Lester Engineering Co., Inc. v. Richland Water and Sewer Dist., 56190

• Decision Date: 11 February 1987
• Docket Number: No. 56190,56190
• Citation: 504 So.2d 1185
• Parties: LESTER ENGINEERING COMPANY, INC. v. RICHLAND WATER AND SEWER DISTRICT.
• Court: Mississippi Supreme Court

Page 1185

504 So.2d 1185

LESTER ENGINEERING COMPANY, INC. v. RICHLAND WATER AND SEWER DISTRICT.

No. 56190.

Supreme Court of Mississippi.

Feb. 11, 1987.

Rehearing Denied April 22, 1987.

E. Clark Rumfelt, Wells, Wells, Marble & Hurst, Jackson, for appellant.

Paul B. Henderson, Brandon, Pat H. Scanlon, Young, Scanlon & Sessums, Jackson and Brandon, for appellee.

Before WALKER, C.J., and DAN M. LEE and GRIFFIN, JJ.

DAN M. LEE, Justice, for the Court:

This cause was originally filed in the Circuit Court of Rankin County by Lester Engineering, seeking indemnification for expenses incurred as the result of successfully defending a negligence suit brought by a third party. The trial court dismissed the suit on a motion to dismiss for failure to state a claim, but allowed Lester to amend its complaint. Lester amended its complaint; however, the trial court ultimately granted Richland's motion for summary judgment. Lester appeals both the 12(b)(6) dismissal and the granting of the defendant's motion for summary judgment. Finding error therein, we reverse and remand this cause.

In 1968, Lester Engineering and the Richland Sewer District entered into an agreement whereby Lester was to perform professional services for Richland in conjunction with the development of a sewage collection, transport, treatment and disposal system. The Agreement provided that Lester would serve as Richland's professional respresentative on the project and would be responsible for the technical design of the work and general observation of its quality. In addition to reimbursement for these technical services, the Agreement also called for reimbursement of "Special Engineering Services," ("engineering services performed in connection with litigation and negotiation"); "Special Project Administrative Services," ("miscellaneous services, not of an engineering nature, but connected with the work and accomplished for the convenience of the OWNER"); and "Related Services," ("those services of a highly technical and specialized nature ... or other services of a non-professional or non-technical nature necessary for the proper accomplishment of the work").

The services performed by Lester for Richland eventually culminated in a contract, dated 1976, for the construction of the sewage system. The contract was authored by Lester Engineering. Lester was not a party to the contract, but was named therein as "the Owner's professional representative in all phases of the work...." This contract and the 1968 Agreement are the basis for this suit.

After construction of the sewage system began, problems developed with some of the pipe that had been laid. Armco, Inc., the pipe manufacturer, eventually volunteered approximately $1.6 million to repair the allegedly defective pipe. However, in 1980, Armco filed suit against Lester and two of the contractors on the project. The suit charged Lester with negligence in preparing plans for the system, in administering contracts, and in inspecting, approving, and certifying work. The United States District Court for the Southern District of Mississippi issued summary judgment on behalf of Lester and the other defendants, holding that Armco could not recover the monies that it had voluntarily paid. The issue of Lester's alleged negligence was not litigated. This result was affirmed by the Court of Appeals for the Fifth Circuit. Armco, Inc. v. Southern Rock, Inc., 696 F.2d 410 (5th Cir.1983). In defending this action, Lester alleged that he incurred costs, expenses, and attorney's fees of $52,763.12, and this lawsuit is based upon Lester's attempt to recover that money on his theory of indemnification.

Lester's claim was based on the assertions that: 1) the reimbursement was due as being incurred pursuant to the Special Engineering Services, Special Project Administrative Services and/or Related Services clauses of the 1968 Agreement; and 2) that, in the alternative, the indemnification of Lester was required as part of the principal/agent relationship of Richland to Lester. Richland responded by way of a motion to dismiss under Rule 12(b)(6) of the Mississippi Rules of Civil Procedure. The motion alleged that: 1) Richland had no contractual responsibility to pay Lester; 2) Miss.Code Ann. Sec. 31-5-41 prohibited indemnification from negligence as against public policy; 3) Lester was not an agent, but an independent contractor; and 4) Richland, as a public body, was not statutorily authorized to reimburse Lester.

The trial court sustained the 12(b)(6) motion. In its order, the court found that no conceivable set of facts could support the contention that Lester was not an independent contractor, and that neither the 1976 Contract nor the 1968 Agreement contained express indemnity provisions. However the court gave Lester 30 days to amend its complaint.

Lester amended Count II of his complaint to further specify the limitations on its authority from Richland, in order to show that Lester was not an independent contractor. Richland reiterated its prior grounds to move to dismiss, and also moved for a summary judgment. In support of the latter motion, Richland submitted an affidavit from Lester Spell, Chairman of the Richland Water and Sewer District. Spell asserted that Lester designed and supervised the construction of the sewage system, that the Board of Commissioners depended on Lester to accomplish the goal of completion of the system, that Richland did not control the means by which construction was accomplished, that it was interested in the ultimate result, and that Richland did not direct Lester to take any specific action with regard to the system.

In opposition to the motion for summary judgment, Lester filed the affidavit of Horace...