Mississippi State Port Authority v. Southern Industrial Contractors, LLC
Mississippi State Port Authority v. Southern Industrial Contractors, LLC
Opinion
¶ 1. This case involves a construction dispute between the Mississippi State Port Authority at Gulfport and Southern Industrial Contractors LLC (SIC). After the Port Authority terminated its contract with SIC, SIC filed a motion to compel arbitration, or alternatively, a one-count complaint for breach of contract, in the Circuit Court of the First Judicial District of Hinds County, Mississippi. The Port Authority moved to dismiss SIC's motion to compel arbitration, arguing that (1) the contract between the parties did not contain a binding arbitration agreement; (2) SIC had effectively asserted a tortious wrongful-termination claim and failed to comply with the Mississippi Tort Claims Act (MTCA) prior to filing that claim; and (3) venue is improper because the lawsuit should be heard in the First Judicial District of the Harrison County Circuit Court of Mississippi. The circuit court summarily granted SIC's motion to compel arbitration, and denied the Port Authority's motion to dismiss. The Port Authority appeals both orders.
¶ 2. We find that the contract between the parties does not contain a binding arbitration agreement, and we reverse and render the circuit court's order compelling arbitration for this reason. We further find that the MTCA does not apply to SIC's breach of contract claim, and, thus, we affirm the circuit court's denial of the Port Authority's motion to dismiss as to that issue. Finally, we find that venue is improper in the First Judicial District of Hinds County, Mississippi, and we, therefore, reverse and remand on this issue, with instructions to the circuit court that this lawsuit should be transferred to the First Judicial District of Harrison County, Mississippi, pursuant to Mississippi Code Annotated section 11-11-3 (Rev. 2004), which is Mississippi's general circuit-court venue statute.
STATEMENT OF FACTS AND PROCEDURAL HISTORY
¶ 3. This dispute arises out of a public-works contract that was awarded by the Port Authority to SIC (the Contract) for a construction project known as West Pier Facilities, Project 305 (the Project). The Project is for the construction of a 1,300-foot-long by 226-foot-wide transit shed and two smaller buildings. 1 The Port Authority and SIC executed the Contract on July 25, 2014.
¶ 4. During the course of construction, SIC encountered large underground debris fields in the same location where SIC was to drive the foundation pilings for the transit shed. The debris removal resulted in extra work for SIC, construction delays ensued, and disputes arose between the Port Authority and SIC regarding timing and payment for the additional work. Ultimately, the Port Authority terminated the Contract in a letter dated September 14, 2016, entitled "NOTICE OF MATERIAL BREACH OF CONTRACT ... AND NOTICE OF TERMINATION." In that letter, the Port Authority cited to paragraph 29 of the general conditions of the Contract and stated that in accordance with that provision, it was terminating the Contract for cause. The letter then provided the specific reasons for termination, with citations to specific Contract provisions.
¶ 5. On November 11, 2016, counsel for SIC sent an email to counsel for the Port Authority asking whether the Port Authority would be "willing to resolve all claims and contract disputes by arbitration in the event that the present efforts to negotiate a settlement fail." Counsel for the Port Authority responded that same day, sending an email in which he said that "[the Port Authority], as a state agency, cannot agree to arbitration." By letter dated November 15, 2016, SIC sent the Port Authority a "notice of intention to arbitrate ... the claims and contract disputes between SIC and the [Port Authority] arising out of the ... Project." In its notice, SIC specified that "[t]he nature of the dispute involves losses sustained by SIC as a result of the [Port Authority's] breach of its contractual obligations." SIC quantified each of its claims in its notice, including a line-item for "wrongful termination" in the amount of $10,000,000.
