Construction Claims

Statutes of Limitations and Repose

Statute of Repose       

Mississippi has a statute of repose regarding suits for construction defects. The statute provides that no claim may be brought to recover damages for “injury to property, real or personal, or for any injury to the person” which arises from a deficiency in the “design, planning, supervision, or observation of construction, or construction of an improvement to real property” more than six years “after the written acceptance or actual occupancy or use, whichever occurs first … by the owner.” This six-year limitation applies to all public and private construction projects. However, the statute expressly states that this limitation does not apply to “any person, firm or corporation in actual possession and control as owner, tenant or otherwise” at the time the defective construction causes injury. The limitation also does not apply to actions for wrongful death. The six-year statute begins to run upon the acceptance or occupancy of the owner. Mississippi Code Section 15-1-41.

Statute of Limitations

1. All actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued, and not after.
2. In actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury.
3. The provisions of subsection (2) of this section shall apply to all pending and subsequently filed actions.

Mississippi Code Section 15-1-49.

Right to Cure

There is no right to cure in Mississippi.

Indemnity and Contribution

Indemnity in Contract

Cases of indemnity in contract customarily arise in instances of special contracts whereby the indemnitor promises to save the indemnitee harmless from loss in the event of a lawsuit. Mississippi law disfavors contracts intended to exculpate a party from liability for his own negligence, although, with some exceptions they are enforceable. However, broad general waivers of negligence provisions are strictly construed against the party asserting them as a defense.

The basic rule used to interpret indemnity agreements is that the indemnitee is not entitled to be indemnified against his own negligence unless the language of the contract clearly and unequivocally demonstrates this to be the intention of the parties. Broad language in an indemnity contract has been found clear and unequivocal enough to protect an indemnitee against the consequences of his own negligence, even in the absence of specific language such as "indemnitor will hold the indemnitee harmless for the latter's own negligence." Where an indemnity agreement is expressed in general terms, courts may construe the language to adopt the common law indemnity requirement that there must be legal liability before a claim of indemnity arises. Where such is the case, an indemnitee defendant is not entitled to recover attorney's fees and expenses incurred in a suit in which it prevails, even though such expenses were specifically mentioned in the contract of indemnity. The common law requirement is in keeping with the general rule that an indemnitee may not simply settle a case and seek indemnification. As a rule, an indemnitee is entitled to indemnification only where he makes a payment reasonable in amount under compulsion rather than voluntarily.

Indemnity in Tort

Indemnity is the process of transferring the entire liability of one tortfeasor to another who in all fairness should pay it. Generally, one tortfeasor equally at fault is not entitled to indemnity from a co-tortfeasor. However, where "a joint [tortfeasor's] liability is secondary as opposed to primary, or is based on imputed or passive negligence, as opposed to positive negligence," equity may require that his legal responsibility be shifted to another joint tortfeasor. Generally, two prerequisites determine whether a tortfeasor is entitled to indemnity: (1) The damages which he seeks to shift were imposed upon him because of a legal obligation to the injured party; and (2) it appears that the party seeking indemnity did not actively or affirmatively take part in the wrong.

Contribution in Contract

The right of contribution between parties to a contract exists where one party has paid more than their share of the obligation. The rule allowing contribution between parties to a contract is equitable in nature and rests upon an implied contract of reimbursement and not upon the contract which was discharged. The doctrine of contribution between joint judgment debtors is considered contractual and allowed at common law.

Contribution in Tort

Contribution is a doctrine which allows an individual who has discharged an obligation for which another or others are also liable to recover the amount expended over his proportionate share. It is to be distinguished from indemnity in that the former distributes the loss equally among all tortfeasors, while the latter seeks to transfer legal responsibility to another who in all fairness should pay. Mississippi for many years adhered to the common law rule that except were modified by statute there was no right of contribution between joint tortfeasors. The result of this rule was that a joint tortfeasor could not pay the plaintiff's judgment and then demand contribution from his co-tortfeasor.

The common law rule in Mississippi has been statutorily changed. Any defendant who has been held jointly liable is entitled to contribution from the other joint tortfeasor. The paying tortfeasor, however, is entitled to contribution only in the amount proportionate to the percentage of fault of the nonpaying co-tortfeasor. The trier of fact is responsible for allocating the percentage of fault of each joint tortfeasor.

Certificate of Merit

Mississippi does not require a Certificate of Merit for Construction Defect claims.

