United Plumbing & Heating Company, Inc. v. AmSouth Bank
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2007-CA-01944-COA
UNITED PLUMBING & HEATING COMPANY,
INC., PRICE’S GLASS & MIRROR CO., INC.,
JAMES THOMAS D/B/A T’S TILE, CARR
PLUMBING SUPPLY, INC., RICKY JACKSON
D/B/A JACKSON SHEET METAL & WELDING,
TOMMY MEADOWS D/B/A F&M
CONSTRUCTION, PRECISION CEILING, LLC
AND RONNIE DEFOREST
APPELLANTS
v.
AMSOUTH BANK, SOMETIMES IDENTIFIED
AS REGIONS BANK AS SUCCESSOR FROM
THE MERGER WITH AMSOUTH BANK F/K/A
DEPOSIT GUARANTY NATIONAL BANK
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANTS:
ATTORNEYS FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEE
9/14/2007
HON. BOBBY BURT DELAUGHTER
HINDS COUNTY CIRCUIT COURT
WILLIAM W. FULGHAM
J. JEFFREY TROTTER
DAVID W. DONNELL
CIVIL - CONTRACT
SUMMARY JUDGMENT FOR AMSOUTH
BANK
AFFIRMED - 7/21/2009
BEFORE LEE, P.J., IRVING AND BARNES, JJ.
LEE, P.J., FOR THE COURT:
FACTS AND PROCEDURAL HISTORY
¶1.
W.D. Russum planned to build a Wee Care Child Care Center (Wee Care) in Byram,
Mississippi, and selected AmSouth Bank to finance the project. Russum and AmSouth
entered into a loan agreement in which Russum agreed to repay the funds loaned for the
project and grant AmSouth the project’s deed of trust. Russum then chose United Plumbing
& Heating Company, Inc. (United) to serve as the project’s general contractor. Russum and
United subsequently entered into agreements that acknowledged AmSouth’s limited role as
lender in the project and specified AmSouth would have no liability for Russum’s payment
or performance associated with the project. The two parties also agreed that AmSouth’s
duties were strictly limited to those outlined in the loan agreement between AmSouth and
Russum.
¶2.
In 2003, United employed several subcontractors to perform various tasks during the
building process. As progress was made, United asked Russum to release funds borrowed
from AmSouth through pay applications. AmSouth hired FAS, a construction management
company, to oversee the pay applications on the project. United and Russum also executed
an agreement consenting to FAS’s role. Wee Care then filed for bankruptcy, and the
contractors went unpaid. United, Price’s Glass & Mirror Co., Inc.; James Thomas d/b/a T’s
Tile; Carr Plumbing Supply, Inc.; Ricky Jackson d/b/a Jackson Sheet Metal and
Construction; Tommy Meadows d/b/a F&M Construction; Precision Ceiling, LLC; and
Ronnie DeForest (collectively referred to as United) subsequently filed suit against Russum,
Wee Care, AmSouth, and FAS in the Circuit Court of Hinds County asserting various claims
including breach of contract, negligence, stop-notice violation, fraud, and quantum meruit.
¶3.
AmSouth filed a motion for summary judgment, which was granted by the trial court.
United now appeals the summary judgment and asserts that the trial court erred in (1) reading
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Mississippi Code Annotated section 31-3-15 (Rev. 2008) to require the construction contract
to be null and void, (2) finding that no claims for breach of contract could be maintained
against AmSouth, and (3) granting summary judgment in favor of AmSouth.
STANDARD OF REVIEW
¶4.
In reviewing a lower court’s grant of summary judgment, this Court employs a de
novo standard of review. Anglado v. Leaf River Forest Prods., Inc., 716 So. 2d 543, 547
(¶13) (Miss. 1998). Summary judgment “shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with any affidavits,
if any, show that there is no genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law.” M.R.C.P. 56(c). This Court will consider all of
the evidence before the lower court in the light most favorable to the non-moving party.
Palmer v. Anderson Infirmary Benevolent Ass’n, 656 So. 2d 790, 794 (Miss. 1995).
¶5.
