Stone Mountain Access Systems, Inc. v. Southern Recycling, L.L.C.

         MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT SOUTHERN RECYCLING, LLC'S MOTION [161] FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF STONE MOUNTAIN ACCESS SYSTEMS, INC.'S SECOND MOTION [165] FOR SUMMARY JUDGMENT

          HALIL SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE.

         BEFORE THE COURT are Defendant Southern Recycling, LLC's Motion [161] for Summary Judgment and Plaintiff Stone Mountain Access Systems, Inc.'s Second Motion [165] for Summary Judgment. These Motions are fully briefed. After review of the Motions, the Responses, the related pleadings, the record as a whole, and relevant legal authority, the Court finds that Defendant Southern Recycling, LLC's Motion [161] should be granted in part as to Plaintiff's negligence per se claim, and denied in part as to Plaintiff's claims for negligence, conversion, and punitive damages/gross negligence. Plaintiff's Second Motion [165] for Partial Summary Judgement on the issue of negligence per se should be denied.

         I. BACKGROUND

         A. Facts and Relevant Procedural History

         This matter arises out of a dispute surrounding Defendant Southern Recycling, LLC's (“Southern Recycling”) purchase of metal scaffolding that had previously been in the inventory of Plaintiff Stone Mountain Access Systems, Inc. (“Plaintiff”). Compl. [1-2] at 4. Plaintiff Stone Mountain is a corporation “engaged in the business of leasing metal scaffolding, access systems, and other hardware and equipment, ” Am. Compl. [39] at 2, while Southern Recycling is a company that “buys scrap metal for the purpose of recycling, ” Def. Mem. in Supp. Summ. J. [162] at 3.

         On May 17, 2016, Plaintiff filed a Complaint in the Circuit Court of Harrison County, Mississippi, First Judicial District, against Defendants Southern Recycling, Letroy Deandre Brooks (“Brooks”), Darryl Maurice Raymond (“Raymond”), and John Doe Defendants. Plaintiff alleged that from January 2013 through January 2015, its former employees, Brooks and Raymond, engaged in a scheme with Southern Recycling wherein Brooks and Raymond would take Plaintiff's scaffolding without Plaintiff's “authority or consent, ” and sell it as scrap metal to Southern Recycling for cash. Id. at 5-6. Plaintiff asserted that through over 50 transactions, Southern Recycling purchased more than 134, 000 pounds of scaffolding “at a fraction of its then current market value as material usable for its original economic purpose.” Id. at 6. The Complaint advanced claims for negligence, negligence per se, negligent receipt of stolen or embezzled property, conversion, and gross negligence, id. at 7-11, and sought damages in excess of $250, 000.00, plus punitive damages, costs, and attorneys' fees, id. at 11.

         Southern Recycling removed the case to this Court on June 7, 2016, invoking diversity jurisdiction. Notice of Removal [1] at 1-3. On June 28, 2016, Plaintiff filed a Motion [9] to Remand on grounds that diversity jurisdiction was lacking because Plaintiff as well as Defendants Brooks and Raymond were all citizens of Mississippi. The Court entered an Order [17] on October 25, 2016, denying remand and dismissing Brooks and Raymond, finding that they were not proper parties to defeat diversity jurisdiction because the record reflected that Plaintiff did not intend to actually pursue claims against them in this case. Order [17] at 1-9.

         On December 13, 2016, Plaintiff filed an Amended Complaint [39] advancing claims against Southern Recycling and Defendant Travelers Property Casualty Company of America (“Travelers”) for: (1) negligence; (2) negligence per se; (3) negligent receipt of stolen or embezzled property; (3) conversion; (4) gross negligence; (5) negligent hiring, supervision, training, control, and retention; (6) seeking a declaration of coverage by Travelers; and (7) bad faith breach of contract by Travelers. Am. Compl. [39] at 5-14. The Amended Complaint seeks damages in excess of $250, 000.00, plus punitive damages, costs, and attorneys' fees. Id. at 14. By Agreed Order [138] dated July 25, 2017, Travelers was dismissed.

         B. Southern Recycling's Motion [161] for Summary Judgment

         Southern Recycling's Motion [161], filed on October 27, 2017, contends that summary judgment is proper because Plaintiff has “presented only speculative and unsubstantiated evidence of its claimed damages.” Mot. Summ. J. [161] at 1. In the alternative, Southern Recycling asserts that partial summary judgment is appropriate on Plaintiff's claims for conversion, negligence per se, and punitive damages/gross negligence, as Plaintiff has produced insufficient evidence to support these claims. Id.