¶ 6. Two days later, SIC filed its motion to compel arbitration in the Hinds County Circuit Court, alleging that "[t]he [Port Authority] is ... liable for all losses sustained by SIC as a result of the [Port Authority's] breach of its contractual obligations," and asking the circuit court to enter an order compelling the Port Authority to engage in binding arbitration to resolve the matter. In support of its motion to compel arbitration, SIC relied upon Section 8 of Attachment 5 to the Contract (sometimes referred to as Section 8). 2 Attachment No. 5 is titled "Mississippi Development Authority Special Provisions to be included in all Contracts between the Subrecipient and Contracted Parties and in ALL Contracts between Contracted Parties and their Subcontractors." Section 8 of Attachment 5 provides:
8. The Subrecipient [Port Authority] and the Contracted Party [SIC] agree to resolve all claims and contract disputes by negotiations, arbitration, litigation, or other means as provided in the Contract documents and state law, prior to submission of any related change order or Contract Amendment to MDA for review and approval, in order to obtain a grant eligibility or allowability determination.
¶ 7. Alternatively, SIC included in its motion to compel arbitration its complaint against the Port Authority. SIC asserted a single count, "COUNT I: BREACH OF CONTRACT," alleging that "[t]he [Port Authority's] actions and omissions constitute a breach of the contract between SIC and [the Port Authority] for which the [Port Authority] is liable to SIC." SIC further alleged that it is entitled to liquidated damages for an amount not less than $10,039,371.30, and "damages in the amount of $10,000,000 for its wrongful termination."
¶ 8. The Port Authority responded by filing a motion to dismiss in which it asserted that (1) there was not an enforceable agreement to arbitrate between the parties and that the Port Authority does not have the authority to agree to arbitrate under Mississippi law; (2) upon dismissal of the motion to compel arbitration, the circuit court should dismiss all alternative claims for relief which fall within the purview of the MTCA because SIC did not provide the required ninety-days' written notice under the MTCA prior to filing its tort claim for wrongful termination; 3 and (3) venue is improper because the lawsuit should be heard in the Circuit Court of the First Judicial District of Harrison County, Mississippi.
¶ 9. After holding a hearing on the parties' motions, the circuit court, in separate, one-page orders, summarily granted SIC's motion to compel arbitration and denied the Port Authority's motion to dismiss.
¶ 10. The Port Authority appeals both orders, asserting three primary issues: (1) whether the parties agreed to binding arbitration; (2) whether the MTCA applies to SIC's wrongful termination-of-contract claim; and (3) whether venue is improper in the First Judicial District of Hinds County, Mississippi, requiring dismissal or transfer to the First Judicial District of Harrison County, Mississippi, pursuant to the applicable venue statute.
STANDARD OF REVIEW AND OTHER APPLICABLE STANDARDS
¶ 11. "A grant or denial of a motion to compel arbitration is reviewed de novo."
Harrison Cty. Commercial Lot LLC v. H. Gordon Myrick Inc.
,
¶ 12. SIC, as the party seeking to invoke arbitration under Section 8 of Attachment 5 to the Contract, bears the burden of establishing that this provision creates a binding arbitration agreement.
Wellness Inc. v. Pearl River Cty. Hosp.
,
Under the first prong, the court should determine whether the parties have agreed to arbitrate the dispute .... In order to determine if the parties have agreed to arbitrate the dispute, two considerations are taken into account: (1) whether there is a valid arbitration agreement; and (2) whether the parties' dispute is within the scope of the arbitration agreement. If the court determines that the parties did in fact agree to arbitrate their dispute, the second prong is applied. The United States Supreme Court has instructed that the second prong is whether legal constraints external to the parties' agreement foreclosed arbitration of those claims.
Driver Pipeline
,
¶ 13. Although the Mississippi courts recognize the "liberal federal policy favoring arbitration,"
Qualcomm Inc. v. Am. Wireless License Grp. LLC
,
DISCUSSION
I. Whether Section 8 of Attachment 5 to the Contract is a Binding Arbitration Agreement
¶ 14. As noted, the arbitration language at issue in this case is contained in Section 8 of Attachment 5 to the Contract, which provides as follows:
Attachment No. 5. Mississippi Development Authority Special Provisions to be included in all Contracts between the Subrecipient and Contracted Parties and in ALL Contracts between Contracted Parties and their Subcontractors.
