United States District Court, S.D. Mississippi, Southern Division
FULL HOUSE RESORTS, INC. and SILVER SLIPPER CASINO VENTURE, LLC, Plaintiffs,
BOGGS & POOLE CONTRACTING GROUP, INC. and RONALD LUSTIG, Defendants.
MEMORANDUM OPINION AND ORDER
KEITH STARRETT, District Judge.
This matter is before the Court on the Motion for Summary Judgment  of the Defendant Boggs & Poole Contracting Group, Inc. ("Boggs") and the Motion to Strike  of the Plaintiffs Full House Resorts, Inc. and Silver Slipper Casino Venture, LLC. Having considered the submissions of the parties, the record, and the applicable law, the Court finds that both motions should be denied.
This action centers on certain alleged defects in the construction of the parking garage at the Silver Slipper Casino in Bay St. Louis, Mississippi. Full House Resorts, Inc. ("Full House") and Silver Slipper Casino Venture, LLC ("Silver Slipper") own and operate the Silver Slipper Casino (the "Casino"). In November of 2004, Silver Slipper contracted with Defendant Ronald Lustig for Lustig's provision of certain architectural services pertaining to the design and construction of the Casino and the attendant parking garage (the "Garage"). ( See Lustig Contract [14-1].) In May of 2006, Silver Slipper contracted with Boggs for the construction of the Casino and Garage. ( See Boggs Contract [7-1].) The construction of the Garage was complete as of February 7, 2007. Full House became an owner of the Casino/Garage in September of 2012, when it purchased 100% of the equity interests or securities of Silver Slipper.
Disputes between Silver Slipper and Boggs arose during the construction process regarding payments, expenses associated with delays, and the quality of the work performed to build the Garage. On June 14, 2007, Silver Slipper filed suit against Boggs and F-S Prestress, LLC ("F-S"), a subcontractor suppling pre-cast sections of concrete, in the Circuit Court of Hancock County, Mississippi (the "First Action"). ( See First Compl. [7-4].) Silver Slipper alleged that it incurred numerous expenses and lost patron revenue due to delays in the construction process. Silver Slipper further alleged that "the finished' garage is poorly constructed and meets neither the specifications nor expectations of Silver Slipper." (First Compl. [7-4] at ¶ 13.) Silver Slipper cited such problems with the Garage as "visual imperfections, " improper and incomplete caulking and sealing, unpainted and exposed structural elements, and uneven joints. (First Compl. [7-4] at ¶ 13.) The First Complaint [7-4] asserted four counts in support of liability: (i) breach of fiduciary duty against Boggs due to its failure to protect Silver Slipper's rights and interests regarding the subcontract performed by F-S; (ii) breach of contract against F-S based on its delay in performing under the subcontract, defects in the pre-cast concrete sections, and construction defects in the Garage; (iii) negligence against Boggs based on its failure to supervise F-S and ensure the work was completed within the specified schedule; and (iv) civil conspiracy against Boggs and F-S based on their respective breaches and Boggs' efforts to collect funds from Silver Slipper purportedly owed to F-S. Silver Slipper's claimed damages included the costs to repair the defective elements of the Garage and the diminished value of the Garage due to poor construction.
Silver Slipper, Boggs, and F-S participated in an unsuccessful mediation shortly after the filing of the First Action. These parties then submitted their dispute to arbitration. The Court's review of the arbitration materials submitted by Boggs reveals that the primary issues before the arbitration panel (the "Panel" or "arbitrators") were Boggs' request for payments from Silver Slipper for work performed by subcontractors and Silver Slipper's claim that any payments should be offset by the expenses it incurred as a result of delays in construction. Silver Slipper also asserted "a warranty claim against Boggs for the poor construction of the garage." (Silver Slipper's Arbitration Statement [7-6 at ECF p. 5].) A multi-day arbitration hearing was held in late January of 2008. The Panel issued its Findings of Fact, Conclusions of Law and Awards ("Panel Findings") [7-9] on March 21, 2008. The Panel found as follows with respect to Silver Slipper's warranty claim:
Silver Slipper claims that Boggs breached its warranty to construct the parking garage in a good and workmanlike manner in accordance with the plans and specifications, free from defects of workmanship and material. Mr. Jack Granade and Mr. Randy Davis were called as witnesses to the defective condition of the facility. Mr. Garande [sic] testified that he inspected the premises for approximately two and one half hours, that he did not make any calculation or perform any test and that his report was based solely on his observations. Mr. Davis' function was principally to corroborate Mr. Granade's report and provide a cost estimate for the repairs found to be necessary. With the exception of Mr. Davis's opinion that all of the corbels under the double T's should be replaced at a cost of $396, 000.00 (660 @ $600), which the Panel finds is not credible, the substance of both witnesses' testimony focused on matters which are basically cosmetic in nature (i.e. painting the exterior walls, interior patching and cleanup, sidewalk repair, etc.) which do not affect the structural integrity of the facility.
