Kurian David v. Signal International, L.L.C , 647 F. App'x 461 ( 2016 )

Case: 15-30464 Document: 00513493930 Page: 1 Date Filed: 05/05/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-30464 United States Court of Appeals
Fifth Circuit
FILED
KURIAN DAVID; et al, May 5, 2016
Lyle W. Cayce
Plaintiffs Clerk
v.
WORLD MARINE, L.L.C.,
Defendant-Cross Claimant - Appellant
v.
MALVERN C. BURNETT; LAW OFFICES OF MALVERN C. BURNETT,
A.P.C.; SACHIN DEWAN; DEWAN CONSULTANTS PVT LTD, also known
as Medtech Consultants,
Defendants-Cross Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:08-CV-1220
Before KING, SOUTHWICK, and HAYNES, Circuit Judges.
PER CURIAM:*
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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Plaintiffs Kurian David, et al. filed suit against Defendants–Appellants
Signal International, LLC, and Signal International, Inc., 1 as well as
Defendants–Appellees Malvern C. Burnett, the Law Offices of Malvern C.
Burnett, A.P.C., Sachin Dewan, and Dewan Consultants Pvt Ltd., alleging a
number of claims arising out of Plaintiffs’ recruitment and treatment by
Defendants as H2-B visa workers. Signal thereafter filed crossclaims against
its co-defendants related to their recruitment of the H-2B visa workers on
Signal’s behalf. Signal asserted breach of fiduciary duty and legal malpractice
claims against Burnett and asserted fraud and indemnity claims against
Burnett and Dewan. The district court ultimately granted judgment as a
matter of law against Signal on the breach of fiduciary duty, legal malpractice,
and fraud claims, concluding that Signal failed to present sufficient evidence
in support of these claims. The district court then submitted jury instructions
on Signal’s indemnity claims, and a jury subsequently found against Signal on
these claims. Signal now appeals. We hold that the district court did not err
in granting judgment as a matter of law and that it did not abuse its discretion
in selecting the jury instructions. We therefore AFFIRM the judgment of the
district court.
I. FACTUAL AND PROCEDURAL BACKGROUND
The instant appeal arises from a suit filed by H-2B visa workers formerly
employed by Defendants–Appellants Signal International, LLC, and Signal
International, Inc. (Signal), related to the recruitment and treatment of the
1 On May 5, 2016, we granted the motion to substitute filed by World Marine, L.L.C.,
to pursue the crossclaims of Signal on appeal after World Marine alleged that there had been
a transfer of interest of Signal’s crossclaims to World Marine. However, given that Signal
initially brought the crossclaims and that the proceedings below related to Signal’s conduct,
we refer to Defendants–Appellants as Signal, rather than World Marine, throughout this
opinion.
2
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workers by Signal, Defendants–Appellees Malvern C. Burnett and the Law
Offices of Malvern C. Burnett, A.P.C. (Burnett), and Defendants–Appellees
Sachin Dewan and Dewan Consultants Pvt Ltd. (Dewan). In April 2006,
Signal, a marine services company, executed a contract with Global Resources,
Inc. (Global), under which Global would recruit skilled workers from India
coming into the United States on H-2B temporary work visas or, alternatively,
I-140 permanent residency visas for Signal. 2 Pursuant to this arrangement,
Global provided the services of Burnett as an immigration attorney to file the
proper documents for the foreign workers and to assist in the process of
migrating the skilled foreign workers free of charge. Signal then executed
several documents appointing Dewan as Signal’s agent for the recruiting of
foreign workers in India.
The recruited H-2B visa workers arrived at Signal’s facilities in Orange,
Texas, and Pascagoula, Mississippi, in late 2006, but issues arose following
their arrival. Among other problems, the workers discovered that they
received H-2B temporary visas rather than the permanent residency visas that
they had expected to receive and that the living and working conditions
provided by Signal were unsanitary and restrictive. Thereafter, in late 2006,
Signal terminated its relationship with Global when Signal learned that the
H-2B visa workers had paid significantly more in fees to Global than Global
admitted to Signal. Signal later severed its relationship with Burnett as well
after discovering that Burnett had filed immigration documents (in particular,
I-140 permanent residency visas) for Signal’s competitor, J & M Associates,
Inc., on behalf of foreign workers who were or had been employed by Signal on
2 The recruitment of Indian laborers was designed to address a skilled labor shortage
Signal had experienced in the aftermath of Hurricanes Rita and Katrina.