The party opposing the motion “may not rest upon the mere allegations or denials of
his pleadings, but his response, by affidavits or as otherwise provided in this rule, must set
forth specific facts showing that there is a genuine issue for trial.” M.R.C.P. 56(e). The
entry of summary judgment is mandated if the non-movant “fails to make a showing
sufficient to establish the existence of an element essential to that party’s case, and on which
that party will bear the burden of proof at trial.” Galloway v. Travelers Ins. Co., 515 So. 2d
678, 683 (Miss. 1987) (citation omitted).
DISCUSSION
I. INTERPRETATION OF MISSISSIPPI CODE ANNOTATED SECTION
31-3-15
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¶6.
In its first issue on appeal, United argues that the trial court incorrectly found that the
construction contract entered into between Wee Care and United was null and void under
Mississippi Code Annotated section 31-3-15. Section 31-3-15 states:
No contract for public or private projects shall be issued or awarded to any
contractor who did not have a current certificate of responsibility issued by
said board at the time of the submission of the bid . . . . Any contract issued
or awarded in violation of this section shall be null and void.
¶7.
The trial court found that even though United held a current certificate of
responsibility, it was not the appropriate certificate for the work United contracted to
perform. The trial court stated in its findings:
There are no regulations, minutes, or orders promulgated by the Board that
interpret whether or not “certificate of responsibility” in § 31-3-15 means any
certificate or the specific certificate necessary to work on a particular project.
However, the Court believes that the rules, orders, and minutes of the Board
implicitly accept this Court’s interpretation that § 31-3-15 is designed to
enforce the overall purpose of the Act. Thus, . . . the Court interprets § 31-315 to mean that a contractor must have a specific certificate of responsibility
to prevent the contract being null and void.
United argues that the language of the statute simply refers to “a current certificate of
responsibility” and does not require any certain classification. Thus, United asserts that since
it held a current certificate of responsibility issued by the State Board of Contractors of the
State of Mississippi (Board), regardless of which classification, the contract with Wee Care
was valid.
¶8.
Despite not specifying if a specific certificate of responsibility is required by statute,
the Board is given the power by this section of the code “[t]o adopt rules and regulations
setting forth the requirements for certificates of responsibility, the revocation or suspension
thereof, and all other matters concerning same . . . .” Miss. Code Ann. § 31-3-13(f). The
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duty of the Board is to “conduct an objective, standardized examination of an applicant for
a certificate to ascertain the ability of the applicant to make practical application of his
knowledge of the profession or business of construction in the category or categories for
which he has applied for a certificate of responsibility.” Miss. Code Ann. § 31-3-13(a). The
Board has “the power and responsibility to classify the kind or kinds of works or projects that
a contractor is qualified and entitled to perform under the certificate of responsibility issued
to him. Such classification shall be specified in the certificate of responsibility.” Miss. Code
Ann. § 31-3-13(g). Finally, Mississippi Code Annotated section 31-3-21(1) (Rev. 2008)
states, “It shall be unlawful for any person who does not hold a certificate of responsibility
issued under this chapter . . . to submit a bid, enter into a contract, or otherwise engage in or
continue in this state in the business of a contractor, as defined in this chapter.”
¶9.
According to the Rules and Regulations of the State Board of Contractors, the Board
has seven major classifications of work from which an applicant for a certificate of
responsibility must choose: building construction; highway, street, and bridge construction;
heavy construction; municipal and public works construction; electrical work; mechanical
work; and specialty work. State Board of Contractors Rule 2(b). According to Rule 2(a) of
the Rules and Regulations of the State Board of Contractors, an applicant for a certificate of
responsibility “will not be classified or permitted to bid on or perform a type or types of work
not included in his request.” The Rules go on to state the penalty for bidding on a project
outside of the applied for classification as follows:
In any case in which a holder of a Certificate of Responsibility has bid outside
the classification contained in his, her or its Certificate of Responsibility, the
Executive Secretary of the State Board of Contractors shall notify each holder
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to appear before the Board at its next regular meeting and show cause, if
possible, why the holder’s Certificate of Responsibility shall not be suspended.
State Board of Contractors Rule 5.
¶10.
