Jernigan Copeland Attorneys | Mississippi Construction & Insurance Law

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Defining “Substantial Completion”

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It is often said that everything is negotiable. The prudent contractor should keep that in mind in regards to the definition of “substantial completion” and should consider negotiating that definition to better fit each specific project. Given the importance of that term and its effect on subsequent events, such as the release of retainage, determination of liquidated damages, and commencement of warranties, among others, the definition of “substantial completion” should be carefully considered and specifically defined.

A standard definition often used is that contained in the AIA A-201 (2017): § 9.8.1 Substantial Completion is the stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.

The typical approach for determining when substantial completion occurs is to rely on the project design professional’s determination; however, given the design professional’s relationship to the project owner, another less subjective option should be considered. Sometimes owners and their design professionals do not agree with the contractor as to when substantial completion occurs. While this could be due to a legitimate dispute over the status of the work, it could also be due to the owner wanting to put off paying the contractor or accepting responsibility for the work. Rather than leaving the actual date of substantial completion open to interpretation, the parties would be better served by providing from the outset as much clarity as possible for acknowledging the date that substantial completion occurs.

One option for additional clarity is to define substantial completion as the date of issuance of a certificate of occupancy by the governing authority. Another option is to agree at the outset on a list of items to be performed and/or materials to be put in place the occurrence of which will constitute substantial completion. There are, no doubt, other options for defining substantial completion, but the take-away is that substantial completion should be defined in the contract documents as specifically as possible to reduce the subjectivity from the determination of when substantial completion occurs and make that determination as straightforward as possible.

If you would like to discuss this issue further, please call Matthew Vanderloo at (601) 427-0065.

Disclaimer: The information and comments presented above are general in nature, are the author’s understandings for educational purposes only, and are not intended to offer a legal opinion for use in dealing with any specific set of facts or to create any attorney/client relationship. You should consult with an attorney before taking any action of a legal consequence. Further, the authority cited above is subject to change and/or re-interpretation.

Pay-if-Paid vs. Pay-when-Paid Clauses

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Most contractors are likely aware of “pay if paid” and “pay when paid” payment terms; however, the meaning of those terms and the language used to draft those clauses are often not fully understood.  Those two payment terms have entirely different meanings, with one shifting the risk of non-payment by the owner to the subcontractor.

A “pay when paid” clause establishes a timing mechanism for payment and generally will not excuse the prime contractor from its obligation of having to pay its subcontractor, regardless of whether the owner has paid the prime contractor.

In contrast, a “pay if paid” clause establishes payment from the owner as a condition precedent for payment from the prime contractor to its subcontractor.  A condition precedent is an event that must occur before a party to a contract must perform or do their part.  Stated another way, a “pay-if-paid” clause provides that a prime contractor is not required to pay its subcontractor unless and until the prime contractor receives payment from the owner.  A “pay if paid” clause excuses the prime contractor from its obligation of having to pay its subcontractor, if the owner does not pay the prime contractor. 

The critical difference between these two payment terms is that the “pay if paid” clause shifts the risk of non-payment by the owner to the subcontractor.  That clause accomplishes that through the use of language that creates the “condition precedent.”  Sometimes a payment clause will include the term “condition precedent,” which is a clear signal that a “pay if paid” clause is intended.  However, other language is sometimes used to establish the condition precedent requirement.

Understanding the difference between these two payment terms is critical to knowing whether you have agreed to payment to a subcontractor within a reasonable time after the subcontractor submits its application for payment, or whether you have agreed to the subcontractor bearing the risk of not getting paid for its work in the event the owner does not pay the prime contractor.

If you would like to discuss this issue further, please call Matthew Vanderloo at (601) 427-0065.

Disclaimer:  The information and comments presented above are general in nature, are the author’s understandings for educational purposes only, and are not intended to offer a legal opinion for use in dealing with any specific set of facts or to create any attorney/client relationship.  You should consult with an attorney before taking any action of a legal consequence.  Further, the authority cited above is subject to change and/or re-interpretation.

Jernigan Honored With Distinguished American Award

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The Ole Miss Chapter of the National Football Foundation and College Hall of Fame will honor Arthur F. “Skipper” Jernigan of Madison, Mississippi, with its Distinguished American Award and Deano C. Orr of Bartlett, Tennessee, with the Contribution to Amateur Football Award here Saturday, Nov. 5 when the Rebels host Georgia Southern. . . .

Homeowners’ Claims under the New Home Warranty Act and a Contractor’s ability to contractually limit the remedies

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Two questions have been raised to me frequently in my practice with Home Builders:  The first is whether a home owner’s potential claims and remedies against a builder are limited to those things contained in the New Home Warranty Act, and the second is whether a builder, through his contract, can effectively limit an owner’s claims (or more importantly, remedies) to those things contained in the New Home Warranty Act.  Both of these seem like simple questions, but as you can see below, they do not produce simple answers (hence, the need for an article).

First, some basics.  The New Home Warranty Act is a statutory warranty that applies to any person (or their entity) which constructs a home or “engages another to construct a home, including a home occupied initially by its builder as its residence, for the purpose of sale.”  There are really two warranties: The first is a warranty for the first year after the “warranty commencement date” (which means the date that either title was conveyed to its initial purchaser — any person for whom the home was built, or the first person to whom the home was sold upon completion of construction — or the home was first occupied, whichever comes first) the home will be free from any defect due to non-compliance with “building standards.”  The second warranty is for six years, again, following the warranty commencement date, that the home will be free from “major structural defects” which are defined within the Act.

