Illinois Cent. R. Co. v. Harried

• Court: U.S. District Court — Southern District of Mississippi
• Writing for the Court: DAVID BRAMLETTE, Court
• Citation: Illinois Cent. R.R. Co. v. Harried, 681 F. Supp.2d 772 (S.D. Miss. 2009)
• Decision Date: 30 December 2009
• Docket Number: Civil Action No. 5:06cv160-DCB-JMR.
• Parties: ILLINOIS CENTRAL RAILROAD COMPANY, Plaintiff v. Willie R. HARRIED, a/k/a William Roy Harried, and William S. Guy and Thomas W. Brock, Defendants.

681 F. Supp.2d 772

ILLINOIS CENTRAL RAILROAD COMPANY, Plaintiff v. Willie R. HARRIED, a/k/a William Roy Harried, and William S. Guy and Thomas W. Brock, Defendants.

Civil Action No. 5:06cv160-DCB-JMR.

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

December 30, 2009.

Tanya D. Ellis, Forman, Perry, Watkins, Krutz & Tardy, LLP, for Illinois Central Railroad Company.

Daniel J. Mulholland, Heather J. Wilkins, Tanya D. Ellis, Forman, Perry, Watkins, Krutz & Tardy, LLP, John G. Corlew, Katherine K. Smith, Corlew Munford & Smith, PLLC, Jackson, MS, Robert Michael Cunningham, II, Law Office of Robert A. Pritchard, Pascagoula, MS, Wayne Dowdy, Dowdy & Cockerham, Magnolia, MS, William S. Guy, Law Offices of William S. Guy, McComb, MS, for Illinois Central Railroad Company, Willie R. Harried, a/k/a William Roy Harried, William S. Guy and Thomas W. Brock.

OPINION & ORDER

DAVID BRAMLETTE, District Court.

This matter comes before the Court on a Motion for Summary Judgment docket entry no. 145 filed by the defendants William Guy and Thomas Brock ("Guy and Brock"). Defendant Willie R. Harried ("Harried") has also joined the defendants' Motion for Summary Judgment docket entry no. 152.¹ The factual and procedural history of this case is extensive. The Court has previously set forth the facts of this case in a prior order docket entry no. 187 on August 6, 2009, which denied Guy and Brock's first motion for summary judgment. Therefore, the Court will not repeat those facts herein.

In the instant motion, the defendants argue that no genuine issue of material fact exists because the plaintiff cannot establish all necessary elements of its fraud claim nor can the plaintiff establish the facts necessary for a breach of duty of good faith and fair dealing claim. Specifically, the defendants argue that the plaintiff did not reasonably rely on their assertions in settling the Eakin's case and that no fiduciary relationship existed between the parties. Illinois Central filed its response in opposition on August 17, 2009. The defendants filed their rebuttal on July 6, 2009. Having carefully considered the Motion, the plaintiff's responses thereto, defendant's rebuttal, applicable statutory and case law, and being otherwise fully advised in the premises, the Court finds and orders as follows:

I. SUMMARY JUDGMENT STANDARD

Summary judgment is apposite "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c).² The party moving for summary judgment bears the initial responsibility of apprising the district court of the basis for its motion and the parts of the record which indicate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

"Once the moving party presents the district court with a properly supported summary judgment motion, the burden shifts to the non-moving party to show that summary judgment is inappropriate." Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). But the non-movant must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Moreover, "the mere existence of a scintilla of evidence is insufficient to defeat a properly supported motion for summary judgment." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. The non-movant must instead come forward with "specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). Summary judgment is properly rendered when the non-movant "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548.

II. ANALYSIS

1. Fraud Claim

Under Mississippi law, to succeed on a claim of fraud, the plaintiff must show that there was "(a) a material false representation, (b) the representation is known by the speaker to be false, (c) the representation is made with an intent to induce the unwitting hearer to act in reliance thereon, (d) the hearer does, in fact, act to his detriment in reasonable reliance on the false representation, and (e) the hearer suffers a consequent injury based on such reliance." McGee v. Swarek, 733 So.2d 308, 312 (Miss.App.1998) (citations omitted). "Cases which involve allegations of fraud or misrepresentation generally are inappropriate for disposition at a summary-judgment stage." Allen v. Mac Tools, Inc., 671 So.2d 636, 642 (Miss.1996). The Mississippi Supreme Court has stated:

The clear and convincing standard required of the evidence to sustain a claim of fraud is certainly met in a summary judgment posture when one witness specifically claims a representation was in fact made. Simmons v. Thompson Machinery of Mississippi, Inc., 631 So.2d 798, 802 (Miss.1994)(quoting McMullan v. Geosouthern Energy Corp., 556 So.2d 1033, 1037 (Miss.1990)). Finally, in a motion for summary judgment, a genuine issue of material fact is obviously present where one party testifies to one account of the matter in interest and the other party swears otherwise. Simmons, 631 So.2d at 802 (citing Newell v. Hinton, 556 So.2d 1037, 1041 (Miss. 1990)).