3
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H-2B visas. As a result of the problems related to Signal’s recruitment of
Indian workers, a number of workers left Signal by early 2008.
On March 7, 2008, several of the H-2B visa workers filed suit against
Signal, Global, Burnett, Dewan, and others, alleging numerous claims arising
out of their recruitment and treatment by these parties. 3 As part of that
litigation, Signal filed crossclaims against its co-defendants on May 9, 2008.
Signal alleged that its co-defendants, Global, Burnett, and Dewan had
deliberately concealed from Signal the false promises and representations
made to prospective H-2B workers, particularly the promise that these workers
would receive green cards. Signal further alleged that, as a result of these
misrepresentations, the H-2B workers recruited by the co-defendants left
Signal’s employ prior to the expiration of their H-2B visas with Signal. As a
result of the alleged acts, Signal claimed that it incurred damages from hiring
other workers at a higher cost after the H-2B workers left and subcontracting
additional legal work. Signal also claimed that it suffered reputational harm.
Based on these allegations, Signal brought a number of crossclaims against
Burnett and Dewan under Mississippi law, including the crossclaims at issue
in the present appeal: breach of fiduciary duty and legal malpractice claims
against Burnett, and fraud and indemnity claims against Burnett and Dewan. 4
3 The H-2B visa workers brought claims based on violations of their rights under the
Trafficking Victims Protection Act, Racketeer Influenced and Corrupt Organizations Act, the
Civil Rights Act of 1866, and the Ku Klux Klan Act of 1871, as well as collective action claims
under the Fair Labor Standards Act and claims for damages arising from fraud, negligent
misrepresentation, and breach of contract. Those claims are not before us on this appeal.
4 Although Signal originally brought crossclaims against Global, Signal later
dismissed its crossclaims after Global’s owner filed for bankruptcy. Global is not a party to
the present appeal. Signal also asserted crossclaims for breach of contract, unfair trade
practices, detrimental reliance, and tortious interference with contractual relationship
against its co-defendants that are not at issue before us on this appeal.
4
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The matter proceeded to trial on January 12, 2015. On February 4, 2015,
Signal, Burnett, and Dewan submitted joint proposed jury instructions.
Consistent with the district court’s instructions, the parties initially submitted
jury instructions on the indemnity crossclaim that included alternative
proposed instructions. Burnett and Dewan objected to Signal’s proposed jury
instructions, contending that the Mississippi Supreme Court had already
established a standard for non-contractual indemnity and that Signal’s
proposed jury instructions did not adopt that standard. The parties then
submitted a final iteration of the joint jury instructions on February 6, 2015,
that included substantially the same language as proposed by Burnett and
Dewan. Signal objected to these instructions, arguing that the language put
forth by Dewan and Burnett instructed on tort-based indemnity whereas the
instruction should have been based on principles of agency law. The final
iteration of the joint jury instructions used different language but ultimately
adopted the tort-based indemnity instructions put forth by Burnett and
Dewan. 5
5 Signal’s proposed jury instructions on indemnity would have stated:
An agent’s conduct may generate legal consequences for the principal in the
principal’s relations with third parties even when the agent’s conduct exceeds
or otherwise diverges from the agent’s actual authority. Such deviations by
the agent breach the agent’s duties to the principal. If the principal suffers
loss as a consequence of the agent’s acts, the agent is subject to liability to the
principal for loss caused the principal.
By contrast, the jury instructions ultimately adopted by the district court stated:
In order to prevail on its claim for indemnity, Signal must prove the following
by a preponderance of the evidence:
1. Signal owes a legal obligation to plaintiffs in the main action;
2. Signal was not at fault in incurring the legal obligation to
Plaintiffs; and
5
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At a hearing on February 10, 2015, the district court heard a number of
motions, including motions for judgment as a matter of law against Signal’s
crossclaims. At the hearing, Burnett argued that Signal failed to show
sufficient evidence of damages from the H-2B visa workers that left Signal and
that Signal failed to show, with specificity, the costs it had to spend on a new
immigration attorney as a result of Burnett’s alleged malpractice. The district
court ultimately granted judgment as a matter of law against Signal’s
crossclaims for breach of fiduciary duty and legal malpractice against Burnett
and the crossclaims for fraud against Burnett and Dewan. In particular, the
district court found that there was not legally sufficient evidence for a
reasonable juror to find in Signal’s favor on damages relating to the breach of
fiduciary duty claim. As to the legal malpractice claim, the district court found
that Signal could not establish damages for a specific amount of attorney’s fees
because of conflicting testimony at trial and because the evidence produced by
Signal did not demonstrate how much Signal had to pay another immigration
attorney as a result of Burnett’s alleged legal malpractice. 6 As to the fraud
claims, the district court found that the damages for these claims were the
same as the damages for the breach of fiduciary duty claim and that Signal
failed to adduce legally sufficient evidence on these claims.