....
8. The Subrecipient [Port Authority] and the Contracted Party [SIC] agree to resolve all claims and contract disputes by negotiations, arbitration, litigation, or other means as provided in the Contract documents and state law, prior to submission of any related change order or Contract Amendment to MDA for review and approval, in order to obtain a grant eligibility or allowability determination.
The Port Authority asserts that Section 8 is not a binding arbitration clause because, by its plain terms, the parties have not manifested their intent to make arbitration their sole remedy or to waive their rights to litigation.
¶ 15. In particular, the Port Authority argues that for an arbitration provision in a contract to be enforceable, that provision must make arbitration the only remedy.
Brennan v. King
,
¶ 16. SIC, on the other hand, asserts that Section 8 clearly and unambiguously provides that the parties "agree" to resolve their disputes by any of the means set forth in the provision, including arbitration, and SIC has chosen to arbitrate the dispute from the alternatives offered. SIC asserts that an arbitration provision need not be identified as an exclusive means of dispute resolution; rather, once a party elects arbitration, the other party cannot neutralize that choice by insisting on litigating in court. For this proposition, SIC relies upon cases that hold that clauses providing, for example, that the other party may elect to submit a dispute to binding arbitration, are binding notwithstanding use of the word "may." 4
¶ 17. We find that the plain language of Section 8 of Attachment 5 to the Contract shows that there was no agreement to arbitrate between the parties. Accordingly, we hold that the circuit court erred in granting SIC's motion to compel arbitration. The cases SIC relies upon in support of its argument that Section 8 is a binding arbitration agreement are distinguishable and do not support its argument on this issue. Unlike the provisions in the cases SIC cites, Section 8 does not use express, unconditional language providing either party with the unilateral right to submit a dispute to binding arbitration. Instead, it provides the parties with various dispute resolution options, none to the exclusion of the other.
¶ 18. Further, in the cases SIC relies upon, either (1) the parties had unequivocally agreed to arbitrate a set of claims in the contract; 5 or (2) the contract contained detailed arbitration provisions-which provided, for example, for the selection of arbitrators, the location of arbitration, and the rules governing arbitration-which confirmed that the parties agreed to arbitrate their disputes. 6 In contrast, Section 8 is part of Attachment 5 of the Contract, which sets forth the MDA's Standard Terms and Conditions, and basically serves to notify the parties that they were free to choose how to resolve their disputes by including a dispute resolution provision in the main Contract or by leaving the matter open to the options provided by state law. We find no legal basis for SIC's proposition that the open-ended language of Section 8 converts to a binding arbitration agreement simply because the parties left the matter of dispute resolution open to options provided under state law.
¶ 19. SIC also relies upon
Harrison County Commercial Lot LLC v. H. Gordon Myrick Inc.
,
¶ 20. Finally, SIC argues that the lack of details regarding how arbitration is to be conducted should not be a consideration in determining whether Section 8 is a binding arbitration provision because the Mississippi Arbitration Act provides default rules governing the arbitration process.
8
We acknowledge that the lack of details regarding how arbitration is to be conducted is not a dispositive factor, but it does lend additional support to our determination that the plain language of Section 8 does not convey the requisite intent to arbitrate which must be present in order to bind the parties to arbitration.
Driver Pipeline
,
¶ 21. As addressed above, in determining whether a motion to compel arbitration should have been granted, we must first "determine if the parties have agreed to arbitrate the dispute, [which involves] two considerations [that] are taken into account: (1) whether there is a valid arbitration agreement and (2) whether the parties' dispute is within the scope of the arbitration agreement."
II. Whether SIC's Wrongful Termination Claim Falls Within the Purview of the MTCA
¶ 22. Having reversed the circuit court's order granting SIC's motion to compel arbitration, we next address the Port Authority's assertion that the circuit court's order denying its motion to dismiss should be reversed because SIC's wrongful termination claim in its complaint is covered by the MTCA. Because SIC did not provide the Port Authority with ninety days' written notice as required under the MTCA, see Mississippi Code Annotated section 11-46-11(1) (Rev. 2004), 9 the Port Authority asserts that this claim should be dismissed.