The Act contains a number of exclusions and exceptions which are specifically listed within the four corners of the statute.  The Act requires that notice be provided and an opportunity provided by the owner and an opportunity be given to the builder to cure any defects in the house before either the owner undertakes any repairs by himself, or files suit under the Act. In turn, the builder is required to provide the initial purchaser written notice of the terms of the New Home Warranty Act at closing. The builder’s failure to do this may result in an extension of the warranty period.  An owner has thirty (30) days from the expiration of the appropriate warranty period to file a civil action under the Act.  This acts as a statute of limitations for claims under the New Home Warranty Act. Damages are limited to the reasonable cost of repair or replacement necessary to cure the defect, and total damages shall not exceed the original purchase price of the home, plus, attorneys’  fees and court costs.  The owner is required to comply with the notice provisions of the New Home Warranty Act before filing a civil  action against the Builder.  If the Owner does so, the Act specifically provides that the Court “shall” dismiss the action “without prejudice,” but the action may be re-filed once the Owner has complied with  Notice requirements of the Act.

The previous version of the New Home Warranty Act, which was amended in 2004, provided that nothing in the Act affected an owner’s right to seek remedies of common law.  That provision was taken out and replaced with a provisions stating “nothing in this chapter shall prevent the owner from filing a cause of action based on breach of contract and remedies attendant to such a cause of action.”  Therefore, at first blush, it seems logical that the Act has, without stating as much, become the “exclusive remedy” to home owners making claims for defective construction against their home builder.    This logical conclusion, however, did not seem so “logical” to the Courts in Mississippi.  In 2005, the Mississippi Court of Appeals in a case, Little v. Miller, citing to the language of the 2004 amendments, expressly held that a common law remedy sought by a home owner is not excluded by the New Home Warranty Act.  Therefore, potential home owner claimants may seek the relief provided under the New Home Warranty Act against their builders for defects in construction of their homes, but are not limited just to those remedies, or exclusions.  They also may make a claim under general negligence or the implied warranty of “good workmanship,” which was pronounced in the George G. Gilmore v. Garrett case of 1991.

Under the General Common Law (including the implied warranty), there is a six-year statute of repose (limitations) that runs from the date that the house is complete and transferred to a third party, not the builder.  This six years runs for any defect, “major structural” or not.  Further, under the Common Law, property damage is measured by not only the cost of repair and remediation, but also any diminution in value caused by the defect, even if repaired. The one thing that the Common Law does not provide for, however, is a right for recovery of attorney fees, except under extreme circumstances.

So how do you protect yourself?  As the Court of Appeals has rendered the New Home Warranty Act for Home Builders a virtual “Maginot Line,” the simple answer is not that simple.  We have been recommending that builders add provisions in their contracts with owners that provide that all disputes between the owner and home builder are to be decided through arbitration, and that the claims and remedies be limited to those contained in the New Home Warranty Act.  We have also recommended to our builder clients that their contracts require strict compliance with the Notice provisions contained in the New Home Warranty Act, and that a copy of the New Home Warranty Act is attached to the contract so that the builder’s Notice provisions to the owner are automatically met.

Can a builder limit an owner’s right and remedies to the New Home Warranty Act by contract?  The jury is out on this issue.  There is some law in other states that seems to say “yes.”  However, this issue has never been addressed by the Courts in Mississippi, to our knowledge.  That is why we recommend that if such a limiting clause if employed in your contracts, that it is employed in conjunction with an Arbitration Agreement, because Arbitrators are not bound to follow the law as courts are, and, it has been our experience that Arbitrators tend to rely on provisions found in contracts more than “case law” in fashioning their remedies.

However, one thing is for sure: That you cannot limit the rights and remedies of a home owner to something that the Act affirmatively provides to them.  The Act specifically establishes a “minimum” requirement which cannot be waived by the owner or reduced by the builder.

Thus, we come full circle to the issue of contracts. While a builder will not make himself immune from suit by an owner by ways contained in his written contract, he certainly can put himself in a better position to defend himself in the event that a claim is made if he has a written contract in place with certain and specific provisions that, while may be limited, they still provide for the “minimum” protections as provided by the New Home Warranty Act.

Mississippi Windstorm Underwriting Association still clearing debris from Hurricane Katrina

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Hurricane Katrina was the largest disaster in United States history in terms of both property damage and the destruction of institutions, programs and agencies created to deal with natural disasters. While much of the public is familiar with the operational weaknesses that Katrina exposed in many of the affected states, municipalities and federal agencies, such as FEMA and the Army Corps of Engineers, most are unaware that Katrina also leveled the entire structure of the Mississippi Windstorm Underwriting Association (MWUA). Following Katrina, MWUA’s entire enabling legislation, Miss. Code Ann. §§ 83-34-1, et seq., was significantly altered because of its incapability of dealing with such a catastrophe. MWUA survived as an organization under the Mississippi Economic Growth and Redevelopment Act of 2007, but it now operates under an entirely different basis for providing insurance and benefits to coastal residents who are unable to obtain adequate property insurance in the private market.

Despite the establishment of an entirely new means for providing coastal residents with an insurance market under the revamped MWUA, the legislative debris left by Katrina is still being cleared almost eight (8) years later. Under the legislation existing at the time of Katrina, MWUA provided coastal residents a market of last resort for purchasing insurance policies and backed those policies through the purchase of reinsurance coverage in the event of disaster. If there was a shortfall in reinsurance coverage, MWUA’s enabling legislation provided that the property insurance companies doing business in Mississippi would be assessed their proportionate market share to cover any shortfalls. Because reinsurance purchases were historically adequate to cover most of the MWUA policy losses of the years, the system met with little objection or notice by the many of the insurance carriers doing business in Mississippi. However, because Katrina defied all reasonable projections and models concerning the amount of reinsurance needed by MWUA to cover potential losses on its policies, the assessment process hit many carriers by surprise. Although MWUA had purchased $175,000,00.00 in reinsurance coverage for all its 2004 and 2005 policies, Katrina resulted in losses of approximately $720,000,000.00 on those same policies. After exhausting the $175,000,00.00 in reinsurance proceeds to pay its policyholder claims, MWUA recorded a net loss for policy years 2004 and 2005 in the approximate amount of $545,000,000.00. “Policy year” is simply the year in which a policy was written. The year that a policy was written is the year that its premium would be recorded for purposes of determining the participation percentage. Because property insurance policies cover a period of one year, losses incurred by a policyholder from Katrina could either be based on annual policies purchased in 2004 or 2005.