3. In all fairness, Dewan and/or Burnett should indemnify Signal
for the obligation owed to Plaintiffs.
6 Signal’s primary evidence of the legal expenses incurred to pay a replacement
attorney for the immigration work that Burnett should have performed was a line item of
$280,219 marked as “Legal & Professional Services” in its own accounting documents.
However, testimony from Signal’s chief financial officer and its human resources director at
trial conflicted as to whether the line item included litigation costs and not just expenses
related to the work of the replacement attorney.
6
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On February 12, 2015, the jury returned a verdict for the H-2B visa
worker plaintiffs on several of their claims and found against Signal on its
indemnity claim. The jury ultimately awarded Plaintiffs over $14 million in
damages against Signal, Burnett, and Dewan. On April 27, 2015, the district
court entered final judgment in favor of Burnett and Dewan, dismissing
Signal’s crossclaims with prejudice. Signal timely appealed, challenging the
jury instructions on its indemnity crossclaim and the dismissal of its other
crossclaims.
II. STANDARD OF REVIEW
“We review de novo a trial court’s decision on a Rule 50(a) motion for
judgment as a matter of law.” MGE UPS Sys., Inc. v. GE Consumer & Indus.,
Inc., 622 F.3d 361, 365 (5th Cir. 2010). A judgment as a matter of law is
appropriate when “a party has been fully heard on an issue during a jury trial
and the court finds that a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on that issue.” Fed. R. Civ. P. 50(a). “In
entertaining a Rule 50 motion for judgment as a matter of law the court must
review all of the evidence in the record, draw all reasonable inferences in favor
of the nonmoving party, and may not make credibility determinations or weigh
the evidence.” Casey v. Toyota Motor Eng’g & Mfg. N. Am., Inc., 770 F.3d 322,
326 (5th Cir. 2014). “The court must review the record as a whole, but must
disregard all evidence favorable to the moving party that the jury is not
required to believe.” Id.
By contrast, “[w]e review challenges to jury instructions for abuse of
discretion and afford the trial court great latitude in the framing and structure
of jury instructions.” Eastman Chem. Co. v. Plastipure, Inc., 775 F.3d 230, 240
(5th Cir. 2014). However, any legal conclusions “as to the content of state law,”
contained in those jury instructions, are reviewed de novo. Northrop
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Grumman Ship Sys., Inc. v. Ministry of Def. of Republic of Venez., 575 F.3d
491, 499 (5th Cir. 2009).
III. BREACH OF FIDUCIARY DUTY AND FRAUD CLAIMS
The district court did not err when it granted judgment as a matter of
law against Signal’s crossclaims for breach of fiduciary duty and fraud because
there was not legally sufficient evidence under Mississippi law for a reasonable
juror to find in Signal’s favor on the damages relating to these claims. “We
apply federal standards of review to assess the sufficiency or insufficiency of
the evidence in relation to the verdict, but in doing so we refer to state law for
the kind of evidence that must be produced to support a verdict [based on state
law claims].” McCaig v. Wells Fargo Bank (Texas), N.A., 788 F.3d 463, 482 (5th
Cir. 2015) (quoting Hamburger v. State Farm Mut. Auto. Ins. Co., 361 F.3d 875,
884 (5th Cir. 2004)). As a result, in the instant case, “state law governs what
the plaintiff must prove and how it may be proved.” Id.
“Under established Mississippi caselaw, evidence of every element of
damages which one seeks is a prerequisite to recovery.” 4 Encyclopedia of
Mississippi Law § 25:47 (2015). “In order to prove its prima facie case of
damages, ‘the plaintiff must show (1) a loss, and (2) that defendant’s conduct
caused the loss.’” MBF Corp. v. Century Bus. Commc’ns, Inc., 663 So. 2d 595,
598 (Miss. 1995) (quoting Cenac v. Murry, 609 So. 2d 1257, 1271 (Miss. 1992)).
