Noatex Corp. v. King Constr. of Houston, L.L.C.

Decision Date10 October 2013
Docket Number12–60586.,Nos. 12–60385,s. 12–60385
Citation732 F.3d 479
PartiesNOATEX CORPORATION, a California Corporation, Plaintiff–Appellee, v. KING CONSTRUCTION OF HOUSTON, L.L.C., a Mississippi limited liability company; Carl King, Defendants–Appellants, v. State of Mississippi, ex rel., Jim Hood, Mississippi Attorney General, Intervenor–Appellant. Noatex Corporation, a California Corporation, Plaintiff–Appellant, v. King Construction of Houston, L.L.C., a Mississippi limited liability company; Carl King, Defendants–Appellees, v. State of Mississippi, ex rel., Jim Hood, Mississippi Attorney General, Intervenor.
CourtU.S. Court of Appeals — Fifth Circuit

732 F.3d 479

NOATEX CORPORATION, a California Corporation, Plaintiff–Appellee,
v.
KING CONSTRUCTION OF HOUSTON, L.L.C., a Mississippi limited liability company; Carl King, Defendants–Appellants,
v.
State of Mississippi, ex rel., Jim Hood, Mississippi Attorney General, Intervenor–Appellant.

Noatex Corporation, a California Corporation, Plaintiff–Appellant,
v.
King Construction of Houston, L.L.C., a Mississippi limited liability company; Carl King, Defendants–Appellees,
v.
State of Mississippi, ex rel., Jim Hood, Mississippi Attorney General, Intervenor.

Nos. 12–60385, 12–60586.

United States Court of Appeals,
Fifth Circuit.

Oct. 10, 2013.






Held Unconstitutional


West's A.M.C. § 85–7–181

[732 F.3d 481]

Robert Espensen Kohn, Esq., Kohn Law Group, Incorporated, Santa Monica, CA, Nicole Amber Collins, Attorney, Wise Carter Child & Caraway, P.A., Biloxi, MS, James C. Simpson, Jr., Esq., Wise Carter Child & Caraway, P.A., Gulfport, MS, for Plaintiff–Appellee.

[732 F.3d 482]


Douglas T. Miracle, Assistant Attorney General, Office of the Attorney General for the State of Mississippi, Jackson, MS, for Intervenor–Appellant.


Carl King, Houston, MS, pro se.


Heather Lynn Ladner, Attorney, Tommie S. Cardin, Butler, Snow, O'Mara, Stevens & Cannada, P.L.L.C., Ridgeland, MS, Steven Harrison Smith, Steven H. Smith & Associates, P.L.L.C., Jackson, MS, for Amicus Curiae.


Appeals from the United States District Court for the Northern District of Mississippi.

Before STEWART, Chief Judge, and DAVIS and WIENER, Circuit Judges.


CARL E. STEWART, Chief Judge:

These appeals arise out of the district court's resolution of matters concerning an invocation of Mississippi's “Stop Notice” statute, Miss.Code Ann. § 85–7–181 (“Stop Notice statute”), by King Construction of Houston. The State of Mississippi (“the State”) challenges the district court's determination that Mississippi's Stop Notice statute is facially unconstitutional. We AFFIRM. We DENY King's motion to dismiss its appeal.

In a separate appeal, No. 12–60586, Noatex challenges the district court's denial of its motion for further relief and stay of an appeal bond determination. We consolidated the cases for oral argument and we now consolidate them for disposition. We AFFIRM.

I. FACTS AND PROCEDURAL HISTORY
A. The Stop Notice Proceeding

Auto Parts Manufacturing Mississippi (“APMM”) contracted with Noatex for the latter to construct an auto parts manufacturing facility in Guntown, Mississippi. Noatex subcontracted with King Construction to provide some materials and labor. Noatex alleges that APMM owes it money for goods and services that Noatex previously provided to APMM. A billing dispute also arose between Noatex and King Construction, in which Noatex questioned some of the invoices submitted to it by King Construction. In response to this dispute, King Construction notified APMM on September 23, 2011, pursuant to Mississippi's Stop Notice statute, that Noatex owed King Construction $260,410.15, and that, therefore, King Construction was filing a “Laborer's and Materialman's Lien and Stop Notice” in Mississippi chancery court. On the date of notification, APMM owed Noatex $179,707.40.