Economic Loss Doctrine

Mississippi law generally allows for the recovery of pecuniary or economic damages. It is worth noting that the Mississippi Supreme Court has never recognized the “economic loss doctrine” which is applicable in product liability cases. Under the “economic loss doctrine,” economic damage to the product itself may only be pursued under a breach of warranty theory. However, the Mississippi Court of Appeals and several federal district courts have recognized and have applied the economic loss rule. There is no Mississippi case law applying the economic loss doctrine outside the realm of products liability, and courts in the Fifth Circuit, applying Mississippi law, have declined to apply the doctrine outside that realm.

Section 11-1-63 of the Mississippi Code, Mississippi's product liability statute, states that it applies to “any action for damages caused by a product, including, but not limited to, any action based on a theory of strict liability in tort, negligence or breach of implied warranty, except for commercial damage to the product itself.” In State Farm Mutual, the Mississippi Court of Appeals reasoned that, although the statute does not define “commercial damage to the product itself,” the language presumably means that defects in the product that adversely affect the product's monetary value are not within the scope of the statute's coverage. Thus, the product owner would have to seek a remedy on a warranty or contract theory.

Contractor Licensing Requirements

According to the Mississippi State Board of Contractors, all applicants are required to take the Mississippi Business and Law exam. Additionally, you will need to take a trade or NASCLA accredited exam if you are to be performing specialty work. Each specialty classification will fall under a major classification category: building construction, electrical, highway, street and bridge construction, heavy construction, mechanical, municipal, and public works. However, your contractor’s license will fall under either commercial and/or residential.

Common Law Claims

Breach of Contract

In its most basic form, an enforceable contract consists of an offer, an acceptance of that offer, and consideration. Stated more broadly, a valid contract must consist of the following six elements: (1) two or more contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition precluding contract formation. [T]he existence of a contract is a question of fact that is to be determined by a jury, or a trial judge when a trial is conducted without a jury.

Historically in Mississippi, proving that a party suffered monetary damages was considered an essential element to prevail on a breach of contract claim. That is no longer the case as the Mississippi Supreme Court has ruled that monetary damages are a remedy for breach of contract, not an element of the claim. Once a party has breached a contract, there are several remedies available to the injured party. Courts prefer to award legal or monetary remedies but will award nonmonetary remedies, or a combination of the two, when monetary damages alone would be inadequate.

Negligence

Regardless of the specific facts or type of case, a plaintiff must establish four basic elements: (1) a duty owed by the defendant, (2) the defendant's breach of that duty, (3) causation, and (4) injury to the plaintiff.

The plaintiff has the ultimate burden to prove each element by a preponderance of the evidence. The plaintiff must prove the defendant breached a duty owed to him or her which caused his or her injury. In conjunction with this ultimate trial burden and the Mississippi Rules of Civil Procedure, to reach a jury on a claim of negligence, the plaintiff must produce evidence sufficient to create a genuine issue of material fact such that a reasonable juror could find for the plaintiff.

Historically professional malpractice actions required proof of a professional-client relationship. This requirement necessitated that privity of contract existed between the parties to the litigation. The Mississippi legislature has abolished the necessity of privity of contract in all causes of action for economic loss brought on account of negligence. Consequently, a professional-client relationship no longer operates as a condition precedent to a malpractice action. Rather, the existence or non-existence of a professional client relationship is merely one factor to consider in determining the duty owed rather than the single factor which establishes that a duty is owed.

Breach of Warranty

1. Express Warranty

Express warranties are created in the following three ways: (1) by an affirmation of fact or promise that relates to the goods in question; (2) by a description of the goods in question; or (3) by a sample or model of the goods in question. To be valid, an express warranty must be part of the basis of the bargain.

Further, the warranty may be verbal or written. An effective express warranty does not require formal words such as “warrant” or “guarantee.” However, a mere affirmation of the value of goods or a statement purporting to be the seller's opinion or commendation of the goods does not create a warranty.

2. Implied Warranty of Merchantability

The Mississippi Code provides for two implied warranties in contracts for the sale of goods: (1) the implied warranty of merchantability and (2) the implied warranty of fitness for a particular purpose.

With respect to any sale of goods, there is an implied warranty that the goods are “merchantable” if the seller is a merchant with respect to goods of the kind. For goods to be “merchantable,” they must: (a) pass without objection in the trade under the contract description; (b) in the case of fungible goods, be of fair average quality within the description; (c) be fit for the ordinary purposes for which such goods are used; (d) run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved; (e) be adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promises or affirmations of fact made on the container or label if any.

To recover under the implied warranty of merchantability provision, a plaintiff must prove the following:

1. that a “merchant” sold “goods” and was a merchant with respect to “goods of the kind” involved in the transaction,
2. that the goods were not merchantable at the time of the sale,
3. that plaintiff incurred injuries and damages,
4. that injuries and damages were caused proximately and in fact by the defective nature of the goods, and
5. that seller was given notice of the injury.
3. Implied Warranty of Fitness for a Particular Purpose

The implied warranty of fitness for a particular purpose exists when the seller at the time of contracting has reason to know any particular purpose for which the goods are required, and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods.