Moreover, in order to establish a prima facie case of damages a party must
show “a reasonable basis for computation and the best evidence which is
obtainable under the circumstances of the case, and which will enable the trier
to arrive at a fair approximate estimate of loss is sufficient proof.” Id. at 599
(quoting Koehring Co. v. Hyde Constr. Co., 178 So. 2d 838, 853 (Miss. 1965));
see also Mississippi Law of Torts § 18:1 (2d ed. 2015) (“Where it is certain that
the plaintiff has sustained damage but the exact loss is uncertain, he may
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recover if the proof is sufficient to afford a reasonable basis to estimate the
amount of his loss.”). That is, “[t]he evidence need only lay a foundation upon
which the trier of fact can form a fair and reasonable assessment of the amount
of . . . damages.” Ham Marine, Inc. v. Dresser Indus., Inc., 72 F.3d 454, 462
(5th Cir. 1995). However, “a damage award cannot be based on mere
speculation.” Par Indus., Inc. v. Target Container Co., 708 So. 2d 44, 50 (Miss.
1998). And “while the measure of damages need not be perfect, the most
accurate and reliable evidence available should be required.” Puckett Mach.
Co. v. Edwards, 641 So. 2d 29, 36 (Miss. 1994) (quoting City of New Albany v.
Barkley, 510 So. 2d 805, 807 (Miss. 1987)).
While Signal alleged that it incurred additional costs in employing
replacement H-2B visa workers as a result of Burnett and Dewan’s alleged
breach of fiduciary duty and fraud, Signal failed to demonstrate sufficient
evidence of damages from the alleged conduct under Mississippi law. On
appeal, Signal points to four pieces of information that it provided as a
reasonable basis for the jury to determine damages: (1) estimates of the
number of H-2B visa workers that left Signal; (2) estimates of the increased
wage costs for contract workers compared to H-2B visa workers; (3) the average
workweek for an H-2B visa worker; and (4) the length of time H-2B workers
were expected to continue working for Signal. However, while some of this
evidence could be support for a damages calculation, Signal failed to provide
the best evidence regarding the length of time for which the H-2B visa workers
had to be replaced by contract workers. In particular, Signal only points to
testimony by its CEO, Richard Marler, speculating that H-2B visa workers
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could work for 30 months. 7 Moreover, Signal fails to reference any records
showing how long their H-2B visa workers were employed by Signal before
leaving the company. See Cenac, 609 So. 2d at 1272 (concluding that relying
on the testimony of one witness without any substantiating documentation did
not constitute proof of damages).
Even accepting Signal’s argument that H-2B visa workers could have
worked for Signal for up to 30 months, Signal has not pointed to any evidence
for how many of those 30 months it hired contract workers to replace H-2B visa
workers. Cf. Adams v. U.S. Homecrafters, Inc., 744 So. 2d 736, 741–42 (Miss.
1999) (holding that the plaintiff “failed to present sufficient evidence of the
reasonable value of [the plaintiff’s] mitigation efforts”). Thus, Signal has failed
to provide a “reasonable basis for computation,” MBF Corp., 663 So. 2d at 599,
of damages stemming from the replacement of H-2B visa workers by contract
workers because it is uncertain what damages Signal actually sustained. See
Adams, 744 So. 2d at 740 (“The rule that damages, if uncertain, cannot be
recovered, applies to their nature, and not to their extent. If the damage is
certain, the fact that its extent is uncertain does not prevent a recovery.”
(quoting Billups Petroleum Co. v. Hardin’s Bakeries Corp., 63 So. 2d 543, 549
(Miss. 1953)).
7 At trial Marler speculated as to the duration of the H-2B visa workers’ employment,
stating:
The government will grant a visa if you certify you are going to have a job for
these people and you are going to pay them as if they were hired locally in a
classification. You would get them for ten months, and it was a measured
program. At the end of the ten months, it would be reevaluated, and there was
a possible extension for another ten months. And it could last 30 months.
Marler’s remarks indicate, in fact, that it is not clear whether Signal’s H-2B visa workers
would actually work up to 30 months at the company.