Pursuant to its enabling legislation, MWUA looked to its members comprised of all property insurance companies conducting business in this state to make up for the reinsurance shortfall. The total assessments to all members for Katrina have so far been approximately $545 million ($10 million on August 31, 20005, $285 million on December 2, 2005, and $250 million on April 17, 2006). Given the shear magnitude of the assessments, the apportionment among member companies is a matter that is still being disputed to this day. There were two previous instances (Hurricane Georges and Hurricane Ivan) in the last thirty (30) years requiring special assessments beyond the annual closing of the books, and never a case such as Katrina with multiple assessments. As a result, many carriers were either lulled to sleep or simply unaware for a variety of reasons that their premium figures utilized to calculate market share, and their resulting proportion of the Katrina assessment, were grossly inaccurate. As the Katrina assessments continued to build, many of these same carriers discovered and reported the inaccuracies based on various factors and instituted appeals to MWUA and the Mississippi Insurance Department, demanding a recalculation or “true-up” to adjust the assessments to reflect each carrier’s true market share before the books were closed on Katrina. Union National Fire Insurance Company was the first carrier to initiate an appeal, with others to follow, all of which were consolidated into a single cause of action that ultimately wound its way to the Mississippi Supreme Court. Despite a ruling by the Mississippi Supreme Court in early 2012, the apportionment process still continues to this day.

The question remains as to why the matter has not concluded. At the heart of the many assessment appeals was the insistence that the legislation was expressly based on the need for a fair and accurate apportionment of assessments, with the express right of appeal under MWUA governing rules, for the purpose of ultimately reaching accurate figures. Pursuant to its enabling legislation, MWUA issued property insurance policies in the six (6) high risk counties of George, Hancock, Harrison, Jackson, Pearl River and Stone to policyholders unable to procure insurance in the private market. In order to fairly and equitably fund the MWUA insurance program, all private insurance companies authorized to write and sell property insurance in Mississippi were required to become MWUA “members” as a condition of doing business in Mississippi. Members were subject to annual assessments to cover the cost of purchasing reinsurance coverage for the MWUA policies and any shortfalls should the reinsurance coverage not be enough to cover claims in a given year. Annual assessments were required to be apportioned among members based on the amount of business each member conducted in the State, rewarding those members already providing insurance policies to property owners in the six coastal counties. This was accomplished by calculating the total dollar amount of property insurance written (premiums received) by a member in Mississippi, crediting the dollar amount of property insurance voluntarily written by that member in the coastal counties that same year. Based on the net premium figure calculated for each member, MWUA determined each member’s “participation percentage” in the Mississippi property insurance market, which fluctuated from one year to the next. Annual assessments were directly proportionate to each member’s participation percentage for the preceding policy year.

Despite these equitable principals of apportionment, MWUA resisted any and all efforts by the appealing companies to reach an accurate apportionment. In this sense, MWUA’s guiding principal of resistance became one of “finality” over “equity.” While the argument gained merit at every stage of the litigation – that being that the process was already complete and that the member companies simply ran out of time to change their numbers – the result may have backfired. Although member companies were ultimately precluded from correcting their company-specific numbers, the Mississippi Supreme Court did conclude that MWUA improperly applied its reinsurance proceeds to the wrong policy years in determining the assessments between the 2004 and 2005 policies that were implicated in the Katrina disaster.

The reinsurance allocation error was revealed through MWUA’s financial statements which indicated that approximately 80% of the Katrina losses were incurred on policies issued in 2005, and only $120 million or 20% of the losses were attributable to policy year 2004. policy year” is the year in which a policy was written. The year that a policy was written is the year that its premium would be recorded for purposes of determining the participation percentage. Because property insurance policies cover a period of one year, losses incurred by a policyholder from Katrina could either be based on policy purchased in 2004 or 2005. (policies purchased from August 30, 2004 to August 29, 2005) However, MWUA applied $116 million or 66% of its $175 million reinsurance recoveries from Katrina to policy year 2004 and approximately $59 million or 33% to policy year 2005. MWUA applied the majority of the losses to 2004 simply to eliminate the need to calculate a 2004 assessment, reasoning found by the Mississippi Supreme Court to be arbitrary and impermissible. As agreed by the Mississippi Supreme Court, the method of assessment elimination for one policy year was fatally flawed since a member company’s market participation percentage changes annually for purposes of determining the accurate assessment for each policy year under § 83-34-9. Application of reinsurance that was not consistent with losses by policy year unfairly benefitted members whose participation percentage may have been larger in 2004 than 2005, but their 2004 assessment was completely eliminated for that year. As proven in the appeals, some member assessments would have been much less with the accurate application of reinsurance proceeds between policy years. Despite this mistake being dwarfed by the losses incurred by many member companies through inaccuracies in their company-specific writings, MWUA was ordered to correct only the reinsurance allocation error before issuing its final apportionment of the Katrina assessments.

In this sense, the finality urged by MWUA throughout its resistance to any and all corrections of premium figures has never been accomplished. Since the reinsurance error affects all assessments for both 2004 and 2005, there is no rational basis any longer for denying corrections of all inaccurate figures in the process.  In fact, a further appeal has now arisen from a member carrier who previously did not have 2004 assessment as a result of previous elimination by application of all the reinsurance proceeds. Also looming may be issues related to assessments avoided by companies that grouped their premium figures, some of whom were bankrupted by Katrina and should now be removed from consideration in both the grouping and assessment process.  Further appeals will certainly follow if such issues are not resolved to the satisfaction of all member companies. Furthermore, the reallocation of reinsurance without full correction for other inaccuracies may reveal further inequities since the reallocation of reinsurance truly affects two policy years while the current “true-up” only attempts to deal with just one.