Thus, for a plaintiff to recover under the implied warranty of fitness for a particular purpose, the evidence must be sufficient for the jury to find (1) the seller at the time of contracting had reason to know the particular purpose for which the goods were required; (2) the reliance by the plaintiff as buyer upon the skill or judgment of the seller to select suitable goods; and (3) the goods were unfit for the particular purpose.

Misrepresentation and Fraud

The essential allegations of an action for fraud and deceit are: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it be acted upon; (6) the hearer's ignorance of its falsity; (7) the hearer's justifiable reliance; and (8) the damages proximately resulting.

Statutory Claims

Mississippi Products Liability Act

The Mississippi Products Liability Act (MPLA) applies in any action for damages caused by a product, including, but not limited to, any action based on a theory of strict liability in tort, negligence, or breach of warranty. It provides the exclusive remedy for a products-liability claim against manufacturers, designers, or sellers of defective products. Claims against non-manufacturing and non-selling designers are outside the scope of the Act. The term “manufacturer,” for purposes of a strict liability claim, has been defined as a person or company who regularly and during their principal business, creates, assembles and/or prepares goods for sale to the consuming public. This definition does not include a service provider. Purely economic losses are also not recoverable in tort or under the Act. Though the Act creates a cause of action in tort for breach of express warranty it does not abrogate any warranty claims under the Uniform Commercial Code or common law negligence.

Unfair and Deceptive Trade Practices Act

A violation of the Unfair and Deceptive Trade practices Act gives rise to both a public and private cause of action. The public cause of action may be brought by a district or county attorney or the attorney general. Ordinarily, relief is an injunction; the court may, however, make such additional order as may be necessary, including the revocation of defendant's business license.

The private cause of action may be brought by a purchaser of consumer goods who has suffered damage because of a deceptive or unfair trade practice. A private party plaintiff is not entitled to recover reasonable attorney's fees.

Damages

Cost of Repair

In a case premised on damage to property, the law generally does not allow recovery of both diminution in value and cost of repair unless the diminution in value accounts for the cost of repairs. City of Jackson v. Keane, 502 So. 2d 1185, 1187 (Miss. 1987). Where costs of repairs are relied upon as the measure of damages, the proof must establish (1) that the repairs were necessary as the result of the wrongful act, and (2) that the cost was reasonable. Miller v. Vicksburg Masonic Temple, 288 So. 3d 372 (Miss. Ct. App. 2019). There is no requirement that the plaintiff repair the damaged property before he can recover. Estate of Burgess v. Trotter, 269 So. 3d 284 (Miss. Ct. App. 2018). Mississippi law does not require that the cost an injured party is entitled to receive to repair his property damaged by another must be diminished if the injured party is able to repair the damaged property himself at a cost less than that charged by a qualified commercial entity. Estate of Burgess v. Trotter, 269 So. 3d 284 (Miss. Ct. App. 2018). A buyer may be able to recover the reasonable cost of repair plus the property's diminution in market value related to nonrepairable defects. Harrison v. McMillan, 828 So. 2d 756, 772 (Miss. 2002).

Diminution in Value

Where the land, or buildings located on the property, has been damaged but the property may be restored to its former condition at a cost less than the value determine by the diminution of the value of the land, the cost of restoration of the property, plus compensation for the loss of its use, may be the measure of damages. Harrison v. McMillan, 828 So. 2d 756 (Miss. 2002). This rule, however, is usually restricted to the introduction of evidence to show a reduction, and not an increase, of damages above the diminution in value of the land resulting from the injury. Id. The plaintiff can choose either the reasonable cost of replacement or repairs, or diminution in value, and if he proves either with reasonable certainty he is entitled to damages if he is not unjustly enriched, and the defendant does not prove a more appropriate measure of damages. Locklear v. Sellers, 126 So. 3d 978 (Miss. Ct. App. 2013).

Punitive Damages

Punitive damages are an extraordinary remedy, reserved for the most egregious cases. T.C.B. Const. Co., Inc. v. W.C. Fore Trucking, Inc., 134 So. 3d 701, 704 (Miss. 2013). While punitive damages have traditionally been disfavored in commercial contract cases, State Farm Fire and Cas.