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Alternatively, Signal argues that it demonstrated damages based on
reputational harm and attorney’s fees that it incurred in defense of the H-2B
visa workers’ claims as a result of Burnett and Dewan’s alleged fraud. Both
arguments are unpersuasive. Signal’s argument for damages on the basis of
the reputational harm rests on a Restatement comment noting that liability
“may be found in a threat of harm to the business reputation,” Restatement
(Third) of Unfair Competition § 3 cmt. f (Am. Law Inst. 1995), and the principle
that that “the [Mississippi Supreme] Court often looks to other jurisdictions
for guidance” when there is no applicable Mississippi caselaw. Harrington v.
Office of the Miss. Sec’y of State, 129 So. 3d 153, 159 n.3 (Miss. 2013). However,
we are unaware of, and Signal does not mention, any Mississippi caselaw
recognizing or discussing damages based on reputational harm. Given this
lack of caselaw, we decline Signal’s invitation to read Mississippi law as
recognizing reputational harm as a basis for damages. See SMI Owen Steel
Co., Inc. v. Marsh USA, Inc., 520 F.3d 432, 442 (5th Cir. 2008) (per curiam)
(“When making an Erie guess, ‘[o]ur task is to attempt to predict state law not
to create or modify it.’” (quoting Hermann Holdings, Ltd. v. Lucent Techs., Inc.,
302 F.3d 552, 558 (5th Cir. 2002)).
Signal’s argument for damages based on attorney’s fees similarly fails.
The Mississippi Supreme Court has reiterated that “unless a statute or
contract provides for imposition of attorney fees, they are not recoverable.”
Coleman & Coleman Enters., Inc. v. Waller Funeral Home, 106 So. 3d 309, 318
(Miss. 2012) (quoting Stokes v. Bd. of Dirs. of La Cav Im. Co., 654 So. 2d 524,
529 (Miss. 1995)). Signal does not point to a statute or contract that would fall
under this narrow exception recognized by the Mississippi Supreme Court. Id.
(“Absent a ‘contractual provision or statutory authority providing for attorney
fees, they may not be awarded as damages unless punitive damages are also
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proper.’” (quoting Stokes, 654 So. 2d at 529)). We conclude then that judgment
as a matter of law was appropriate as to Signal’s fraud and breach of fiduciary
duty claims.
IV. LEGAL MALPRACTICE CLAIMS
The district court also did not err in granting judgment as a matter of
law on Signal’s legal malpractice claim against Burnett. Much as with Signal’s
other crossclaims, Signal failed to demonstrate sufficient evidence of damages
as a result of the alleged legal malpractice. On appeal, Signal argues that it
provided sufficient evidence of legal expenses it had to pay a replacement
attorney to undertake legal work that should have been performed by Burnett.
However, Signal’s primary evidence of damage on this point involved a line
item in its own accounting report for “Legal & Professional Services”—a line
item that may or may not have included litigation costs based on conflicting
testimony heard by the district court. This is insufficient evidence under
Mississippi law. In a case involving the recovery of attorney’s fees, the
Mississippi Supreme Court previously held that a plaintiff’s proof of attorney’s
fees was inadequate as a matter of law when the plaintiff failed to introduce
time sheets or “any other evidence indicating the amount of time expended by
counsel.” Lovett v. E.L. Garner, Inc., 511 So. 2d 1346, 1354 (Miss. 1987). And
a lower Mississippi court similarly found that a party could not recover
attorney’s fees when that party provided “billing summaries but [where the
billing summaries] did not identify the time and charges that were
reimbursable.” A & F Props., LLC v. Lake Caroline, Inc., 775 So. 2d 1276, 1283
(Miss. Ct. App. 2000). Signal’s evidence of the expenses gives no indication of
the time and charges billed by its replacement attorney.
Signal attempts to distinguish these cases by arguing that attorney’s fees
that arise as part of compensatory damages—rather than attorney’s fees
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recovered from an opposing party in a litigation—need only allow a trier of fact
to be able to arrive at a “fair approximate estimate of loss.” MBF Corp., 663
So. 2d at 599. However, that standard still requires Signal to prove damages
based on “the most accurate and reliable evidence available.” Puckett Mach.,
641 So. 2d at 36 (quoting Barkley, 510 So. 2d at 807). And Signal failed to
provide the most logical evidence available of any costs related to the work of
the replacement attorney: the attorney’s legal fee invoices. Cf. Coleman &
Coleman Enters., 106 So. 3d at 319 (Miss. 2012) (holding that sufficient
evidence was introduced through “a detailed, itemized statement of fees
incurred” during the time period). Indeed, one of the witnesses testified as to
the existence of such invoices, but Signal never produced these invoices. We
conclude then that judgment as a matter of law was also appropriate as to
Signal’s legal malpractice claims.