The Panel finds that Boggs warranted the delivery of a structurally sound facility as well as one free from cosmetic deficiencies not caused by ordinary wear resulting from use for the intended purpose. Although the evidence does not even remotely indicate that the garage is structurally unsound in any way, it does clearly establish that there are nonstructural deficiencies which constitute and are a breach of warranty requiring remedial measures for which Boggs should be held responsible. These include the stained and prematurely worn appearance of the three exterior walls not covered by EFS; cleaning, painting and patching the unfinished and unsightly aspects of the interior; and repairing the deteriorating sidewalks. Therefore, Silver Slipper should be and is awarded the sum of $40, 000.00 for the exterior walls, $25, 000.00 for the interior, and $20, 000.00 for sidewalk repair, for a total of $85, 000.00.
(Panel Findings [7-9] at pp. 13-14.) The Panel also found that Boggs should be awarded $880, 548.57 from Silver Slipper for certain materials and services. As a result, Boggs was "awarded $880, 548.57 from Silver Slipper less the sum of $85, 000.00 awarded to Silver Slipper against Boggs...." (Panel Findings [7-9] at p. 14.) On May 6, 2008, the Panel issued its Final Awards [7-10] awarding Boggs "$795, 548.57 from Silver Slipper, together with interest at the rate of 8% per annum from March 21, 2008." (Final Awards [7-10] at p. 2.)
On May 29, 2008, Silver Slipper served its Motion to Modify the Arbitrators' Award [7-13] in the First Action, alleging the existence of a miscalculation by the arbitrators. Boggs filed a competing motion to confirm the award. On June 27, 2008, the state court denied Silver Slipper's request for modification, granted Boggs' motion for confirmation, and entered final judgment in favor of Boggs. ( See State Court Order [7-15].) In July of 2008, Boggs and Silver Slipper executed a Mutual Release [7-11]. The Mutual Release states in pertinent part:
Boggs... and Silver Slipper... hereby release and discharge the other party and the other party's respective assigns of and from any and all claims, demands, liabilities, debts, obligations, actions, and causes of action of every kind, nature, and description arising out of the contract of construction for the Silver Slipper Casino and attached parking garage located in Hancock County, Mississippi, with the sole exception of new warranty claims not adjudicated in or determined by the arbitrators in the aforementioned litigation and arbitration.
(Mutual Release [7-11].)
On April 9, 2014, Full House and Silver Slipper (collectively referred to as "Plaintiffs") initiated this action against Boggs and Lustig in the Circuit Court of Hancock County, Mississippi. ( See Compl. [1-2].) The Complaint presents the following averments and allegations in support of liability. In October of 2013, Plaintiffs retained Reigstad and Associates, Inc. ("Reigstad"), an engineering firm, after noticing deficiencies in the Garage, such as water leakage and panel movement. Reigstad inspected the premises and prepared a corrective plan to alleviate the movement and deterioration. During the implementation of the plan, Reigstad noticed that lateral reinforced steel was missing in the pour-strip locations at each level of the Garage. The "reinforced steel was necessary for the Garage to have proper structural support and meet applicable building codes." (Compl. [1-2] at ¶ 13.) Boggs and Lustig intentionally concealed the absence of the steel by pouring concrete over the defective areas. The Garage has suffered, and will continue to suffer, acute damage and accelerated deterioration due to the missing reinforced steel. Plaintiffs were forced to expend significant resources in order to remedy the defective condition and bring the Garage up to code. Plaintiffs "seek to recover the cost of retrofitting the Garage with the missing lateral reinforced steel and fixing the damage to the Garage's structure as a result of Defendants' failure to design, install, properly supervise and/or properly monitor the construction of the lateral reinforcement during construction." (Compl. [1-2] at ¶ 20.) The Complaint asserts ten counts based on these allegations: (i) breach of contract against Boggs; (ii) intentional misrepresentation against Boggs; (iii) negligence and gross negligence against Boggs; (iv) breach of express warranty against Boggs; (v) breach of implied warranty against Boggs; (vi) breach of contract against Lustig; (vii) negligence and gross negligence against Lustig; (viii) intentional or negligent misrepresentation against Lustig; (ix) indemnity as to both Defendants; and (x) equity as to both Defendants.