Just recently, the Mississippi Supreme Court found that a member company had been misled by MWUA regarding the manner in which excess policies should be reported in premium numbers.  See Arrowood Indemnity Company v. MS Windstorm Underwriting Association, Cause No. 2014-CA-01638-SCT (Miss. June 16, 2016).  Because the case has been remanded to the Chancery Court of Hinds County, presumably for a recalculation of this members premium figures for the relevant Katrina policy years, such is yet another recent example of the lack of finality created by the operating procedures employed by MWUA, especially since all members may be again potentially affected by the recalculation for this individual member. 

It has been eight years since Katrina made landfall, yet MWUA is apparently still dealing with the apportionment of assessments. Perhaps MWUA would have been better and more efficiently served by pursuing a course of action designed to reach assessment figures based on complete and accurate reporting instructions and premium figures for all members. If they had instead responded with a massive campaign, lasting even a year or two, demanding accurate premium figures before issuing the final numbers, this matter might have been closed six years ago, and without alienating some of the member companies in the process. Instead, MWUA’s campaign of resisting any and all corrections based on the notion of “finality” has resulted in exactly the opposite. As a result, MWUA expends time and resources that would have been better spent moving forward under the new legislation instead of still trying to clear its debris left by Hurricane Katrina.

*This article was authored by Samuel L. Anderson, Esq., of the law firm Jernigan Copeland & Anderson, PLLC which represented one of the appealing member companies. The opinions expressed herein do not attempt to represent all competing arguments asserted during the appeals process. Insurance carriers needing representation in regulatory matters before the MWUA or the Mississippi Insurance Department are encouraged to contact Jernigan Copeland & Anderson, PLLC.

Firm News, Decisions & Links

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  • MS Court of Appeals affirms summary judgment for JC&A client in Warren County Circuit Court, dismissing premises liability lawsuit.
  • Jernigan appointed Board of Trustees Chairman for Baptist Health Systems
  • Jernigan and Anderson secure Appellate Court decision vindicating State Auditor in records dispute with Biloxi’s Sun Herald
  • Copeland named top 10 finalist in the “TOP 40 LEADERSHIP IN LAW 2015” by the Mississippi Business Journal
  • Wilson named to “GOPAC’s Class of Emerging Leaders” for 2016Wilson named Vice-Chairman of House Judiciary A Committee
  • Vanderloo admitted to practice before United States Court of Federal Claims
  • Copeland selected for listing by The Best Lawyers in America, 2016, 22nd Edition for his work in Insurance Law
  • Copeland has article published in the Mississippi Law Journal, providing a comprehensive survey of the Revised Mississippi Lien Law. See Clyde X. Copeland, III & Robert P. Wise, Expansion of Mississippi’s Construction Lien Laws to include Mississippi Subcontractors, Materialmen, Consulting Engineers, and Surveyors, 84 Miss.L.J. 905 (2015).
  • JC&A listed as a Top Mississippi Law Firm by The American Lawyer and in Super Lawyers Directory
  • Vanderloo selected as a Member of the Claims & Litigation Management AllianceVines selected for listing by Best Lawyers In America for his defense work on personal injury and professional malpractice lawsuits
  • Vanderloo selected for Mid-South Super Lawyers Rising Star List
  • Jernigan Copeland & Anderson, PLLC named “GO-TO FIRM” by Fortune 500 client for Misssissippi premises liability work managed by Barton
  • Copeland (argued), Graham and DeNobriga secure landmark decision enforcing “Open Roof Exclusion” and “Water Damage Exclusion” in CGL Policy before the U. S. Fifth Circuit Court of Appeals
  • Vanderloo secures Arbitration Award of money damages for general contractor in dispute with project developer.
  • Davis secures summary judgment for landowner on issues of negligence, duty and proximate cause in Mississippi
  • Favorable insurance coverage decision secured by JC&A in U. S. District Court is Affirmed by U. S. Fifth Circuit Court of Appeals.
  • JC&A assists State Auditor in successfully securing Order for Southaven Mayor Greg Davis to repay taxpayers for personal expenses charged to the City. The decision is affirmed by the MS Court of Appeals.
  • Jernigan and Anderson secure summary judgment for client and dismissal of lawsuit concerning financing of Lost Rabbit Development
  • MS Court of Appeals affirms summary judgment for JC&A client in Hinds County Circuit Court, dismissing premises liability lawsuit. 

Partial ownership of real property in state does not necessarily establish residency for purposes of coverage under automobile policy

Jernigan and Anderson successfully represent Mississippi State Auditor, Stacey Pickering, who prevails in dispute with Mississippi Attorney General over payment of fees to private attorneys hired as special assistants. See Archived Oral Argument by Jernigan

Jernigan and Anderson lead charge in Mississippi for court ordered recalculation and true-up of Hurricane Katrina assessments by Mississippi Windstorm Underwriting Association based upon its misapplication of reinsurance proceeds following the storm, leading to millions of dollars in refunds to insurance carriers across Mississippi. MWUA regulations are overseen by the Mississippi Insurance Department

Firm tackles arbitration disputes arising from Mississippi contracts through Mississippi Supreme Court rulings*

Re-Thinking Arbitration

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An arbitration agreement makes sense for a number of reasons – it can be relatively quick and you expect that an arbitrator, unlike a jury, has the technical knowledge and expertise to understand a complex construction dispute – to name a few.

Those considerations notwithstanding, arbitration can be expensive.   If the parties have agreed to have the American Arbitration Association administer an arbitration, the administration fees will typically run in the thousands to the tens of thousands of dollars.  Add to that the cost of the hearing locale and the fees for the arbitrator to prepare for, and participate in, the arbitration hearing, and the costs may become prohibitive.

