PYCA Industries, Inc. v. Harrison County Waste Water Management Dist.
| Decision Date | 03 May 1996 |
| Docket Number | Nos. 94-60800,95-60091,s. 94-60800 |
| Citation | 81 F.3d 1412 |
| Parties | PYCA INDUSTRIES, INC., Plaintiff-Appellee Cross-Appellant, and D. Reynolds Company, Inc., doing business as Reynolds Company, The, Plaintiff, v. HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT, Defendant-Appellant Cross-Appellee, and Owen and White, Inc.; Max Foote Construction Company, Inc.; Fidelity and Deposit Company of Maryland, Defendants-Appellees. PYCA INDUSTRIES, INC.; D. Reynolds Company, Inc., doing business as Reynolds Company, The, Plaintiffs-Appellees. v. HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT, Defendant-Appellant, and Owen and White, Inc.; Max Foote Construction Company, Inc.; Fidelity and Deposit Company of Maryland, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
E. Stephen Williams, Young, Scanlon and Sessums, Jackson, MS, for PYCA Industries, Inc.
Rodney Douglas Robinson, Gulfport, MS, for D. Reynolds Co., Inc.
Cynthia Ann Brown, Gary Eugene White, James B. Wright, Jr., Blackwell and White, Gulfport, MS, for Harrison Cty. Waste Water Management Dist.
Patrick Holt Zachary, Dorrance L. Aultman, Carol Ann Estes, Aultman, Tyner, McNeese & Laird, Hattiesburg, MS, for Owen & White, Inc.
Christopher J. Solop, Luther Smith Ott, Ronald Alton Yarbrough, David Wayne Case, Ott & Purdy, Jackson, MS, for Max Foote Const. Co., Inc. and Fidelity & Deposit Co. of Maryland.
Appeals from the United States District Court for the Southern District of Mississippi.
Before JOLLY, JONES and BENAVIDES, Circuit Judges.
The central issues of these interlocutory appeals are whether the Harrison County Wastewater Management District ("the District") is a citizen for diversity jurisdiction purposes and, if so, whether under Mississippi law it is a political subdivision of the state entitling it to sovereign immunity from tort claims. Because we conclude that the District is a person for diversity purposes, we agree with the district court that it had jurisdiction over the claims asserted. However, because we also conclude that the District is a political subdivision of the state, the District is immune from the tort claims and we accordingly reverse that part of the judgment of the district court denying tort immunity.
The underlying litigation in this case involves multiple contract and tort claims among several different parties arising out of the construction of the West Biloxi Wastewater Treatment Facility. Appellant Harrison County Wastewater Management District hired Max Foote Construction Co. ("Foote") as the general contractor for the project. Owen & White ("O & W") was the project engineer. Appellee PYCA Industries, Inc. ("PYCA") is an electrical subcontractor that was awarded a subcontract on the project. In preparing its bid, PYCA made commitments for the purchase of certain equipment from electrical equipment suppliers.
While the project was ongoing, PYCA proposed revisions in the electrical portion of the project that would net substantial savings to the District. After being initially rejected by O & W, the District ultimately directed O & W to implement the changes. These changes decreased the amount of work required and thus the amount due PYCA. Consequently, the District was entitled to change order credits. The principle dispute underlying this case is the amount of these credits.
PYCA believed the credit should be significantly less than the District. The District In August 1991, PYCA sued the District, O & W, Foote, and Fidelity & Deposit Company of Maryland (Foote's surety under a labor and materials bond). PYCA alleged breach of contract and tortious interference with contract claims. In addition, PYCA included claims for punitive damages.
through O & W, arrived at its larger credit figure by obtaining price quotes from additional electrical equipment suppliers. PYCA continued to object and refused to complete its subcontract until the credit dispute was resolved. Subsequently, the District and O & W allegedly threatened Foote with termination of the general contract. Foote, in turn, pressured PYCA. PYCA then complied by completing its part of the project despite the credit dispute. Later, the District and O & W required PYCA to provide the cost breakdown of its electrical equipment. Believing PYCA's suppliers were too high, the District and O & W increased the amount of the credit due. Apparently, this forced PYCA to breach its purchase price commitments with its suppliers.
