Mrs. Lucille Jurisich Breeland et al.,plaintiffs-appellants, Cross Appellees, v. Hide-a-way Lake, Inc. et al., Defendants-appellees, Cross Appellants,hide-a-way Lake Club, Inc., and Hide-a-way Lake Propertyowner's Association, Inc., Intervenors.mrs. Lucille Jurisich Breeland et al., Plaintiffs-appellants, v. Hide-a-way Lake, Inc., Defendants-appellees, 585 F.2d 716 (5th Cir. 1978)

Ray M. Stewart, for Intern'l Land, Inc., et al.

Thomas W. Tyner, Hattiesburg, Miss., for other interested parties in both cases.

Dan Hedges, Houston, Tex., Ray M. Stewart, Picayune, Miss., for Hide-A-Way Lake Inc., et al. in 77-1244.

Appeals from the United States District Court for the Southern District of Mississippi.

Before COLEMAN, SIMPSON and TJOFLAT, Circuit Judges.

TJOFLAT, Circuit Judge:

This diversity action¹  was brought by purchasers of residential sites in the Hide-A-Way Lake development located near Picayune, Mississippi. Joined as defendants were the developer and others purportedly involved in the enterprise. Plaintiffs alleged that they were induced to purchase their sites through various fraudulent misrepresentations made by the defendants, and they sought damages and other relief. Following the first stage of the trial on the merits, the district court, on February 10, 1976, entered a partial final judgment dismissing the case as to some of the defendants for want of in personam jurisdiction. Subsequently, when the trial on the merits was concluded, the court found that the plaintiffs had failed to make out a case as to any of the defendants and on January 6, 1977 entered a final judgment dismissing all claims. We consolidated the plaintiffs' separate appeals from these judgments.² 

* Hide-A-Way Lake is a weekend resort community located approximately fifty miles from New Orleans, the appellants' place of residence. Appellants were made aware of the community's existence through various newspaper advertisements and other promotional activities conducted in New Orleans. These advertisements and promotional activities, appellants contend, contained fraudulent misrepresentations as to the nature and quality of facilities to be provided and induced them to make their purchases.³ 

Named as parties defendant were Hide-A-Way Lake, Inc. (Hide-A-Way), a Mississippi corporation, the developer; International Land, Inc. (International), a Texas corporation and sole stockholder of Hide-A-Way; James W. Fair and Thomas Gordon, Jr., officers and directors of Hide-A-Way; Michael Gulla, formerly a vice-president and director of Hide-A-Way and a director of International; Antoinette M. Gulla, an International stockholder; Crystal Systems, Inc. (Crystal), a Texas corporation licensed in Mississippi, the owner and operator of the development's water system; and Donald Ginn, a real estate salesman. Two parties subsequently intervened as defendants: Hide-A-Way Lake Club, Inc., a Mississippi corporation and owner of the community's common facilities, which had an option to purchase the water system, and Hide-A-Way Lake Property Owners' Association, Inc., a Mississippi nonprofit corporation made up of the residential owners in the subdivision, to which the stock of Hide-A-Way Club, Inc., had been assigned.

The suit was filed in the District Court for the Southern District of Mississippi. The plaintiffs invoked the Mississippi long-arm statute⁴  for the purpose of obtaining in personam jurisdiction over the nonresident defendants: International, Fair, Gordon, and the Gullas. Each nonresident interposed a timely Fed. R. Civ. P. 12(b) (2) objection to the court's jurisdiction, claiming that the Mississippi long-arm statute was not available to nonresident plaintiffs such as the appellants in this case. Their objections were overruled. Record, vol. 1, at 96. These jurisdictional attacks were reconsidered at the trial and upheld; the partial final judgment was entered dismissing the nonresident defendants.⁵ 

On the evidence before it, the court found that Hide-A-Way had made one of the fraudulent misrepresentations charged in the plaintiffs' complaint, the one concerning the availability of a golf course at the development site. In the partial final judgment the court retained jurisdiction for the purpose of receiving further evidence to determine the appropriate measure of damages. Supplemental testimony of witnesses, in the form of depositions, was subsequently filed by the parties. This testimony, together with all the other evidence previously presented in the case, was considered by the court as to all the parties, and a final judgment was entered exonerating the defendants.⁶  Partial Record at 5657. Although the court found that the plaintiffs had not been defrauded or misled, or even subjected to a material misrepresentation, and that they were entitled to no relief, the court taxed the costs of the litigation against one of the prevailing defendants, Hide-A-Way.

