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Rifenburg Construction, Inc. v. Hatch Mott McDonald, LLC

United States District Court, S.D. Mississippi, Northern Division

May 11, 2015

RIFENBURG CONSTRUCTION, INC., Plaintiff,
v.
HATCH MOTT MCDONALD, LLC, et al., Defendants.

ORDER

DANIEL P. JORDAN, III, District Judge.

This construction-related negligence dispute is before the Court on Defendants' Joint Motion for Summary Judgment [148] pursuant to Federal Rule of Civil Procedure 56. Because Plaintiff Rifenburg Construction, Inc.'s contract with the Jackson Municipal Airport Authority ("JMAA") bars its claims, the motion is granted. As a result, Rifenburg's claims, as well as the Third-Party Complaint [46], are dismissed with prejudice.

I. Facts and Procedural History

On July 24, 2009, Defendant Hatch Mott MacDonald Florida, LLC (collectively with Defendants Hatch Mott MacDonald, LLC, Curtis M. Wright, and Heath Jenkins, "HMM"), entered into a contract with JMAA as the engineer for a runway-rehabilitation project at Jackson-Medgar Wiley Evers International Airport. HMM Contract [49-2]. Subsequently, on August 16, 2010, JMAA hired Rifenburg as general contractor for the same project. Rifenburg/JMAA Contract [49-1].[1]

On December 15, 2011, due to delays in construction caused by defects in the asphalt mix used on the project, JMAA terminated Rifenburg's contract for default. Letter [148-4]. Rifenburg filed a demand for arbitration against JMAA, and the parties ultimately settled, with Rifenburg paying damages to JMAA. Settlement Agreement [148-7].

On December 4, 2012, Rifenburg filed suit in this action against Hatch Mott MacDonald, LLC; Curtis M. Wright, the principal project manager for the JMAA project; and Heath Jenkins, the project engineer for the JMAA project. Compl. [1]. Rifenburg claimed in its initial complaint that Hatch Mott MacDonald, LLC, Wright, and Jenkins were negligent in setting the specifications for the asphalt mix and that they negligently misrepresented the adequacy of the specified mix for the project. See generally id. After several motions to dismiss and to amend, Rifenburg filed its Third Amended Complaint ("TAC") [49], adding Hatch Mott MacDonald Florida, LLC, as a defendant. The TAC also beefed up the factual averments and included assertions that HMM improperly recommended that JMAA reject Rifenburg's work. Id. ¶ 21. Following discovery, Defendants filed the instant Motion for Summary Judgment [148].[2] Rifenburg responded [178], and Defendants replied [184]. The Court has personal and subject-matter jurisdiction and is prepared to rule.

II. Standard of Review

Summary judgment is warranted under Rule 56(a) of the Federal Rules of Civil Procedure when evidence reveals no genuine dispute regarding any material fact and that the moving party is entitled to judgment as a matter of law. The rule "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who 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." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

The party moving for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323. The nonmoving party must then "go beyond the pleadings" and "designate specific facts showing that there is a genuine issue for trial.'" Id. at 324. In reviewing the evidence, factual controversies are to be resolved in favor of the nonmovant, "but only when... both parties have submitted evidence of contradictory facts." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). When such contradictory facts exist, the court may "not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). Conclusory allegations, speculation, unsubstantiated assertions, and legalistic arguments do not constitute an adequate substitute for specific facts showing a genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002); Little, 37 F.3d at 1075; SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993) (per curiam).

III. Analysis

Though Defendants urge several grounds for dismissal, all but one of them flow from General Provision 70-17 ("GP 70-17") of the Rifenburg/JMAA Contract. That provision states as follows:

In carrying out any of the contract provisions or in exercising any power or authority granted to him by this contract, there shall be no liability upon the Engineer, his/her authorized representatives, or any officials of the Owner either personally or as an official of the Owner. It is understood that in such matters they act solely as agents and representatives of the Owner.