There is another possibility to consider:  a contractual agreement to have a dispute heard in a bench trial.  Section 11-1-18 of the Mississippi Code, as amended, provides that:

If the parties to a cause of action agree, any claim filed alleging damages may receive a bench trial which shall be conducted in two hundred seventy (270) days or less after the cause of action has been filed.  The cause of action shall be a priority item in the court.  This alternative may provide a significant cost savings.  Also, like arbitration, it eliminates the possibility of a jury deciding the issue.  While a bench trial may involve higher transaction costs than an arbitration (e.g., conducting discovery), that consideration is mitigated by the relatively short period of time available between filing suit and trial.  Furthermore, with a bench trial, summary disposition of the claim is a possibility, as is the right to an appeal.

Typically, a one-size fits all approach is not very effective or efficient; that’s undoubtedly the case with selecting a forum for dispute resolution.  If you already have an arbitration agreement in your form contract (if you do not, you should consider including one) it is wise to leave it in place; however, it may make sense to amend the dispute resolution clause in your contract form to include a provision for a bench trial for certain claims.

While an arbitration agreement for complex defect or delay claims may make sense, adding a bench trial provision for certain limited claims, such as claims below a certain dollar amount, may well save you significant legal costs and still provide a timely result.

If you would like to discuss this, or practical solutions to help grow your construction business, please call Matthew Vanderloo at (601) 427-0065, or Adam deNobriga at (601) 427-0069.

Disclaimer:   The information and comments presented above are general in nature, are the author’s understandings for educational purposes only, and are not intended to offer a legal opinion for use in dealing with any specific set of facts or to create any attorney/client relationship.  You should consult with an attorney before taking any action of a legal consequence.  Further, the authority cited above is subject to change and/or re-interpretation.

Construction Defect Claims

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Traditionally, in construction defect claims (non-products claims) there is a fairly well defined slate of legal theories to be plead.  They include claims of negligence, breach of the implied warranty of workmanship, breach of the statutory warranty found in the New Home Warranty Act (for residential claims) and breach of contract claims.  Typically breach of contract claims can come in two varieties:  Claims for out-right breach of contract relative to an expressed provision or condition of a written or oral contract, or breach of an expressed warranty contained in the contract, itself (e.g., “Builder warrants that the work will be done in a good and workman-like manner” or “Builder warrants that the work will conform with the design plans and specifications for the project”).  Each of these theories and causes of action are discussed below:


A claim for negligence requires proof of duty, causation, and damages.  The following are the duties owed in Mississippi by those in the construction industry:

  (1) Contractor – build in a “good and workmanlike manner”

  (2)  Project designers – (engineers and architects)-duty to use the care, skill and diligence ordinarily exercised by architects and engineers under like circumstance in the area in designing the project and in carrying out their duties to administer the construction contract, including observations and approval of the work by contractors and subcontractors

  (3)  Component Supplier-use reasonable care in the manufacture of component products

Negligence per se (i.e. the violation of building codes) removes the duty aspect of a negligence claim. See Thomas v. McDonald, 667 So. 2d 594, 597 (Miss. 1995) (In order for violation of building codes to constitute negligence per se, Plaintiff has burden to show that he/she is member of class that code was designed to protect and that the harm suffered was the type of harm that code was intended to prevent)


Implied Warranty of Habitability

Implied Warranty of good workmanship – George G. Gilmore v. Garrett, 582 So. 2d 387 (Miss. 1991) (Where a person contracts to do certain work he is charged with the common-law duty of exercising reasonable care and skill in the performance of the work required to be done by the contract, and the parties may not substitute a contractual standard for this obligation . . .Accompanying every contract is a common law duty to perform with care, skill and reasonable experience, and a negligent failure to observe any of these conditions is a tort as well as a breach of contract . . . One who engages in a business, occupation or profession represents to those who deal with him in that capacity that he possesses the knowledge, skill and ability, with reference to matters relating to such calling, which others engaged therein ordinarily possess.  He also represents that he will exercise reasonable care in the use of his skill and in the application of his knowledge and will exercise his best judgment in the performance of work for which his services are engaged, within the limits of such calling.) 582 So. 2d 387, 391-92 (Miss. 1991)


Elements: Contractual obligation, breach, causation and damages

Specific provisions/warranties to look for: (1) “Build per specifications”, (2) “Build in good and workmanlike manner”, (3) “Responsible for correcting defects in materials and workmanship” (Example:  AIA Document A201-1997 General Conditions, Article 3.1.2, 3.3.1, 3.3.2, 3.3.3 and 3.4.3)

Oil & Gas Liens in Mississippi

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Our firm routinely assists Oil & Gas Operators and Oil Field Contractors with the filing of liens directly against the equipment and proceeds of producing oil and gas wells in Mississippi. The filing of these liens are governed by Miss. Code Ann. 85-7-131. If your company has unpaid invoices from work performed on any oil or gas well, liens may be filed and recorded in the chancery clerk’s office in the county where the subject well is located. If the filing of such liens does not accomplish the goal of receiving payment on these overdue invoices, we likewise have experience in proceeding with collection lawsuits to judicially enforce payment. Our past experience in these matters normally allows for the enforcement of liens and the satisfaction of unpaid liens at a small fraction of the amounts owed. Please feel free contact us at any time for an initial assessment of your particular situation to determine whether the assertion of an oil and gas lien and/or a lawsuit for collection is an economical alternative to simply waiting for payment of unsatisfied invoices on oil and gas wells in Mississippi.

Non-Adjudication and Expungement of DUI

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As of October 1, 2014, Mississippi law allows DUI offenders a one-time opportunity to have their first offense non-adjudicated or expunged under Mississippi Code Annotated Section 63-11-30. 

A non-adjudication is where the judge withholds a judgment of guilt after a guilty plea or trial. To qualify for a non-adjudication, a petition for non-adjudication must be filed with the Court before conviction, and whether your case will be non-adjudicated is left to the discretion of the Court. If the Court permits the non-adjudication, the person will be ordered to pay a $250 fee, pay all fines for conviction, and complete an alcohol safety education program. After successfully completing the program, the person can continue driving if he or she installs an ignition interlock device on every vehicle driven by that person, obtains an interlock restricted license, and maintains it for 120 days. After the 120 days, the person must obtain proof from the interlock vendor that there were no violations of the interlock device during that time. After all of these conditions are satisfied, the court will enter an order of non-adjudication. 