In these appeals, appellants contend (1) that the district court erred in holding that the Mississippi long-arm statute is not available to nonresident plaintiffs for the purpose of obtaining in personam jurisdiction over nonresident defendants and (2) that the court's finding that actionable fraudulent misrepresentations were not made is clearly erroneous. Hide-A-Way cross-appeals, asking us to reverse the district court's taxation of costs against it.

II

The amenability of a nonresident defendant to a diversity action in a federal district court is governed by the law of the forum state. Accordingly, a district court may exercise in personam jurisdiction over a foreign defendant only if a state court could do so in the proper exercise of state law, including the state's long-arm statute. Mack Trucks, Inc. v. Arrow Aluminum Castings Co., 510 F.2d 1029, 1031 (5th Cir. 1975); Arrowsmith v. United Press International, 320 F.2d 219, 223 (2d Cir. 1963) (en banc); Fed. R. Civ. P. 4(d) (7); See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938).

Under the Mississippi long-arm statute⁷  there are three categories of nonresident defendants who are subject to personal jurisdiction: (1) any nonresident who makes a contract with a resident of Mississippi to be performed in whole or in part by any party in that state, (2) any nonresident who commits a tort in whole or in part in the State of Mississippi against a Mississippi resident, and (3) any nonresident who does any business or performs any work or service in the state. C. H. Leavell & Co. v. Doster, 211 So. 2d 813, 814 (Miss.1968).

Appellants maintain that the third category of defendants may be called to answer when sued by persons not residents of Mississippi. In dismissing this action against the nonresident defendants for lack of in personam jurisdiction, the district court stated as follows:

The plaintiffs in this case are residents and citizens of the state of Louisiana. The contract of sale as to each of the plaintiffs expressly provides that: "Buyer acknowledges that buyer does not expect to use the property as buyer's principal residence." It is not the policy of the courts of Mississippi to extend its jurisdiction under that statute in any controversy wherein a non-resident plaintiff asserts a claim and seeks to procure jurisdiction under this wholesome statute designed and intended for the sole use and protection of residents and citizens of the state of Mississippi who wish to assert some extended jurisdiction of non-residents who are not available for personal service of process and are involved in a controversy with the resident of the state of Mississippi. The motions of the nonresident defendants for dismissal of this claim will be sustained without prejudice or advantage to anyone.

Record, vol. 2, at 509-10. The appellants assert that it is apparent from this language that the trial court misconstrued the statute. They also claim that the court's construction is violative of the privileges and immunities clause of the United States Constitution.⁸ 

Neither the briefs of the parties nor our own research indicate that these precise questions have been resolved by the Supreme Court of Mississippi. But existing Mississippi case law, as well as the decisions of the federal district courts in Mississippi, strongly suggest that the appellants' positions are without merit.

The predecessor to the present Mississippi long-arm statute reached nonresident defendants only when it was demonstrated that they had "do(ne) any business or perform(ed) any character of work or service in this state . . . ." 1940 Miss. Laws ch. 246 (formerly codified at Miss.Code Ann. § 1437 (1942)). Mississippi courts construing this "doing business" provisions have consistently found that it was designed for the purpose of providing Mississippi residents with a means of acquiring personal jurisdiction over nonresidents. See Davis-Wood Lumber Co. v. Ladner, 210 Miss. 863, 50 So. 2d 615, 621 (1951); Lee v. Memphis Publishing Co., 195 Miss. 264, 14 So. 2d 351, 357 (1943) (Roberds, J., dissenting); Brown & Scott, In Personam Jurisdiction Under Mississippi's Long Arm Statute, 43 Miss. L.J. 1, 12 (1972) (only residents of Mississippi may utilize the statute to secure jurisdiction over a nonresident). More recently, the Supreme Court of Mississippi has held that a foreign corporation qualified to do business in the State of Mississippi is a resident within the meaning of the statute and is entitled to utilize its provisions. C. H. Leavell & Co. v. Doster, 211 So. 2d 813 (Miss.1968). We read this holding to mean that a foreign corporation not so qualified cannot invoke the terms of the long-arm statute.⁹ 