V. JURY INSTRUCTION ON INDEMNITY
Finally, the district court did not abuse its discretion in selecting the jury
instructions on Signal’s indemnity claim. We have previously stated three
requirements for an appellant to successfully challenge jury instructions:
First, the appellant must show that viewing the charge as a whole,
the charge creates “substantial and ineradicable doubt whether
the jury has been properly guided in its deliberations.” Second,
even if erroneous, the appellate court will not reverse if the error
“could not have affected the outcome of the case.” Third, the
appellant must show that the proposed instruction offered to the
district court correctly stated the law. Perfection is not required
as long as the instructions were generally correct and any error
was harmless.
Taita Chem. Co., Ltd. v. Westlake Styrene, LP, 351 F.3d 663, 667 (5th Cir. 2003)
(footnotes omitted) (quoting FDIC. v. Mijalis, 15 F.3d 1314, 1318 (5th Cir.
1994)). Accordingly, “[t]he instructions need not be perfect in every respect
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provided that the charge in general correctly instructs the jury, and any injury
resulting from the erroneous instruction is harmless.” Eastman Chem., 775
F.3d at 240 (quoting Rogers v. Eagle Offshore Drilling Servs., Inc., 764 F.2d
300, 303 (5th Cir. 1985)).
On appeal, Signal contends that the district court should have instructed
the jury on an agency-based theory of indemnity under Mississippi law rather
than the tort-based theory of indemnity on which it ultimately instructed the
jury. 8 Signal argues that on its agency-based theory of indemnity, the inquiry
would have been whether Dewan and Burnett, as the agents of the principal,
Signal, exceeded their authority. While Signal is correct that the Mississippi
Supreme Court has not expressly addressed the specific issue of whether an
agent has a duty to indemnify its principal for actions exceeding its authority,
we find that Mississippi caselaw is instructive on this issue. See Paz v. Brush
Engineered Materials, Inc., 555 F.3d 383, 392 (5th Cir. 2009) (“If there is no
apposite decision, this court must forecast how the Mississippi Supreme Court
would rule . . . based on Mississippi case law, dicta, general rules on the issue,
decisions of other states, and secondary sources.”).
In describing indemnity claims under Mississippi law, the Mississippi
Supreme Court has stated:
An obligation to indemnify may arise from a contractual relation,
from an implied contractual relation, or out of liability imposed by
law. When one person is required to pay money which another
person in all fairness should pay, then the former may recover
8 Signal also contends that the district court abused its discretion when it denied
Signal’s motion to supplement the record on appeal with an email relevant to the jury
instruction argument it now raises before us. We hold that the district court did not abuse
its discretion in denying the motion to supplement because the email reiterated objections to
the jury instructions that Signal had previously made. See Performance Autoplex II Ltd. v.
Mid-Continent Cas. Co., 322 F.3d 847, 854 (5th Cir. 2003) (holding that denial of a motion to
supplement the record is reviewed for an abuse of discretion).
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indemnity from the latter in the amount which he paid, provided
the person making the payment has not conducted himself in a
wrongful manner so as to bar his recovery.
Bush v. City of Laurel, 215 So. 2d 256, 259 (Miss. 1968). And in dealing with
non-contractual indemnity, the Mississippi Supreme Court has noted:
Two critical prerequisites are generally necessary for the
invocation of noncontractual implied indemnity in Mississippi:
(1) The damages which the claimant seeks to shift are imposed
upon him as a result of some legal obligation to the injured person;
and (2) it must appear that the claimant did not actively or
affirmatively participate in the wrong.
J.B. Hunt Transp., Inc. v. Forrest Gen. Hosp., 34 So. 3d 1171, 1173–74 (Miss.
2010) (quoting Home Ins. Co. v. Atlas Tank Mfg. Co., 230 So. 2d 549, 551 (Miss.
1970)). As a result, Mississippi does not allow for indemnity between
tortfeasors unless “one party is liable merely ‘because of passive negligence in
failing to remedy the defect or because of a non-delegable statutory duty.’” Id.
at 1174 (quoting Bush, 215 So. 2d at 260). In adopting the jury instructions on
indemnity, the district court instructed on the aforementioned requirements
for non-contractual indemnity under Mississippi law. Signal contends that
these requirements relate to non-contractual, tort-based indemnity whereas
Signal’s relationship with Dewan and Burnett, while not contractual, 9 was
similar to a contractual relationship and based in agency rather than in tort.