To have a previous DUI offense expunged from your records, the person must wait at least five (5) years after completing all terms and conditions of his or her sentence. It is only available to a person who: (1) has successfully completed all conditions of his or her sentence, (2) did not refuse a breath or blood test, (3) had a blood alcohol concentration (BAC) under .16%, and (4) has not been convicted of or have any other pending DUI offenses.

If you are interested in petitioning the jurisdiction in which you have been charged or convicted of a DUI, please contact Richard Davis at Jernigan, Copeland & Anderson, PLLC for a free consultation to determine whether you may be eligible and/or if you would like to engage our firm for representation in proceeding further.

Mississippi Adoption Law

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A.    What are Private Placement Adoptions? *
Private adoptions are typically ones where a private attorney handles the arrangements for the adoption, including the following:
1.    Finding or helping your adoptive parent clients find a suitable infant or child for adoption would certainly be job one. I meet with prospective adoptive parents all the time that, for a variety of issues, are not eligible for adoption through an agency. The most common factor is the age of one or both of the prospective parents, but it can range from desires for a particular sex or age of a child to a child from only a certain background, be it social, cultural or ethnic. I counsel these prospective parents that I am not a reliable source for a child and that they need to be their own best advocate in locating a prospective adoptable child or infant. I can be the go-between for them and make contact or follow up on leads that they might get from their sources, even across state lines. 
2.    Contact with the birth parents and taking care of the needs of the birth mother during the pregnancy. This can include everything from arranging for prenatal care to housing, clothing, transportation and incidentals. One of the biggest concerns with private adoptions, as well as with independent placements, is the fact that often times the biological parent(s) and the adoptive parents do not receive any, or very little, counseling concerning the process, the emotional aspects of the release, and post placement support and counseling for the biological parents.
3.    Identifying and dealing with the birth father. Handling a recalcitrant birth father seems to be one of the biggest issues in a private adoption, since the agency folks usually deal with the birth father and arrange for getting his consent or for instituting proceedings to terminate his parental rights. 
4.    Working with the birth mother to get her through the pre and post natal periods by offering counseling or the opportunity to at least talk with other birth mothers who have released a child for adoption. (See 2 above).
5.    Making the arrangements at the hospital for the pick up and delivery of the baby after the consents have been obtained and compliance, if necessary, with the adoption and release laws of other states and the Interstate Compact.
6.    The legal matters for finalizing the adoption, including the termination of parental rights, the court hearing for the adoption itself, and final documents such as the birth certificate if you are in a county that allows the attorneys to file for the new birth certificate. Miss. Code sections 93-17-1 through 93-17-31. 
7.    Home studies are now required in all adoptions, except when the parties are related within the third degree. 

B.    Agency Adoptions
1.    Generally, adoption agencies have certain restrictions on who is eligible for their services, such as age limitations (minimum and maximum), marriage requirements, income requirements, statements of faith, and agreements for fees and expenses.
2.    Most agencies allow the birth mother (parents) to chose the adoptive couple or person from a pool of applicants. There are very few identified adoptions with agencies as opposed to private adoption where most adoptions are identified.
3.    As part of the agency services, the birth mother will receive counseling from trained professionals both pre and post placement. The agency will often times provide continuing updates or pictures to the birth mother and will have the ability to maintain the adoption records indefinitely. This is very important as birth searches by adoptees are becoming more and more prevalent and almost routine in most adoptions. Based upon my experience representing several agencies, the subject of birth searches could be the topic for one whole segment of this seminar.
4.    Most agency adoptions are what I would call “semi-open” as opposed to a closed private adoption. Usually birth mothers (parents) are given first names only and very little other specific identifying information. There may also be a face-to-face meeting between the birth mother and the adoptive parents. 

C.    Venue
Venue in adoption proceedings is governed by Miss. Code section 93-17-3. It provides that “[t]he adoption shall be by sworn petition filed in the Chancery Court of the county in which the adopting petitioner or petitioners reside or in which the child to be adopted resides or was born, or was found when it was abandoned or deserted, or in which the home is located to which the child has been surrendered by a person authorized to so do.” 