The federal district courts confronted with this question have almost uniformly held that the Mississippi long-arm statute is not available to a nonresident plaintiff in a diversity action against a nonresident defendant. See F. L. Crane Co. v. Cessna Aircraft Co., 73 F.R.D. 384 (N.D. Miss. 1976); McAlpin v. James McKoane Enterprises, Inc., 395 F. Supp. 937, 941 (N.D. Miss. 1975); American International Pictures, Inc. v. Morgan, 371 F. Supp. 528 (N.D. Miss. 1974). But see Daniels v. McDonough Power Equipment, Inc., 430 F. Supp. 1203, 1209 (S.D. Miss. 1977). Morgan was a diversity suit by nine foreign corporations against a Florida resident. The defendant, conceding that he was doing business in Mississippi, contended that he was beyond the reach of the Mississippi long-arm statute because the plaintiff nonresident corporations were not qualified to do business in the state. In response, the plaintiffs asserted that the defendant's doing business in the state was dispositive of the jurisdictional question. The district court sustained the motion to dismiss. In holding that the "doing business" provision of the long-arm statute was available to resident plaintiffs only, the court said:We are thus of the view that by the enactment of the state's long-arm statute, as consistently construed by prior cases, the state legislature intended to afford a remedy only to residents who might have claims or grounds of action against nonresidents from activity done within the state, thus obviating the necessity for its citizens to resort to a foreign jurisdiction for enforcement of their rights. When taken in its entirety, the long-arm statute was clearly enacted for the benefit of residents only, and the legislation has not been expanded through the process of judicial interpretation to include nonresident plaintiffs not qualified to do business within the state. Contrary to plaintiffs' assertions, we perceive no defect under federal constitutional standards for limiting a long-arm statute to resident plaintiffs since a state is not obliged to make its courts available to nonresidents, who themselves are not doing business in the state, to sue other nonresidents. We readily acknowledge that the classification of persons or corporations for legislative purposes must be based on some reasonable ground or difference bearing a proper and just relation to the object sought to be accomplished. Here, the object sought to be accomplished is the protection of the rights of Mississippi residents, as first proclaimed in Lee v. Memphis Publishing Company, (195 Miss. 264, 14 So. 2d 351 (1943)); and this classification is in no way discriminatory. Sugg v. Hendrix, (142 F.2d 740 (5th Cir. 1944)).

371 F. Supp. at 532.

As for the appellant's claim that the district court gave the statute an unconstitutional construction, we think our opinion in Sugg v. Hendrix, 142 F.2d 740 (5th Cir. 1944), puts the issue to rest. In disposing of a contention that the Mississippi long-arm statute denied nonresidents due process and equal protection of the law and infringed their privileges and immunities, we said:

(I)t seems that the power of the state to confer jurisdiction in the courts over the persons of individual non-residents by such substituted service depends entirely upon whether or not such enabling statute is a reasonable exercise of the police power of the state in the regulation of the business that is being conducted in the state by such non-resident individual defendants. If the regulation be one for the protection of the health, safety, and welfare of those within its borders, rather than a mere attempt to extend the jurisdiction of its courts over citizens beyond its borders, the state is not without power to legislate to that end. The statute must, if fairly possible, be so construed as to be constitutional.