         Plaintiff's Response [171] maintains that sufficient evidence was produced and that all claims should be allowed to advance to trial. Resp. in Opp'n [171] at 1. Plaintiff argues that it has evidence that it suffered damages of at least $18, 872.87, which is the amount Defendant paid as the scrap metal value of Plaintiff's stolen scaffolding. Mem. [172] at 2. Plaintiff further asserts that some of its “equipment was comprised of aluminum tubes, bars, and rods” and that some materials “were used in the maintenance of railroads, [and] were used to construct communication and power distribution towers and facilities” all of which fall within the class of regulated metals set forth in Mississippi's scrap metal statute, Mississippi Code § 97-17-71. Id. at 3.

         C. Plaintiff's Second Motion [165] for Partial Summary Judgment

         On November 2, 2017, Plaintiff filed its Second Motion [165] for Partial Summary Judgment on its claim of negligence per se. Mot. [165] at 1-2. Plaintiff posits that Southern Recycling failed to comply with the mandatory requirements of Mississippi Code § 97-17-71 by not keeping accurate records and by paying cash for the scaffolding, which proximately caused Plaintiff's damages. Mem. [166] at 1-2, 14. Plaintiff maintains that Southern Recycling also failed to adhere to requirements placed upon scrap metal dealers under “City of Gulfport Ordinance No. 2560, § 3, 10-16-07.” Id. at 10-12.

         In its Response [182], Southern Recycling contends that because the Amended Complaint [39] did not allege a violation of the City of Gulfport's Ordinance, Plaintiff cannot rely on it to support a negligence per se claim. Mem [183] at 11-12. Further, Southern Recycling takes the position that the purchases of scaffolding did not fall within the reporting requirements for “metal property” as set forth in Mississippi's scrap metal statute. Id. at 6-17.

         II. DISCUSSION

         A. Summary Judgment Standard

         “Summary judgment is appropriate when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law.” Cox v. Wal-Mart Stores E., L.P., 755 F.3d 231, 233 (5th Cir. 2014); see Fed. R. Civ. P. 56(a). In deciding a motion for summary judgment, a court “view[s] the evidence and draw[s] reasonable inferences in the light most favorable to the nonmoving party.” Hemphill v. State Farm Mut. Auto. Ins. Co., 805 F.3d 535, 538 (5th Cir. 2015) (quoting Cox, 755 F.3d at 233); Maddox v. Townsend & Sons, Inc., 639 F.3d 214, 216 (5th Cir. 2011). Before it can determine that there is no genuine issue for trial, a court must be satisfied that “the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). If the movant carries this burden, “the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc); see also Lujan v. National Wildlife Federation, 497 U.S. 871, 888 (1990) (the nonmovant must set forth specific facts to contradict the specific facts set forth by the movant, general averments are not sufficient).

         To rebut a properly supported motion for summary judgment, the opposing party must show, with “significant probative evidence, ” that there exists a genuine issue of material fact. Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir. 2000). “A genuine dispute of material fact means that evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Royal v. CCC&R Tres Arboles, LLC, 736 F.3d 396, 400 (5th Cir. 2013) (quotation omitted). An actual controversy exists “when both parties have submitted evidence of contradictory facts.” Salazar-Limon v. Houston, 826 F.3d 272, 277 (5th Cir. 2016) (quotation omitted).

         B. Mississippi Code § 97-17-71

         The gravamen of this dispute is that over the course of two years, two of Plaintiff's former employees removed scaffolding and other miscellaneous materials and took them to Southern Recycling to sell as scrap metal. Southern Recycling purchased the scaffolding and materials and remitted payment to the former employees in cash. Although it is undisputed that Southern Recycling paid in cash, a genuine issue of material fact does exist as to whether the items were actually stolen from Plaintiff, and, if so, whether Southern Recycling knew or should have known they were stolen. Since the Court cannot make a factual determination as to whether the materials were stolen, it likewise cannot address the parties' legal arguments unless that factual dispute is not material to resolution of the legal issues advanced in the parties' competing summary judgment motions.

         A review of Mississippi Code § 97-17-71 reflects that a number of its provisions apply to materials purchased by a scrap dealer whether those materials were stolen or not. See Metal Mgmt. Miss. v. Barbour, No. 3:08cv431, 2008 WL 3842979, at *1-2 (S.D.Miss. 2008) (finding that this statute requires certain acts to be performed by scrap metal dealers to deter metal theft).

         Specifically, Mississippi Code § 97-17-71(2) requires that a scrap metal dealer or other purchaser shall, for a period of two years, keep an accurate and legible record containing the following information for each purchase transaction:

(a) The name, address and age of the person from whom the metal property is purchased as obtained from the seller's personal identification card;

(b) The date and place of each acquisition of the metal property;

(c) The weight, quantity or volume and a general physical description of the type of metal property, such as wire, tubing, extrusions or casting, ...