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Southern Industrial Contractors, LLC v. Neel-Schaffer, Inc.

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

July 3, 2019

SOUTHERN INDUSTRIAL CONTRACTORS, LLC PLAINTIFF
v.
NEEL-SCHAFFER, INC.; T.L. WALLACE CONSTRUCTION, INC; THOMPSON ENGINEERING, INC.; CH2M HILL, INC.; W. G. YATES & SONS CONSTRUCTION COMPANY; ROY ANDERSON CORP.; YATES ANDERSON, JV; QUALITY ENGINEERING SERVICES, INC.; and MISSISSIPPI STATE PORT AUTHORITY AT GULFPORT DEFENDANTS

          MEMORANDUM OPINION AND ORDER DENYING QUALITY ENGINEERING SERVICES, INC.'S MOTION FOR SUMMARY JUDGMENT

          LOUIS GUIROLA, JR. UNITED STATES DISTRICT JUDGE

         BEFORE THE COURT is the [194] Motion for Summary Judgment filed by the defendant Quality Engineering Services, Inc. (QES) in this lawsuit that arose out of a construction project at the Port of Gulfport, Mississippi. The parties have fully briefed the Motion. After reviewing the submissions of the parties, the record in this matter, and the applicable law, the Court finds that the Motion for Summary Judgment must be denied, because QES has not met its initial burden of demonstrating that material facts are not in dispute.

         BACKGROUND

         The plaintiff, Southern Industrial Contractors, LLC, served as the general contractor for the West Pier Facilities project at the Port of Gulfport, Mississippi. It filed this lawsuit against the project's owner, Mississippi State Port Authority (MSPA)[1], as well as the project's consultants and engineers - Neel-Schaffer, Inc., CH2M, T.L. Wallace Construction, Inc., Thompson Engineering, Inc., W.G. Yates & Sons Construction Company, Roy Anderson Corp., Yates Anderson, JV, and QES. Southern Industrial alleges that these defendants failed to provide notice of a large underground debris field at the project site. Southern Industrial claims it was required to excavate the debris, which made the project much more expensive and time-consuming. QES filed the present Motion for Summary Judgment.

         DISCUSSION

         A motion for summary judgment may be filed by any party asserting that there is no genuine issue of material fact and that the movant is entitled to prevail as a matter of law on any claim. Fed.R.Civ.P. 56. The movant bears the initial burden of identifying those portions of the pleadings and discovery on file, together with any affidavits, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the movant carries its burden, the burden shifts to the non-movant to show that summary judgment should not be granted. Id. at 324-25. The non-movant may not rest upon mere allegations or denials in its pleadings but must set forth specific facts showing the existence of a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986).

         I. SOUTHERN INDUSTRIAL'S BREACH OF CONTRACT CLAIM

         No contract existed between QES and Southern Industrial, but Southern Industrial asserts that it is a third-party beneficiary of the contract between QES and MSPA. It argues that QES breached its duty to notify other contractors on the project of the debris field that caused extra expense and delay during the project. “Third-party-beneficiary status arises from the terms of the contract.” Simmons Hous., Inc. v. Shelton ex rel. Shelton, 36 So.3d 1283, 1286 (Miss. 2010).

In order for a third person beneficiary to have a cause of action, the contracts must have been entered into for his benefit, or at least such benefit must be the direct result of the performance within the contemplation of the parties as shown by its terms. There must have been a legal obligation or duty on the part of the promisee to such third person beneficiary. This obligation must have a legal duty which connects the beneficiary with the contract. In other words, the right (of action) of the third[-]party beneficiary to maintain an action on the contract must spring from the terms of the contract itself.

Rein v. Benchmark Constr. Co., 865 So.2d 1134, 1146 (Miss. 2004). Therefore, the following three factors must be present to create third-party beneficiary status:

(1) the contract between the original parties was entered for that person's or entity's benefit, or the original parties at least contemplated such benefit as a direct result of performance; (2) the promisee owed a legal obligation or duty to that person or entity; and (3) the legal obligation or duty connects that person or entity with the contract.

Id. “[A] third party beneficiary may sue for a breach of the contract only when the condition which is alleged to have been broken was placed in the contract for his direct benefit.” Rosenfelt v. Miss. Dev. Auth., 262 So.3d 511, 519 (Miss. 2018). “A mere incidental beneficiary acquires by virtue of the contractual obligation no right against the promisor or promisee.” Id. Therefore, an individual or entity who did not sign the contract, was not alluded to in the contract, and received no direct benefit from the contract does not acquire third-party beneficiary status. Simmons Hous., Inc., 36 So.3d at 1286-87.

         In the present lawsuit, the parties do not dispute that QES's scope of work on the West Pier Facilities project was governed by Task Order Number 9, which provided that QES would “provide Construction Material Testing (CMT) and inspection services” for the project. (Def.'s Mot. Ex. B to Ex. 5, ECF No. 194-5.) The Task Order required QES's work to conform to ...


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