A flurry of motions to dismiss and for partial summary judgment ensued below. In an attempt to winnow the issues for trial, the district court issued several opinions and accompanying orders, often referencing one another, disposing of these motions. Because the issues addressed by these various opinions and orders define the parameters of what is properly before us, it is necessary to describe them in some detail.
Initially, the District moved to dismiss the claims against it for lack of diversity jurisdiction. The District's position was based upon the argument that it was the alter ego of the State of Mississippi and therefore not a "citizen" for diversity purposes. On January 18, 1994, the district court issued a 58-page opinion dealing with, inter alia, the District's motion to dismiss for lack of jurisdiction. Finding that the District was not the alter ego of the state, the court denied the motion in a subsequent order filed February 9th, referencing the January 18th opinion. The District sought and received certification from the district court for an interlocutory appeal of this order under both 28 U.S.C. § 1292(b) and Federal Rule of Civil Procedure 54(b). The District now appeals the court's failure to dismiss for lack of jurisdiction.
Also on January 18th, the district court issued a 25-page opinion dealing with Foote and O & W's motion for partial summary judgment on punitive damages. In an order filed January 31, 1994, the district court granted Foote's motion, but denied O & W's. In a subsequent clarification order, filed November 8, 1994, the district court held that O & W was also immune from punitive damages. No one sought certification of these two specific orders for interlocutory appeal. Nonetheless, PYCA cross-appeals on the propriety of dismissing its punitive damage claims. Foote and O & W contend in a pending motion that the lack of certification deprives us of appellate jurisdiction.
In June 1994, the District moved to amend its answer to assert cross-claims against Foote and O & W and counterclaims against PYCA based upon allegations of possible fraud and conspiracy. This motion to amend, made nearly three years into the litigation, was denied by the magistrate judge. On October 3, 1994, the district court upheld the magistrate judge's denial of the District's motion to amend. Surprisingly, this order was also certified for interlocutory appeal under Rule 54(b). The District appeals the denial of its motion to amend.
Also on October 3, 1994, the district court filed a third opinion relating primarily to the District's summary judgment motion based upon sovereign immunity. Finding that the District's activities were not "governmental," the court concluded that the Mississippi Sovereign Immunity Act did not apply. Alternatively, the court concluded that if the Act did apply, the District waived its immunity to the extent it had general liability insurance. 1 Additionally, the court granted the District partial summary judgment on PYCA's punitive damages claim. These conclusions were then embodied in an order filed October 31 To recap, the District appeals the district court's conclusion that it is a citizen for diversity purposes. It also appeals the denial of summary judgment on the tort claims based on sovereign immunity. Furthermore, the District appeals the denial of its motion to amend. PYCA cross-appeals on the dismissal of its punitive damage claims against the District, Foote, and O & W. We examine each of these issues in turn.
1994 that referenced the court's earlier January 18th and October 3rd opinions. This order was also certified for interlocutory appeal under both § 1292(b) and Rule 54(b). The District appeals the denial of summary judgment on the immunity issue; PYCA cross-appeals on the punitive damage issue.
As a threshold matter, the District contends that it is the alter ego of the State of Mississippi and therefore not a citizen for diversity jurisdiction purposes. In answering this jurisdictional question, the district court applied the balancing test of Tradigrain, Inc. v. Mississippi State Port Authority, 701 F.2d 1131 (5th Cir.1983), and concluded that the District was not the alter ego of the state. On appeal, the District argues that the Tradigrain analysis only applies if the District's status is unclear. Because the enabling act for the District created it as "a public body corporate and politic constituting a political subdivision of the State of Mississippi," the District argues that such analysis is inappropriate because its status is clear. See Senate Bill 2833, Chap. No. 885, Local & Private Laws of the State of Mississippi, § 4 (1982) (hereinafter "Enabling Act"). Alternatively, if Tradigrain is applied, the District contends that the balance should tip in favor of it being the alter ego of the state.
It is well-settled that a state is not a "citizen" for purposes of diversity jurisdiction. Moor v. County of Alameda, 411 U.S. 693, 717, 93 S.Ct. 1785, 1796-97, 36 L.Ed.2d 596 (1973). If suit is brought against an agency that is the alter ego of the state, federal jurisdiction is lacking. Tradigrain, 701 F.2d at 1132. However, if the agency is an independent one, separate and distinct from the state, the district court can properly proceed to the merits. Id.
In this case, the district court properly applied Tradigrain analysis. The District's...
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