¶ 23. The Port Authority bases its argument that SIC has asserted a tortious wrongful termination claim on one sentence from SIC's complaint alleging that "SIC is entitled to damages in the amount of $10,000,000 for its wrongful termination." Relying primarily upon
Suddith v. The University of Southern Mississippi
,
¶ 24. The Port Authority's reliance on
Suddith
is misplaced. In
Suddith
, the plaintiff brought numerous claims against the University and others, including federal claims, a breach of contract claim under the plaintiff's employment contract, and various state-law tort claims.
¶ 25. This Court then held that Suddith's tort claims were governed by the MTCA,
¶ 26. In particular, SIC's lawsuit does not reference negligence or any delictual acts on the part of the Port Authority. In its complaint, SIC alleges one count against the Port Authority, entitled "COUNT I: BREACH OF CONTRACT," which provides: "[t]he [Port Authority's] actions and omissions constitute a breach of the contract between SIC and [the Port Authority] for which the [Port Authority] is liable to SIC." Attached to SIC's complaint is SIC's notice of intention to arbitrate that, consistent with the allegations in SIC's lawsuit, provides that "[t]he nature of the dispute involves losses sustained by SIC as a result of the [Port Authority's] breach of its contractual obligations." SIC quantified each of its claims in its notice, including a line-item for "wrongful termination" in the amount of $10,000,000. Although SIC does not expressly cite the termination clause of the Contract, we find no indication in SIC's complaint, including the attached notice of intention to arbitrate, that SIC is seeking anything more than damages incurred as a result of the Port Authority's alleged
wrongful breach of the Contract, including the termination provision. SIC is the master of its complaint and is entitled to control the type of claims asserted in its lawsuit.
See, e.g.
,
Patton Med. of Gulf Coast Inc. v. Relle
, No. 2017-CA-00122-COA,
¶ 27. In short, the MTCA is not implicated in this case. A contract exists between the parties, SIC has brought this action for breach of that specific contract and has not alleged any breach of some duty independent of the Contract.
See, e.g.
,
Hazell Mach. Co. v. Shahan
,
III. Whether Venue is Improper in the First Judicial District of Hinds County
¶ 28. Having determined that the parties did not agree to arbitrate this matter, and that SIC's breach of contract claim is not subject to the MTCA, we turn to the Port Authority's final assignment of error concerning the proper venue for this matter. The Port Authority asserts that venue is improper in the First Judicial District of Hinds County, and that the proper venue for this lawsuit is in the First Judicial District of Harrison County because the Port Authority resides in Harrison County, the events giving rise to the lawsuit occurred in Harrison County, and the Port Authority's principal and only place of business is in Harrison County. We find that pursuant to Mississippi's general venue statute, Mississippi Code Annotated section 11-11-3 (Rev. 2004), venue is proper in the First Judicial District of Harrison County.
¶ 29. Mississippi Rule of Civil Procedure 82(b) provides that venue shall be governed exclusively by statute. In this case, there is not a specific statute governing venue under the Port Authority's enabling legislation, the State Ports and Harbors Law ( Mississippi Code Annotated section 59-5-1 through section 59-5-69 (Rev. 2013), nor is there any other specific statutory provision governing venue in this matter. 10 As such, venue for SIC's breach of contract claim is governed by the general venue statute for circuit courts, section 11-11-3, which provides, in relevant part, as follows:
Civil actions of which the circuit court has original jurisdiction shall be commenced in the county where the defendant resides, or, if a corporation, in the county of its principal place of business, or in the county where a substantial alleged act or omission occurred or where a substantial event that caused the injury occurred.