However, Signal’s argument is undermined by the Mississippi Supreme
Court’s decision in Baker & McKenzie, LLP v. Evans, 123 So. 3d 387 (Miss.
2013), the facts of which are similar to the appeal before us.
There, S. Lavon Evans Jr., an oil and gas drilling contractor, had an
ongoing business relationship with Reed Cagle, and the two entered into a joint
9 Signal’s original contract for the recruitment of the H-2B visa workers was with
Global, not Dewan and Burnett.
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venture, Laredo Energy Holdings, LLC (Laredo). Id. at 394–96. Throughout
the business relationship, the law firm of Baker & McKenzie, LLP, and one of
its partners (Baker) represented Cagle and his businesses. Id. at 394–400.
Evans ultimately sued Laredo, its subsidiaries, and Baker, asserting that “he
lost access to his companies’ two largest assets . . . and was sued in Texas by
[Baker] on behalf of [Cagle], who was acting on behalf of [Laredo].” Id. at 392–
93. In particular, Evans sued Baker because he allegedly made decisions and
entered agreements “based on advice and recommendations from [Baker], who
Evans believed to be his lawyer,” and Evans alleged that his businesses had
gone into significant debt “as a result of the conduct by [Baker].” Id. at 393.
Similar to the present matter, Laredo and its subsidiaries asserted crossclaims
against Baker, including claims of legal malpractice and breach of fiduciary
duty. Id. at 401. The jury in the case ultimately awarded Laredo and its
subsidiaries $22.4 million against Baker. Id. at 401.
On appeal, Baker asserted that the cross-plaintiffs’ jury instructions for
Laredo against Baker were improper because they granted Laredo damages if
the jury found against Baker. Id. at 412. The Mississippi Supreme Court
focused on a specific jury instruction and agreed that the instruction
“constitute[d] an indemnity instruction.” Id. However, the court found that
Laredo was not entitled to an indemnity instruction based on the facts of the
case, as Laredo was also a tortfeasor, whose actions did not fall within the
narrow exception for passive negligence. Id. at 412–13. The court concluded
that it “kn[e]w of no authority in [Mississippi] which would provide rights of
indemnity in favor of an actively or intentional tortious LLC, based upon the
conduct of one of its minority members.” Id. at 413. Although Baker &
McKenzie did not address whether an agency relationship existed between
Baker and Laredo or the implications of such a relationship for indemnity, the
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Case: 15-30464 Document: 00513493930 Page: 17 Date Filed: 05/05/2016
No. 15-30464
relationship of Baker and Laredo was similar to the relationship of Signal to
Dewan and Burnett in the instant case. Yet the relation of the parties to one
another did not change the principle under Mississippi law that tortfeasors
could not recover under non-contractual indemnity.
Discounting Baker & McKenzie, Signal relies on a Restatement provision
in support of its proposed agency-based indemnity jury instruction. However,
in “making an Erie-guess in the absence of explicit guidance from the state
courts, we must attempt to predict state law, not to create or modify it.” United
Parcel Serv., Inc. v. Weben Indus., Inc., 794 F.2d 1005, 1008 (5th Cir. 1986).
And here, Signal points to no Mississippi caselaw that supports using the
agency-based indemnity instruction that it requested. Moreover, the
Restatement (Third) of Agency does not support Signal’s argument. That
treatise does not contain a section clearly describing when an agent should
generally indemnify a principal. Indeed, Signal relies on a comment to
Restatement (Third) of Agency § 8.09, which states that an agent is subject to
liability to the principal for loss caused to the principal “[i]f an agent takes
action beyond the scope of the agent’s actual authority.” Restatement (Third)
of Agency § 8.09 cmt. b. But that comment later explains that “the principal’s
right to be indemnified against subsequent losses by the agent does not extend
to the loss that the principal could have avoided,” id., and does not address
situations in which the principal may also be liable to a third party. In light
of established Mississippi caselaw on non-contractual indemnity, we find that
the district court did not abuse its discretion when it instructed the jury on
indemnity.
VI. CONCLUSION
For the reasons herein, we AFFIRM the district court’s judgment
dismissing Signal’s crossclaims with prejudice.
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