Rifenburg/JMAA Contract [148-1] at 4. Defendants' arguments with respect to this provision overlap to some extent, but the Court will focus on HMM's claimed rights as a third-party beneficiary to the Rifenburg/JMAA Contract.

Rifenburg resists this argument, contending that GP 70-17 is inapplicable because: (1) Rifenburg and JMAA subsequently voided the contract in their Settlement Agreement; (2) HMM waived all defenses based on GP 70-17; (3) GP 70-17 is unenforceable because it was never negotiated; (4) GP 70-17 fails to reach Rifenburg's claims; and (5) HMM is not an intended third-party beneficiary. The Court takes each issue in turn.

A. Whether Rifenburg and JMAA Voided Their Contract

Rifenburg contends that all arguments premised on GP 70-17 must fail because a subsequent settlement agreement between Rifenburg and JMAA voided the Rifenburg/JMAA Contract containing GP 70-17. Pl.'s Mem. [169] at 9-11. As Rifenburg correctly notes, its Settlement Agreement with JMAA included the following merger clause: "This Agreement contains the entire understanding and agreement of the parties hereto. All other oral or written agreements made prior to this Agreement relating to the matters set forth herein are declared null and void." Id. at 5 (emphasis deleted) (citing Settlement Agreement [148-7] at 7). Based on this language, Rifenburg contends that "Paragraph 70-17 [of the previously signed construction contract] is no longer binding." Id. at 9.

Rifenburg supports its position with general authority on contract construction, but it fails to consider any authority interpreting merger clauses specifically. As interpreted in Mississippi (and elsewhere), standard merger clauses like this are a means to solidify the parol-evidence rule. As stated by the Mississippi Supreme Court in Grand Legacy, LLP v. Gant, "[M]erger clauses are used to signal to the courts that the parties agree that the contract is to be considered completely integrated.... [T]hus the purpose and effect of including a merger clause is to preclude the subsequent introduction of evidence of preliminary negotiations...." 66 So.3d 137, 145 (Miss. 2011) (en banc) (second, third, and fourth alterations in original) (quoting B.C. Rogers Poultry, Inc. v. Wedgeworth, 911 So.2d 483, 490 (Miss. 2005); see also 17A Am. Jur. 2d Contracts § 388 ("A merger clause' is often used in contracts to merge prior discussions, negotiations, and representations into the written document and avoid litigation over the question of whether there were oral representations made outside the written agreement.").

Significantly, merger clauses are not generally interpreted as voiding previously existing contracts that are not part of the negotiated bargain memorialized in the subsequent agreement. This point was explored in B.C. Rogers Poultry, Inc. v. Wedgeworth , where the parties had entered a series of contracts for processing poultry. 911 So.2d at 485-86. One of those agreements included an arbitration provision and a merger clause similar to the one here. Id. at 489 ("This Agreement constitutes the entire agreement between the parties hereto, replacing and superseding any and all prior oral or written agreements between the parties...."). Though the dissent argued that the merger provision voided the prior production contracts, the majority rejected that contention. Id. at 489-90. After noting the traditional use of these clauses, the majority refused to find that disputes under prior production contracts were subject to the arbitration provision found in the subsequent contract containing the merger clause. Id.

Applying the merger clause to void the Rifenburg/JMAA Contract is even more tenuous. Whereas in Wedgeworth the successive contracts covered essentially the same duties ( i.e., the agreement to provide poultry for a price), the two contracts here address entirely different bargains-one for construction work and the other to settle disputed claims. The parties made other arguments on this point, but after considering all arguments, the Court finds nothing in the Settlement Agreement suggesting an intent to expand the merger clause beyond its well-recognized and routine purpose.[3]

B. Whether HMM Waived its Arguments

Defendants generally assert that Rifenburg must be held to GP 70-17 based on waiver, estoppel, election of remedies, and HMM's rights as a third-party beneficiary. But Rifenburg contends that HMM waived these defenses by failing to sufficiently plead them in its answer to the TAC. Federal Rule of Civil Procedure 8(c)(1) provides that "[i]n responding to a pleading, a party must affirmatively ...


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