¶ 30. SIC does not dispute that the Port Authority's "principal place of business" is in Harrison County, nor does it provide any record citation, argument, or authority that a "substantial event" giving rise to its breach of contract claim occurred anywhere other than in Harrison County. SIC, however, asserts that venue is proper in Hinds County because the Port Authority is an "agency of the state",
see
¶ 31. In
Moore
, the Mississippi Supreme Court relied upon Mississippi Code Annotated section 11-45-1 (Rev. 2012) in determining that Hinds County was the proper venue for a discovery lawsuit brought by the Mississippi Automobile Dealers against the attorney general in his official capacity.
Any person having a claim against the State of Mississippi, after demand made of the auditor of public accounts therefor, and his refusal to issue a warrant on the treasurer in payment of such claim, may, where it is not otherwise provided, bring suit therefor against the state, in the court having jurisdiction of the subject matter which holds its sessions at the seat of government ....
¶ 32. We find that
Moore
and
Johnson
are distinguishable and do not
apply here for several reasons, and we hold that for purposes of determining venue under section 11-11-3 in this case, the Port Authority "resides" in the First Judicial District of Harrison County, Mississippi. We first observe that the agencies in
Moore
and
Johnson
had their principal places of business in Hinds County (the Office of the Attorney General and the Mississippi Division of Medicaid, respectively),
13
so there was no factual basis to challenge where those agencies "reside" for venue purposes. Further, the Mississippi Supreme Court's recent decision in
Purdue Pharma L.P. v. State
,
¶ 33. In this case the Port Authority's offices, operations, employees, and commissioners are located in Harrison County. Specifically, the Port Authority was created as a separate governmental entity with the express right to sue and be sued in its own name, and is charged with the oversight of the Port of Gulfport.
See
¶ 34. We find no Mississippi case in which a state agency under these circumstances has been deemed to reside in Hinds County for venue purposes. Further, decisions in our sister states support the proposition that the Port Authority both "resides" and has its "principal place of business" in Harrison County.
See
Ala. Youth Servs. Bd. v. Ellis
,
¶ 35. Also distinguishing the Port Authority from the defendant agencies in Moore and Johnson is that although the Port Authority is deemed a state agency under section 59-5-21, it possesses very unique legislative characteristics under its enabling legislation. We find it particularly relevant that the Port Authority is defined as a "governing authority," rather than an "agency" under the state public purchasing laws, as follows:
The State Port Authority shall be considered to be a "governing authority" under the state public purchasing laws as that term is defined in Section 31-7-1 and used in Sections 31-7-1 through 31-7-73, and shall not be subject to the jurisdiction of the Department of Finance and Administration, the Public Procurement Review Board or the Bureau of Building, Grounds and Real Property Management....
¶ 36.
Moore
and
Johnson
also lack precedential value in the case at hand because, as noted above, the supreme court in
Moore
made its venue determination looking only at the portion of section 11-45-1 addressing where lawsuits against the state may be brought, i.e., "in the court having jurisdiction of the subject matter which holds its sessions at the seat of government."
See
Moore
,
¶ 37. This is relevant because in
Mississippi State Building Commission v. S & S Moving Inc.
,
¶ 38. We acknowledge that the supreme court in
S & S Moving
did not address the portion of section 11-45-1 that addresses where lawsuits against the State may be brought, as it had no reason to do so. Here, however, this issue is before us. We find no basis for applying the venue aspect of section 11-45-1 when the Mississippi Supreme Court has squarely held that this statute does not apply to cases in which the state auditor does not have authority over the claim at issue-like SIC's breach of contract claim in this case.
S & S Moving Inc.
,
¶ 39. Finally, as recognized in a respected Mississippi treatise, "venue rules operate to locate where within the state court system a civil action might be conveniently and fairly tried." 1 Jeffrey Jackson, Donald Campbell & Justin Matheny, MISSISSIPPI CIVIL PROCEDURE-MISSISSIPPI PRACTICE SERIES , § 3:1 at 252 (2018 ed.); see Van Slyke , 510 So.2d at 492 ("[I]t is the uniform policy of judicial procedure in our state to bring all litigation in personam to the home of the defendant, and the [venue] statute must be construed in the light of that policy."). We find that this policy can only be served by locating venue for this case in Harrison County, where the Project, and the Port Authority's offices, operations, employees, and commissioners are located. Indeed, SIC, a foreign corporation, offers no factual basis for locating venue in Hinds County, Mississippi, but relies solely upon its legal argument that the Port Authority "resides" in Hinds County, an argument we reject above.