The effect of this notice was that funds in the amount of $260,410.15 were “bound in the hands” of APMM. SeeMiss.Code Ann. § 85–7–181 (“[T]he amount that may be due ... shall be bound in the hands of such owner for the payment in full....”). Further, under a related section of the Mississippi Code, § 85–7–197,1 King Construction's

[732 F.3d 483]

filing of the stop notice in the lis pendens record of the chancery court had the effect of establishing King Construction's lien priority over the property that was the subject of the dispute. APMM later deposited the $260,410.15 in the registry of the chancery court.

B. Procedural History

Three lawsuits resulted from this dispute. First, Noatex filed a declaratory judgment action against King Construction and its principal Carl King (collectively “King”), challenging the facial constitutionality and constitutionality-as-applied of the Stop Notice statute. The State intervened in that action to defend the constitutionality of its statute. Second, APMM filed an interpleader action in Mississippi chancery court, seeking resolution of the funds subject to King Construction's stop notice. Noatex removed this interpleader action to the district court.2 Third, Noatex filed suit against King Construction for breach of contract in district court, claiming damages in excess of $500,000.3

1. The Declaratory Action No. 12–60385

On April 12, 2012, the district court granted Noatex's motion for summary judgment in the declaratory action. The district court held that § 85–7–181, the Stop Notice statute, was facially unconstitutional because it deprived contractors of property without due process. King and the State appealed. King subsequently filed a purportedly unopposed motion to withdraw its appeal pursuant to Fifth Circuit Rule 42.1. Noatex filed a response in opposition to this motion, asserting that it had never consented to King's withdrawal and further, that King was attempting to evade potential liability for attorney's fees. King's motion was carried with this case.

2. The District Court's Denial of Noatex's Motions No. 12–60586

Following the district court's declaratory judgment, Noatex filed several other motions in the district court, including a motion for attorney's fees based on the declaratory action, a motion for further relief, and a motion for an appeal bond to secure payment of costs on appeal from King. Noatex's motion for further relief requested damages against King equal to the amount of the stop notice plus interest, as well as attorney's fees it had incurred (and may continue to incur) in the interpleader action. Noatex's motion for an appeal bond included attorney's fees among the estimated costs of appeal. The district court denied Noatex's motion for further relief and stayed all other proceedings, including Noatex's attorney's fees

[732 F.3d 484]

motion in the declaratory action and appeal bond motion, pending our resolution of the appeal of the district court's ruling on the constitutionality of the Stop Notice statute. Noatex now appeals these orders of the district court, asserting that it was entitled to further relief and challenging the validity of the district court's stay with respect to its motion for an appeal bond.

II. DISCUSSION

We first address the issues presented by the State and King on appeal—the constitutionality of the Stop Notice statute and King's motion to dismiss its appeal. We then address the issues presented by Noatex-the district court's denial of its motion for further relief and the district court's stay of its motion for an appeal bond.

A. Mississippi's Stop Notice Statute

“We review a district court's grant of summary judgment de novo, applying the same legal standards as the district court. Summary judgment should be granted if ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ ” Ballard v. Devon Energy Prod. Co., 678 F.3d 360, 365 (5th Cir.2012) (quoting Fed.R.Civ.P. 56(c)). In a facial challenge to the constitutionality of a statute, “the challenger must establish that no set of circumstances exists under which the Act would be valid.” United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987). “[S]tatutes should be construed whenever possible so as to uphold their constitutionality.” United States v. Vuitch, 402 U.S. 62, 70, 91 S.Ct. 1294, 28 L.Ed.2d 601 (1971).

