day of November 2014.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?