¶ 40. In sum, based upon our review of the record, and the applicable statutes, case law, and other authorities, we find that for venue purposes, the Port Authority "resides" in the First Judicial District of Harrison County. Accordingly, we reverse the circuit court's decision denying the Port Authority's motion to dismiss on this issue, and remand this case to the circuit court for entry of an order transferring this case to Harrison County Circuit Court, First Judicial District.
See
Fluker v. State
,
¶ 41. AFFIRMED IN PART; REVERSED AND RENDERED IN PART; AND REVERSED AND REMANDED IN PART.
LEE, C.J., IRVING AND GRIFFIS, P.JJ., BARNES, FAIR, WILSON, GREENLEE, WESTBROOKS AND TINDELL, JJ., CONCUR.
The Project is one of many projects that are part of a massive, on-going Port of Gulfport Restoration Program that is being funded by a Community Development Block Grant (CDBG) Sub-grant Agreement between the Mississippi Development Authority (MDA) and the Port Authority. The MDA is responsible for administering Hurricane Katrina disaster-recovery programs that are funded by CDBG funds and overseen by the United States Department of Housing and Urban Development (HUD). Recipients of CDBG funds must comply with an array of federal rules and regulations when using CDBG funds on any given project.
As noted in the Port Authority's principal brief, the Contract has not been included in the record in its entirety because the general conditions, supplemental conditions, specifications, and contract drawings comprise over 1,150 pages. The parties have included in the record the Contract excerpts that they believe are relevant to this appeal.
Before the circuit court, the Port Authority also argued that the parties had engaged in negotiations to the exclusion of arbitration, and that the Port Authority is entitled to discretionary-function immunity under Mississippi Code Annotated section 11-46-9 (Rev. 2004) of the MTCA. The Port Authority does not raise these issues on appeal.
See, e.g.
,
Benihana of Tokyo LLC v. Benihana Inc.
,
See, e.g.
,
Benihana of Tokyo
,
See, e.g.
,
Hanover Ins. Co.
,
The separate arbitration provisions provided, in relevant part:
4.6.1 Any Claim arising out of or related to the Contract, except Claims relating to aesthetic effect and except those waived ... shall ... be subject to arbitration. Prior to arbitration, the parties shall endeavor to resolve disputes by mediation in accordance with the provisions of Paragraph 4.5.
4.6.2 Claims not resolved by mediation shall be decided by arbitration.
Myrick
,
See, e.g.
,
Questions concerning application of the MTCA are subject to a de novo standard of review.
Kelley LLC v. Corinth Pub. Utils. Comm'n
,
For the reasons addressed below, we find that Mississippi Code Annotated section 11-45-1 (Rev. 2012), which governs venue for certain actions against the State of Mississippi, does not apply to SIC's breach of contract lawsuit against the Port Authority.
SIC also cites
Gaskin v. Commonwealth of Pennsylvania
, No. 94-4048,
Mississippi Code Annotated section 11-5-1 (Rev. 2002) provides, in relevant part, that "all cases not otherwise provided may be brought in the chancery court of any county where the defendant, or any necessary party defendant, may reside or be found...."
As noted, in
Moore v. Bell Chevrolet-Pontiac-Buick-GMC LLC
,
Similarly, the defendant in the
Office of the Governor Division of Medicaid v. Johnson
,
Additionally, in
Board of Trustees of State Institutions of Higher Learning v. Van Slyke
,
This same proposition is now found in 92A C.J.S. Venue § 101 (2010).
Case-law data current through December 31, 2025. Source: CourtListener bulk data.