Norman Brooks, executive secretary of the Board, testified by affidavit that he
reviewed the Board’s records for the legal classifications of United and found that it held the
following specialty classifications: asbestos abatement or removal; heat, air conditioning, and
ventilation; plumbing; and renovations. Brooks testified that an entity contracting to do work
as a construction manager must have a certificate of responsibility in construction
management or the major classification of building construction. See State Board of
Contractors Rule 19. An exception is made to the specific classification requirement when
the project is a private project totaling less than $100,000. Miss. Code Ann. § 31-3-1(b)
(Rev. 2008). An exception is also made when at least fifty percent of the total cost of the
project is for work within the particular specialty classification held. State Board of
Contractors Rule 4. According to Brooks, since United did not have a certificate of
responsibility in either classification and no exception was claimed, United was not licensed
to do work as a prime contractor, subcontractor, or sub-subcontractor as a construction
manager.
¶11.
We find that the contract entered into between United and Wee Care was null and
void because United failed to possess the appropriate certificate of responsibility for the type
of work it undertook to perform. Having found that United’s contract with Wee Care was
void, it follows that any contractual obligations AmSouth may have owed the subcontractors
are also void. Therefore, we find that this issue is without merit.
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II. BREACH OF CONTRACT
¶12.
In its second issue on appeal, United argues that the trial court erred in finding no
claims for breach of contract against AmSouth. In order to establish a breach of contract
claim, United bore the burden of proving: (1) the existence of a valid and binding contract
between it and AmSouth, (2) that AmSouth breached the contract to which it was a party, and
(3) that United was damaged monetarily. Suddith v. Univ. of S. Miss., 977 So. 2d 1158, 1175
(¶35) (Miss. Ct. App. 2007). United claims it entered into a valid contract with AmSouth
through the “Subordination Agreement” as well as other agreements that granted AmSouth
broad project powers and various project duties.
¶13.
Questions concerning the construction of a contract are questions of law to be
reviewed by the trial court. Miss. State Highway Comm’n v. Patterson Enters. Ltd., 627 So.
2d 261, 263 (Miss. 1993). Here, the trial court found that no contractual relationship was
formed between the parties. The trial court further concluded that AmSouth failed to enter
into any relationship with United which would hold AmSouth liable for damages. The trial
judge stated, “The relationships of the parties to this action are clear: the subcontractors
contracted with United, who contracted with the Owner. AmSouth’s contracts regarding its
loan were with the Owner, not with the plaintiffs . . . without any privity of contract with
AmSouth, [the] plaintiffs cannot establish a claim for breach of contract.”
¶14.
We find that AmSouth possessed no contractual relationship with United. Therefore,
we find it unnecessary to address the other contractual arguments pertaining to breach found
in United’s brief. Thus, this issue is without merit.
III. SUMMARY JUDGMENT
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¶15.
In its third issue on appeal, United argues that the trial court erred in granting
AmSouth’s motion for summary judgment because it has a valid negligence claim. United
argues that AmSouth had a duty to protect it from an unreasonable risk of damage and that
AmSouth breached that duty which ultimately caused it damage. United attempts to bolster
this argument by claiming that AmSouth failed to investigate why Russum asked AmSouth
to withhold payments designated for United or to follow AmSouth’s own dispute resolution
policies. United also claims the proper standard of care owed to them by AmSouth was that
of “reasonable diligence.”
¶16.
We disagree with United’s argument and hold its negligence claim invalid as a matter
of law. We find no contract, statute, or law that would establish that AmSouth had a duty
to (1) pay money to a party it was not obligated to pay; (2) investigate or contradict a valid
request made by its client, Russum; or (3) adhere to its own dispute resolution policies when
United was neither a client nor a party to any valid contract involving AmSouth. As to
United’s reasonable-diligence argument, the supreme court held in Riley Building Suppliers,
Inc. v. First Citizens National Bank, 510 So. 2d 506, 509 (Miss. 1987), that a reasonablediligence duty only applied to lien-priority disputes and did not create a common-law duty
between banks and contractors. Therefore, absent an owed duty in a negligence claim,
United’s tort claim is without merit.
¶17. THE JUDGMENT OF THE HINDS COUNTY CIRCUIT COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANTS.
KING, C.J., MYERS, P.J., IRVING, GRIFFIS, BARNES, ISHEE AND
ROBERTS, JJ., CONCUR.
CARLTON AND MAXWELL, JJ., NOT
PARTICIPATING.
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