142 F.2d at 743. We are convinced that this language and the holding of the case require us to reject the constitutional claim the appellants urge here. We hold, therefore, that the "doing business" provision of the Mississippi long-arm statute may not be invoked by a nonresident plaintiff and that the statute, so construed, does not deny a nonresident plaintiff privileges and immunities secured under the Constitution.

III

With respect to the appellants' claims of fraudulent misrepresentation, it is clear that, under Mississippi law, which the Erie doctrine requires us to apply, All elements of fraud must be established by clear and convincing evidence before the complaining party can recover. Hamilton v. McGill, 352 So. 2d 825, 831 (Miss.1977); Crawford v. Smith Brothers Lumber Co., 274 So. 2d 675, 677 (Miss.1973); Rhyne v. Gammil, 215 Miss. 68, 60 So. 2d 500, 502 (1952). The elements of the cause of action 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 should be acted upon by another in a manner reasonably contemplated, (6) the hearer's ignorance of its falsity, (7) the hearer's reliance on its truth, (8) the right to rely on it, and (9) consequent and proximate injury. Hamilton v. McGill, 352 So. 2d at 831; Crawford v. Smith Brothers Lumber Co., 274 So. 2d at 678; McMahon v. McMahon, 247 Miss. 822, 157 So. 2d 494, 501 (1963); Gardner v. State, 235 Miss. 119, 108 So. 2d 592, 594 (1959).

The district court applied the proper "clear and convincing" test in assessing the appellants' claims. Record, vol. 2, at 513. As to their allegations regarding the lake, sewage, swimming pool, and paved roads, the court, in its partial final judgment, found "these complaints . . . captious in the extreme and certainly . . . not add(ing) anything to the heavy burden which these plaintiffs have to show that they have been defrauded by this defendant, and to show such fact by clear and convincing evidence as they must." Id. at 515. Only the representation about the availability of a golf course was characterized by the district court as fraudulent. Id. at 515-16, 518. And after receiving additional evidence and reexamining the entire record, the district court concluded that even this claim was meritless because none of the appellants had been misled or had purchased lots because of their proximity to a golf club.¹⁰  Partial Record at 53.

Under Fed. R. Civ. P. 52(a), our scope of review is limited to determining whether the district court's findings are clearly erroneous, giving due regard for the opportunity of the trial judge to assess the credibility of witnesses. When, as here, we are reviewing findings made pursuant to the clear and convincing evidence test, it seems to us that the trial judge's credibility choices must be given considerable weight. "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence, is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542, 92 L. Ed. 746 (1948); Mercer v. C. A. Roberts Co., 570 F.2d 1232, 1236 n. 5 (5th Cir. 1978).

IV

The remaining question is whether the district court erred in taxing all costs against Hide-A-Way, a prevailing party in this litigation. Fed. R. Civ. P. 54(d) provides for the allowance of costs in civil litigation. It states, in pertinent part, as follows: "Except when express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs . . . ." There is no applicable statute or rule providing for the allowance of costs in this case;¹¹  therefore, rule 54(d) itself provides the operative standard.

It is well established that the district court enjoys discretion in determining who shall bear the costs of litigation and how much of the costs shall be apportioned to a taxed party. United States v. Mitchell, 580 F.2d 789, 793-94 (5th Cir. 1978); In re Nissan Antitrust Litigation, 577 F.2d 910, 918 (5th Cir. 1978); 10 C. Wright & A. Miller, Federal Practice and Procedure § 2668 (1973). The rule does, however, embody the policy that a prevailing party will ordinarily be awarded costs, or will at most be denied an award of costs if the circumstances so warrant. See id. at 142-43. Here, the district court took the unwonted course of Taxing a prevailing party. The court provided no justification for its decision, and on this record we can imagine none. Hence, we find that the court abused its discretion in taxing the costs to Hide-A-Way. Therefore, we remand to the district court for a reallocation of costs.

V

The judgment of the district court is affirmed in all respects except the taxation of costs. As to the taxation of costs, the judgment is reversed, and the cause is remanded for further proceedings.

AFFIRMED IN PART, REVERSED IN PART, and REMANDED.