In assessing a due process challenge, we must consider the nature of the property interest being deprived and the sufficiency of the procedural safeguards in protecting an erroneous deprivation of that interest. See Boddie v. Connecticut, 401 U.S. 371, 377–79, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971); see also generally Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) (addressing both the nature of the property interest at stake and the procedural safeguards). “[E]ven the temporary or partial impairments to property rights that attachments, liens, and similar encumbrances entail are sufficient to merit due process protection. Without doubt, state procedures for creating and enforcing attachments, as with liens, ‘are subject to the strictures of due process.’ ” Connecticut v. Doehr, 501 U.S. 1, 12, 111 S.Ct. 2105, 115 L.Ed.2d 1 (1991) (quoting Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 85, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988)).

We apply a version of the familiar Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) balancing test in assessing the sufficiency of the process set out by such state statutes. In doing so, we weigh such factors as the private interests implicated, the risk of erroneous deprivation, the probable value of additional safeguards, and the interests of the party seeking the prejudgment remedy, coupled with the “ancillary interest the government may have in providing the procedure or forgoing the added burden of providing greater protections.” Doehr, 501 U.S. at 10–11, 111 S.Ct. 2105. Importantly, “an individual [must] be given an opportunity for a hearing before he is deprived of any significant property interest, except for extraordinary situations where some valid governmental interest is at stake that justifies postponing the hearing until after the event.” Fuentes, 407 U.S. at 82, 92 S.Ct. 1983 (internal quotations omitted) (emphasis added).

Mississippi's Stop Notice statute provides in part:

When any contractor [employed by an owner] ... shall not pay ... the amount due by him to any subcontractor therein,

[732 F.3d 485]

... [subcontractor] may give notice in writing to the owner thereof of the amount due [to subcontractor] and claim the benefit of this section; and ... the amount that may be due upon the date of the service of such notice ... shall be bound in the hands of such owner for the payment in full ... of all...

To continue reading

Request your trial
34 cases
  • Noatex Corp. v. King Constr. of Hous. LLC
    • United States
    • U.S. District Court — Northern District of Mississippi
    • 14 Mayo 2014
    ... 74 F.Supp.3d 764 NOATEX CORPORATION, a California Corporation, Plaintiff v. KING CONSTRUCTION OF HOUSTON LLC, a Mississippi limited liability company; and Carl King, Defendants and Jim Hood, Mississippi Attorney General, State of Mississippi, ex rel., Intervenor. Civil Action No. 3:11cv00137GHD. United States District Court, N.D. Mississippi, Oxford Division. Signed May 14, 2014. 74 F.Supp.3d 767 ... ...
  • Auto Parts Mfg. Miss. Inc. v. King Constr. of Hous., LLC
    • United States
    • U.S. District Court — Northern District of Mississippi
    • 14 Junio 2017
    ... ... KING CONSTRUCTION OF HOUSTON, LLC, a Mississippi limited liability company; Noatex Corporation, a California corporation; and ... , 782 F.3d 186 (5th Cir.), cert. denied sub nom. Noatex Corp. v. Auto Parts Manufacturing Mississippi Inc., U.S. , 136 S.Ct. 330, 193 L.Ed.2d 230 (2015). In ... ...
  • Funke v. Aggregate Constr., Inc.
    • United States
    • North Dakota Supreme Court
    • 27 Mayo 2015
    ... ... See, e.g., Noatex Corp. v. King Const. of Houston, L.L.C., 732 F.3d 479, 487 ... See, e.g., AllTech Commc'ns, LLC v. Brothers, 601 F.Supp.2d 1255, 126061 (N.D.Okla.2008) ; ... ...
  • Mack v. USAA Cas. Ins. Co.
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • 22 Abril 2021
    ... ... " But we held in A&M Gerber Chiropractic LLC v. GEICO General Insurance Company , that "the ... See Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex. , ... See, e.g. , Noatex Corp. v. King Constr. of Hous., LLC , 732 F.3d ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT