Terrain Enterprises, Inc. v. Mockbee

• Decision Date: 13 April 1995
• Docket Number: No. 91-CA-01081-SCT,91-CA-01081-SCT
• Citation: 654 So.2d 1122
• Parties: TERRAIN ENTERPRISES, INC. v. David W. MOCKBEE.
• Court: Mississippi Supreme Court

Page 1122

654 So.2d 1122

TERRAIN ENTERPRISES, INC. v. David W. MOCKBEE.

No. 91-CA-01081-SCT.

Supreme Court of Mississippi.

April 13, 1995.

James H. Herring, Herring Long & Ward, Canton, for appellant.

Kenneth W. Barton, Phil B. Abernethy, J. Collins Wohner, Jr., Butler Snow O'Mara Stevens & Cannada, Jackson, for appellee.

EN BANC.

PRATHER, Presiding Justice, for the Court:

I. INTRODUCTION AND PROCEDURAL HISTORY

Terrain Enterprises, Inc., (Terrain), appellant herein, appeals from a jury verdict in favor of the appellee, Attorney David W. Mockbee (Mockbee), following trial in the Circuit Court of Hinds County. Terrain, a Mississippi corporation, sued Mockbee, Terrain's former attorney, alleging that but for an unauthorized settlement by Mockbee in a lawsuit against Western Casualty & Surety Company (Western), Terrain would have recovered a substantially larger judgment against Western.

Trial commenced on May 6, 1991. Prior to that date, the trial court determined a bifurcated trial would be held, with any liability of Mockbee to be determined separately from the issue of damages. Following a three day trial, the jury returned a verdict in favor of Mockbee on the liability issue; accordingly, the damages issue was not considered.

Following the denial of its post-trial motions, Terrain perfected an appeal to this Court. Terrain assigns the following issues for review by this Court:

A. WHETHER OR NOT THE TRIAL COURT ERRED IN REFUSING TO GRANT THE MOTION IN LIMINE FILED BY TERRAIN ENTERPRISES, INC., TO PREVENT PAT H. SCANLON, A WITNESS CALLED BY THE DEFENDANT, FROM TESTIFYING AS TO:

(1) the reasonableness of David Mockbee's evaluation and analysis concerning damages recoverable by Terrain against Western;

(2) the applicable construction and surety law applicable in Terrain's case against Western;

(3) the amount which a developer such as Terrain can collect on a performance bond;

(4) the reasonableness of the $65,000 settlement made by Mockbee;

(5) when and under what circumstances punitive damages, prejudgment interest and attorneys fees are collectible in a case such as this one;

(6) that Mockbee would not be at fault if he settled Terrain's case against Western for $65,000 if told by his client specifically to settle for $50,000;

(7) that a surety on a performance bond, such as Western Surety Company, would typically only be required to pay to Terrain the difference between the cost to complete the construction project in question and the original amount of the bond after the default by the contractor;

(8) to explain the penalty provisions of the bond in question and the difference between payment bonds and performance bonds.

B. WHETHER OR NOT THE TRIAL COURT ERRED IN GRANTING THE DEFENDANT'S MOTION TO BIFURCATE FOR TRIAL THE ISSUE OF MOCKBEE'S LIABILITY FROM THE ISSUE OF PLAINTIFF'S DAMAGES.

C. WHETHER OR NOT THE TRIAL COURT ERRED IN THEIR ALLOWING

THE DEFENDANT EXHIBITS 18, 19 and 20 INTO EVIDENCE OVER THE OBJECTION OF THE PLAINTIFF SINCE DEFENDANT FAILED TO SEASONABLY LIST THEM AS POTENTIAL EXHIBITS IN HIS ANSWER TO INTERROGATORIES OR PRODUCE THEM FOR INSPECTION BY THE PLAINTIFF.

II. THE FACTS

In a Federal District Court suit, Mockbee negotiated a settlement of $65,000 with Western, the surety on a performance bond for a construction project being developed by his client, Terrain. In subsequent litigation between Terrain and Western, the Federal District Court allowed Mockbee's settlement to be set aside and found for Terrain. Damages were awarded in the amount of $283,830 (the face value of the bond) and $800,000 in punitive damages. An additional $88,932 in prejudgment interest was added. Appeal of that case resulted in the Fifth Circuit's reversal of the judgment and enforcement of Mockbee's original $65,000 settlement. See Terrain Enterprises, Inc. v. the Western Casualty and Surety Co., 774 F.2d 1320 (5th Cir.1985), reh'g denied, 778 F.2d 790 (5th Cir.1985), cert. denied, 475 U.S. 1121, 106 S.Ct. 1639, 90 L.Ed.2d 184 (1986).

Terrain next brought suit against Mockbee in the Hinds County Circuit Court based on the same settlement, alleging that but for the $65,000 settlement, Terrain "would have recovered a much larger judgment against Western," presumably similar to that which the District Court had originally awarded.

Mockbee was called as an adverse witness. He stated he was a practicing attorney in Mississippi during 1982-83 when the matters in question took place and had specialized in construction law since 1977. At the time Mockbee first met with Bob Stewart, President of Terrain, Mockbee was aware of a $50,000 settlement offer made by Western to Stewart to settle the case. The dispute between Terrain and Western involved a construction contract and Western's role as surety of the performance bond for the Millcreek Place Phase IV subdivision. Mockbee explained Terrain's suit against Western was one for damages in the nature of the cost to complete the construction work and included a count for "bad faith." Mockbee identified a letter he wrote to Stewart on March 23, in which he informed Stewart of the "substantial burden we bear" on the punitive damages claim, from which Mockbee stated he knew Stewart was expecting a large recovery. Mockbee was aware that in July of 1980, U-Con, Inc., a construction company, had defaulted on its obligation to perform the construction work under the contract. Mockbee recalled that Terrain's lawsuit against Western had prayed for damages of $181,000 and at that point, shortly after he took the case, he was of the opinion that "if that was Terrain's actual damages, ... certainly $50,000 wouldn't be a very good settlement."

Mockbee admitted he was aware that Western had placed $283,000 in reserves to pay any potential claim which Terrain had against Western. Mockbee recalled that Western's adjuster estimated it would take $145,000 to finish the Terrain project. Mockbee stated Bill Purdy, Western's attorney, calculated that Western's liability to Terrain was between $4,841 and $6,268. Mockbee's own analysis, dated January 1983, estimated that Terrain was entitled to damages of $67,623, and recommended settlement for that sum. Mockbee made another estimate dated September 30, 1983, some nine months later, that Terrain consider settling for $50,819, plus two years' interest at eight percent. Mockbee stated he was paid in full, $5,800, for his services by Terrain. Mockbee and Bob Stewart had "several meetings" discussing the settlement value of the case, but Mockbee stated he was only authorized to make an actual settlement on October 10, 1983. Trial in federal court was then scheduled for October 17. Mockbee recalled in setting up the October 10, 1983 meeting, Stewart, by phone, expressed he did not wish to settle for $50,000 plus interest.

Mockbee testified that on October 10, before 8:00 a.m., Stewart came to Mockbee's office and authorized Mockbee to settle for $50,000, the same amount Western had initially offered in August of 1980. Mockbee stated that Purdy had called on behalf of Western in June of 1983 and requested that Terrain make a settlement offer based on Terrain's out of pocket costs. Stewart's response then was "don't make them an offer." Again, the first time Stewart and Mockbee had a "real discussion" on settlement was the morning of October 10, 1983. As a result, Stewart authorized Mockbee to settle for a "minimum" of $50,000. Mockbee settled for $65,000. He stated he always tried to do better than the minimum his client was willing to take.

Mockbee denied he might have "misinterpreted" anything his client had said; the two had gone over the damages issue in detail in his office on October 10. Later in the afternoon of October 10, Stewart had called Mockbee back to discuss two specific elements of the damages. Mockbee stated the two came to a "heated conclusion" and Stewart had told him, "talking to you is like talking to this brick wall I'm looking at or standing next to." Mockbee told his client he felt the same way about him. The conversation ended with Stewart telling Mockbee to "Settle for $50,000. Settle, settle, settle," and Stewart hung up. Mockbee stated: "I felt like I had my marching orders; no question about it." Mockbee stated later that afternoon, Western's attorney, Purdy, called and accepted the $65,000 settlement.

On October 11, Stewart called Mockbee's office and was informed of the settlement. Stewart then came to Mockbee's office and again spoke to his secretary: "He spoke to her and she told him that I had settled for $65,000 in the front office in front of other witnesses. He then left without complaining." Mockbee stated that Stewart went to a side door, a direct entrance to the secretary's office and commented, "How much did Western pay to David to settle for $65,000?" Stewart met with Mockbee the next morning and "wanted to go back through the numbers" but Mockbee explained he had settled the case and "couldn't go back." Stewart was informed if he refused to accept the settlement, he would have to fire Mockbee because he knew he could be called as a witness if the matter went to court.

On October 12, Stewart, his wife, and Attorney Chuck Knauss met with Mockbee and another attorney, Bill Jones. All of Mockbee's files were given to Knauss who took over the case for Terrain. A hearing was held in federal court on October 14 on Western's motion to have the settlement enforced. Ultimately, the Fifth Circuit adjudged the settlement Mockbee negotiated to be binding.

Bob Stewart, engineer and land developer, testified that he was the President and owner of Terrain Enterprises, Inc. Stewart stated: "At no time did I ever authorize Mr. Mockbee to settle this case for any specific number. At no time." Stewart testified U-Con, Inc., submitted a bid to do the construction work in the Millcreek Phase IV subdivision, which Terrain accepted. Terrain required the work to be bonded to get a guarantee that the work...