On May 23, 2014, Boggs removed the proceeding to this Court on the basis of diversity of citizenship subject matter jurisdiction under Title 28 U.S.C. § 1332. ( See Notice of Removal .) Shortly thereafter, Boggs filed its Motion for Summary Judgment , urging dismissal based on the doctrines of res judicata and collateral estoppel, and arguing that the Plaintiffs' claims are time-barred. Lustig has joined in Boggs' summary judgment motion. ( See Joinder .) Plaintiffs' Motion to Strike  is aimed at Exhibit "E" to Boggs' summary judgment motion. This Exhibit is a position paper prepared by Silver Slipper's former legal counsel and submitted to the mediator in connection with the aforementioned unsuccessful mediation between Boggs, Silver Slipper, and F-S in August of 2007. ( See Position Paper [7-5].) Copies of the Position Paper were also furnished to opposing counsel at that time.
I. Plaintiffs' Motion to Strike 
Boggs relies on the Position Paper [7-5] in support of its contention that there is an identity of facts and circumstances as between the First Action and this lawsuit for purposes of res judicata. Boggs also cites to this document in arguing that Silver Slipper failed to exercise due diligence in discovering the construction defects alleged in this case. Plaintiffs argue that the Position Paper should be stricken and disregarded by the Court pursuant to Federal Rules of Civil Procedure 12(f) and 56(c)(2). Boggs opposes Plaintiffs' request and the parties present numerous arguments regarding the admissibility vel non of the Position Paper under the Mississippi Court Annexed Mediation Rules for Civil Litigation, this Court's Local Uniform Civil Rules, Federal Rule of Evidence 408 (compromise offers and negotiations), and Federal Rule of Evidence 801 (hearsay).
First, Federal Rule of Civil Procedure 12(f) fails to authorize the Plaintiffs' requested relief. Neither the Position Paper [7-5] nor the Motion for Summary Judgment  to which it is attached is a "pleading" falling under the scope of this Rule. Second, as discussed below, the Court does not rely upon the Position Paper for any ruling adverse to the Plaintiffs in relation to Boggs' summary judgment motion. Therefore, it is unnecessary to delve into the various evidentiary arguments raised by the parties, and the Plaintiffs' objections are essentially moot. The Motion to Strike  will be denied without prejudice to the Plaintiffs' ability to object to the admissibility of the Position Paper in future proceedings before the Court.
II. Boggs' Motion for Summary Judgment 
A. Standard of Review
Federal Rule of Civil Procedure 56 provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "Where the burden of production at trial ultimately rests on the nonmovant, the movant must merely demonstrate an absence of evidentiary support in the record for the nonmovant's case.'" Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir. 2010) (quoting Shields v. Twiss, 389 F.3d 142, 149 (5th Cir. 2004)). However, "if the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). If the movant meets his burden, the nonmovant must go beyond the pleadings and point out specific facts showing the existence of a genuine issue for trial. Cannata v. Catholic Diocese of Austin, 700 F.3d 169, 172 (5th Cir. 2012) (citation omitted). "An issue is material if its resolution could affect the outcome of the action." Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010) (quoting Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001)). "An issue is genuine' if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party." Cuadra, 626 F.3d at 812 (citation omitted).
The Court is not permitted to make credibility determinations or weigh the evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009) (citing Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007)). When deciding whether a genuine fact issue exists, "the court must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Sierra Club, Inc., 627 F.3d at 138. However, "[c]onclusional allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not adequately substitute for specific facts ...