D.    The Crucial Element of Consent
1.    The issue of consent is governed by Miss. Code section 93-17-5, where the legislature prescribes who shall be made parties to an adoption proceeding. This section provides that an adoption may proceed with the consent of the following:
(a)    the parents, or parent , if only one (1) parent, though either be under the age of twenty-one (21) years; or (b)    in the event both parents are dead, then any two (2) adult kin of the child within the third degree computed according to the civil law, provided that, if one of such kin is in possession of the child , he or she shall join in the petition or be made a party to the suit; or (c)    the guardian ad litem of an abandoned child, upon petition showing that the names of the parents are unknown after diligent search and inquiry by the petitioners. In addition to the above, there shall be made parties to any adoption proceeding proposed in the petition, the following: (i)    Those persons having physical custody of such child, except persons having such child as foster parents as a result of placement with them by the Department of Human Services of the State of Mississippi. (ii)    Any person to whom custody of such child may have been awarded by a court of competent jurisdiction of the State of Mississippi. (iii)    The agent of the county Department of Human Services of the State of Mississippi that has placed a child in foster care, either by agreement or by court order. 2.    Such consent may also be executed and filed by the duly authorized officer or representative of a home to whose care the child has been delivered. The child shall join the petition by its next friend.
3.    In the case of a child born out of wedlock, the father shall not have a right to object to an adoption unless he has demonstrated, within the period ending thirty (30) days after the birth of the child, a full commitment to the responsibilities of parenthood. Determination of the rights of the father of a child born out of wedlock may be made in proceedings pursuant to a petition for determination of rights as provided in section 93-17-6.
4.    If such consent be not filed, then process shall be had upon the parties as provided by law for process in person or by publication, if they be nonresidents of the state or are not found therein, after diligent search and inquiry, or are unknown after diligent search and inquiry; provided that the court or chancellor in vacation may fix a date in term time or in vacation to which process may be returnable and shall have power to proceed in term time or vacation. In any event, if the child is more than fourteen (14) years of age, a consent to the adoption, sworn to or acknowledged by the child, shall also be required or personal service of process shall be had upon the child in the same manner and in the same effect as if it were an adult.
Miss. Code section 93-15-103 (2) provides that, “[t]he rights of a parent with reference to a child, including parental rights to control or withhold consent to an adoption, and the right to receive notice of a hearing on a petition for adoption, may be relinquished and the relationship of the parent and child terminated by the execution of a written voluntary release, signed by the parent, regardless of the age of the parent.” The written voluntary release or consent by the natural parents terminates their parental rights, and thereafter, no objection to an adoption may be sustained. Miss. Code Ann. sections 93-15-103(2), 93-17-7, Grafe v. Olds, 556 So.2d 690, (Miss. 1990). What a mouthful by our Supreme Court. Nowhere does this pronouncement say anything about fraud, duress, or undue influence. Nowhere does this pronouncement say anything about whether or not and under what circumstances, if any, can a consent be withdrawn. Nowhere does this pronouncement say anything about whether the “voluntary consent” operates as a termination of the natural parents’ rights as against all other individuals. For many years now, those of us who practice in this area of the law have always been of the opinion that, because obtaining the consent of the biological parents was so very important, the Mississippi Supreme Court meant what it said in the Grafe case and many others with the same or similar holdings. Then, in 2008, along comes the opinion in A.D.R. v. J.L.H, 994 So.2d 177 (Miss. 2008) that says that a consent to adoption signed by the biological mother does not wholly terminate her parental rights as the mother only consented to a proposed adoption by the adopting couple and termination of her rights as against the couple only and not against all other individuals.
As a matter of public policy, no final decree granting an adoption can be set aside except for under two very specific grounds: (1) jurisdiction and (2) for failure to file and prosecute the adoption petition in accordance with state statute. See Miss. Code section 93-17-17. In such case, the Complainant must also bring an action to overturn the disputed adoption within six months after the entry of the Final Decree. See Miss Code section 93-17-15. The Mississippi Supreme Court has, time and again, indicated its alignment with a strict interpretation of these important Code provisions. See In the Matter of the Adoption of M.D.T., 722 So.2d 702, 705 (Paragraph 13)(Miss. 1998). With regard to setting aside consents, the Mississippi Supreme Court has been unrelenting in applying the rule that, absent a very defined group of exceptions, consents entered into by the natural parents are irrevocable. Grafe v. Olds, 556 So.2d 690, 694 (Miss. 1990). See also C. C. I. v. Natural Parents, 398 So.2d 220, 226 (Miss. 1981). The Court there held,
An absent showing by the parent(s) establishing either fraud, duress, or undue influence by clear and convincing evidence, surrenders executed in strict compliance with the safeguard provision of section 93-17-5, supra, are irrevocable. Strong policy reasons support such a holding. If a parent is allowed an unrestricted right to challenge his act of surrender, uncertainty and confusion among adoption agencies would undoubtedly result, making placement more difficult which would be detrimental to the children involved as well as to the public welfare. The statutory safeguards for themselves are sufficient to guard against a hastily made decision. The Court in Grafe v. Olds applied this same rule to a private, non-agency, adoption. 556 So. 2d at 695. It cannot be overemphasized enough that the only way for any birth parent to successfully overturn their individual consent is to demonstrate, by clear and convincing evidence, a showing of fraud, duress, or intimidation. Id. at 694-95. Courts are admonished that “consent is not to be arbitrarily withdrawn.” C.C.I. v. Natural Parents, 398 So. 2d at 226. 
You should take note of the Supreme Court’s decision in Grafe v. Olds, wherein the natural mother, described as “an unwed minor,” was deemed not to make a sufficient showing to set aside a consent. See 556 So. 2d at 691. In the Grafe case, the natural mother was not represented by counsel, was not given the opportunity to take the consent that she signed to an attorney, and she was not given copies of the consent after she signed it. 556 So. 2d at 692. Likewise, as the Supreme Court has stated on numerous occasions, “the Court cannot prevent people who are in their right mind and are under no disability, from making contracts or excuse them from their folly.” Early v. Williams, 123 So. 2d 446 (Miss. 1960). “A person cannot void or blank a written contract on the grounds that he did not read it.” Hicks v. Bridges, 580 So. 2d 743, 746 (Miss. 1991). 
There have been numerous attempts to get the Mississippi Supreme Court to overturn consents that have been signed by minors. The Mississippi Code states, plainly:
There shall be made parties to the proceeding by process or by the filing therein of a consent to the adoption proposed in the Petition, which consent shall be duly sworn to or acknowledged, and executed only by the following persons, but not before seventy-two (72) hours of the birth of said child: (a) the parents, . . . , though either be under the age of 21 years; . . . .Miss. Cod Ann. section 93-17-5. Further, you can look to Grafe as an example of how the age of the consenting natural parent is not a basis for overturning said consent. (Case involved a minor unwed mother, presumably under the age of 21). See also the case of C.C.I. v. Natural Parents as another example of this point. See 398 So. 2d at 221 (natural mother being 20 years old at the time of consent).
The Mississippi Supreme Court has endorsed a very stringent standard in determining what constitutes undue influence.
Undue influence is one of several grounds demonstrating a lack of voluntary consent on the part of the parties. Several other means which may constitute undue influence include over-persuasion, a threat of economic detriment, or promise of economic benefit, the invoking of extreme family hostility, both to the child and mother, and undue moral persuasion. Because undue influence is such a broad concept, cases must be resolved on their particular facts. General law is that the party asserting undue influence has the heavy burden to show that the consent was obtained by undue influence. Such a burden must be met by clear and convincing evidence, and there is no presumption that a party has exercised undue influence upon another. A mere preponderance of the evidence on the issue of undue influence is not sufficient. . . . . .
Not every influence is undue. An undue influence cannot be predicated of any act unless free agency is destroyed, and that influence exerted by means of advice, arguments, persuasions, solicitation, suggestion, wherein treatment is not undue, unless it is so importunate and persistent, or otherwise so operates as to subdue and subordinate the will and take away its free agency. Nor is influence ordinarily considered undue which arises out of sympathy, kindness, attention, attachment, or affection, gratitude for past services, desire of gratifying the wishes of another, or relieving distress, claims of kindred in family or other intimate personal relationships, love, esteem, social relations, prejudices or flattery. C.C.I. v. Natural Parents, 398 So. 2d at 222-24. “The ultimate fact for determination is whether the complaining party was deprived of the free exercise of his own will. The conduct of the dominant party must have been such as to override the volition of the victim.” Id. The mere showing of emotional strain does not constitute legal cause for the revocation of consent. Grafe v. Olds, 556 So. 2d at 695. 