Id. at 643.

The defendants contend that Illinois Central cannot establish the fourth element necessary for a fraud claim because Illinois Central did not "reasonably rely" on the defendants sworn statements in choosing to settle the Eakin's case. The defendants argue that Illinois Central knew or should have known that Harried had been involved in prior asbestos litigation because Illinois Central had in its possession a one-page document obtained on October 1, 2003, that indicated Harried's involvement in an asbestos case in 1999. Therefore, the defendants argue, Illinois Central did not reasonably rely on the pulmonary questionnaire provided to them by Guy and Brock in deciding to settle the Harried claim.

Illinois Central argues that the "reasonable reliance" standard which incorporates "knew or should have known" is not the correct standard in common law fraud cases in Mississippi. Rather, the plaintiff argues that "justifiable reliance" is the correct standard.

At the center of both parties' arguments is whether common law fraud under Mississippi law requires, as an element, "reasonable reliance" or "justifiable reliance" on a party's false representation. The defendants argue that Mississippi law requires "reasonable reliance," which incorporates the knew or should have known standard. The plaintiffs, on the other hand, argue that "justifiable reliance" is the standard.

In support of its argument, the plaintiff cites Field v. Mans, 516 U.S. 59, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995). In Field, the Supreme Court articulated a difference between "justifiable reliance" and "reasonable reliance" as those terms exist under Chapter 11 of the bankruptcy code. 516 U.S. at 70-76, 116 S.Ct. 437. "Reasonable reliance", the Court indicated, is a reasonable person standard in which the person would investigate the truth or falsity of all representations made to him or her. Id. at 70-74, 116 S.Ct. 437. The Court stated:

Justifiable reliance is the standard applicable to a victim's conduct in cases of alleged misrepresentation and that `it is only where, under the circumstances, the facts should be apparent to one of his knowledge and intelligence from a cursory glance, or he has discovered something which should serve as a warning that he is being deceived, that he is required to make an investigation of his own.'

Id. at 71, 116 S.Ct. 437 (citing W. Prosser, Law of Torts § 108, p. 718 (4th ed. 1971)). In Field, the Supreme Court also cited First Mobile Home Corp. v. Little, 298 So.2d 676, 679 (Miss.1974), in support of its conclusion that as of November 6, 1978, Mississippi was one of the 36 states that had adopted the "justifiable reliance" standard in common law fraud actions. Id. at 75, n. 12, 116 S.Ct. 437.

To support their argument, the defendants rely on Waters v. Allegue, 980 So.2d 314, 318 (Miss.Ct.App.2008), and Little v. Miller, 909 So.2d 1256 (Miss.Ct.App.2005). Both of these cases involved a real estate transaction between a buyer and seller in which the court held that the buyer could not reasonably rely on the seller's misrepresentations in the contract when the buyer actually knew the truth before signing the contract. The defendants also rely on Travelers Casualty & Surety Co. of America v. Ernst & Young LLP, 542 F.3d 475 (5th Cir.2008). In Travelers, the Fifth Circuit determined that, in the context of financial statements, Mississippi law makes clear that "a party cannot reasonably rely on a misstatement when the error is obvious to the party or the party knows the truth of the matter." Id. at 483. However, these cases differ from the facts in the instant case. In the cases cited by the defendants, there was proof that the plaintiffs knew the falsity of the representations before the contracts were signed or before the agreement was made. The defendants have failed to show that the plaintiffs knew at the time of the settlement that the information in the pulmonary questionnaires was false or that the plaintiff knew about the existence of a one-page document discovered by MMI that indicated Harried had been involved in prior asbestos litigation.³

More importantly, Illinois Central provided an affidavit by Charles G. Garrett, Illinois Central's Risk Mitigation...