Co. v. Simpson, 477 So. 2d 242, 248–49 (Miss. 1985), the Mississippi Supreme Court has not hesitated to uphold them when the situation warrants. T.C.B. Const. Co., Inc. v. W.C. Fore Trucking, Inc., 134 So. 3d 701, 705 (Miss. 2013)

An award of punitive damages is governed by section 11-1-65 of the Mississippi Code. Under that section, only if compensatory damages have been awarded will the court hold an evidentiary hearing to determine whether the issue of punitive damages should be presented to the jury. T.C.B. Const. Co., Inc. v. W.C. Fore Trucking, Inc., 134 So. 3d 701, 704 (Miss. 2013). “The jury should be allowed to consider the issue of punitive damages if the trial judge determined under the totality of the circumstances and in light of defendant's aggregate conduct, that a reasonable, hypothetical juror could [determine] that the breach was the result of an intentional wrong or that a defendant acted maliciously or with reckless disregard of the plaintiff's rights.” Id. Stated differently, “[t]he breaches must rise to the level of an independent tort.” Cain v. Cain, 967 So. 2d 654, 668 (Miss. Ct. App. 2007). The fact that a party willingly breached a contract does not alone give rise to punitive damages. Id.

Consequential Damages

Mississippi has adopted the rule of Hadley v. Baxendale, 9 Exch 341, 156 Eng. Rep. 145 (1854), which allows recovery of losses resulting from a breach that were reasonably foreseeable at the time the contract was entered. Wright v. Stevens, 445 So. 2d 791, 798 (Miss. 1984). For example, when a contractor relies upon a subcontractor's bid in submitting a quote, and the subcontractor subsequently refuses to perform, the difference between the subcontractor's bid and the price the contractor had to pay another subcontractor is a reasonably foreseeable consequence of the subcontractor's breach. Hinson v. N & W Const. Co., Inc., 890 So. 2d 65 (Miss. Ct. App. 2004). However, consequential damages “must be measurable in monetary terms and must be reasonably certain. They may not be established by speculation or conjecture.” Wright v. Stevens, 445 So. 2d 791, 798 (Miss. 1984).

Joint & Several Liability

Mississippi law recognizes that in any civil action based on fault, the liability for damages caused by two or more persons is several only. Consequently, a joint tortfeasor is only liable for damage allocated to him by the trier of fact in direct proportion to his percentage of fault. Miss. Code Ann. § 85-5-7(2).

Attorneys’ Fees

As a rule, a prevailing party is not entitled to attorney's fees in the absence of a statute, contract, or the assessment of punitive damages. Stanton & Associates, Inc. v. Bryant Const. Co., Inc., 464 So. 2d 499 (Miss. 1985).

Coverage

Definition of an Occurrence

Occurrence is generally understood to mean an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Architex Ass’n, Inc. v. Scottsdale Ins. Co., 27 So. 3d 1148, 1157 (Miss. 2010).

Duty to Defend

The general rule in Mississippi and elsewhere is that a liability insurer has the duty to defend claims falling within coverage under the policy. Moeller v. American Guar. and Liability Ins. Co., 707 So. 2d 1062 (Miss. 1996). “The traditional test for whether an insurer has a duty to defend under the policy language ‘is that the obligation of a liability insurer is to be determined by the allegations of the complaint or declaration.’” Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714 (Miss. 2004). Federal courts applying Mississippi law have termed this the “allegations of the complaint rule.” Universal Underwriters Ins. Co. v. American Motorists Ins. Co., 541 F. Supp. 755, 762 (N.D. Miss. 1982). If the allegations made against the insured bring the action within the coverage of the policy, the insured is entitled to a defense of such allegations, even though the facts later reveal that the claims presented were not within coverage. American Guarantee and Liability Ins. Co. v. 1906 Co., 273 F.3d 605 (5th Cir. 2001).

Coverage Defenses

To recover on an insurance policy, an insured must prove that is loss was covered under the policy. Corban v. United Servs. Auto. Ass’n, 20 So. 3d 601, 619 (Miss. 2009). If the insured proves the same, the burden shifts to the insurer to prove that an exclusion in the policy applies. Cincinnati Ins. Co. v. Wilson, No. 2018-CA-01703-COA, 2021 WL 2101235 at *6 (Miss. Ct. App. May 25, 2021).

Consent Judgment

A consent judgment possesses the attributes of a contract and, when duly authenticated and especially after being filed, it is binding on the consenting parties if they are competent to contract and cannot be set aside or reviewed, except on a clear showing that it was obtained by fraud or the substantial equivalent thereof or was based on mutual mistake. Middlesex Banking Co. v. Field, 84 Miss. 646, 37 So. 139 (1904). The judgment should recite on its face that it was by consent, although this is not essential if the consent be sufficiently shown by other parts of the judicial record, provided the attorneys sign the judgment. Every consent judgment must be approved and signed by the attorney for all the parties to the action who may be represented by an attorney and interested in or affected thereby or it must be signed by all parties not represented before being presented to the judge for his or her signature.