E.    Exploring Other Adoption Alternatives
1.    When and How to Use Independent Options
Independent adoptions and private placement adoptions are almost identical with the primary distinction being that the adoptive parents, in independent adoptions, do all of the work in locating a suitable adoptive infant or child. In this way, independent adoptions can be very attractive to both the birth parents and the prospective adoptive parents because it allows the parties in the adoption to maintain control over the entire adoption process. However, in independent adoptions, there can be risks and costs involved that do not come with agency or private adoptions, and, certainly much more work for the prospective adoptive parents. 
As I have discussed previously, many private placement adoptions are completely confidential or with very little non-identifying information being provided to the birth mother or parents. This is usually because both parties want the process to be kept confidential. Many birth parents are reassured by knowing their adoptive parents personally and dealing with them directly instead of having to deal with an attorney or an adoption agency. Rather than relying on an agency as the go-between, the birth parents and the adoptive parents can meet, get to know each other and decide for themselves how they want to proceed with the adoption. The biggest factor in considering an independent adoption is that the adoptive parents can usually avoid long waiting lists and restrictive qualifying criteria that can be a part of agency adoptions. Finally, many independent adoptions can be less expensive than using an attorney or going through an agency. Even though the adoptive parents may still have many of the same costs, like paying birth mother’s expenses, they can save the agency fees and the on-going attorneys’ fees until such time as the adoption is finalized in court. 
While many states have significant restrictions on independent adoptions, Mississippi is not necessarily one of them. However, one must be aware of and act in accordance with Miss. Code Ann. section 43-15-23, regarding the placing out of children and the expenses and compensation that can be paid in connection with an adoption. See Balouch v. State of MS, 938 So.2d 262 (Miss. 2005). Criminal prosecution for violating this code section reversed by the Mississippi Supreme Court.
Independent adoptions can be a lot of work. An adoptive parent often spends enormous amounts of time and money just finding a birth mother, not to mention the efforts required to follow through and bring the adoption legally to a close. Because each situation is unique, fees for independent adoptions vary widely. Now most birth mothers are eligible for medicaid, which covers the costs of the hospital and the birth. As with other adoptions, adoptive parents in independent adoptions may be required to pay certain reasonable, actual, and necessary costs related to the adoption process and to the birth mother’s care and well-being during the pregnancy. Because it is illegal in Mississippi, or in any state, to buy or sell a baby, adoptive parents must be very careful to adhere to these laws when contemplating providing any money, expenses or other compensation to the birth mother.
2.    Circumstances When It’s Appropriate to Adopt an Adult
Miss. Code Ann. section 93-17-3(4) provides that any person may be adopted in accordance with the provisions of this chapter in term time or in vacation by an unmarried adult or by a married person whose spouse joins in the petition. This code section provides for the adoption of an adult by another adult in the State of Mississippi. I have been asked to comment on when it would be appropriate for one adult to adopt another one, and the only situations that I could think of that would be applicable or where it would be appropriate, would be for certain inheritance rights and estate planning matters, such as eligibility for retirement benefits, pensions, or other types of deferred compensation. Adult adoption could also possibly include situations where one wanted to provide for an adult stepchild, distant relative, same sex partner, or even a loyal employee. Anyone considering adopting an adult should be advised to consider what might happen if your relationship with the adoptee ends. Adoptions are very difficult to reverse, so the strategy of using adoption as an estate planning tool can have undesired consequences if the relationship ends. Under the parent- adult child legal relationship, the adoptee may still inherit the money or other benefits. The adoption process for adopting an adult is the same as that for a child. A new birth certificate will be issued and the legal relationships with the biological parents are severed. The adopted adult can have their last name changed, and as with other adoptions, the records are sealed.

F.    Understanding Step Parent Adoptions
In most instances, a stepparent adoption in Mississippi is easier to complete than other types of adoptions. Just as in any other adoptions, the child’s other birth or legal parent will need to consent to the adoption and if that consent is not forthcoming, then those parent’s rights will have to be terminated for cause such as abandonment, unfitness, habitual use of drugs or alcohol, or neglect. It is often times difficult to get the consent of the other birth parent because giving such consent to the adoption means giving up all parental rights, including any right to visit the child or make decisions regarding issues, such as medical treatment or education. Also, in my experience, grandparents can be a significant factor in whether or not a birth parent will consent in a stepparent adoption. Many times, however, when the stepparent is the husband of the biological mother and has been the only father figure in the child’s life for many years, most birthfathers seem to be willing to consent to such an adoption because they will no longer be responsible for child support once their parental rights are terminated. If it becomes necessary in the stepparents’ adoption process to terminate the parental rights of the child’s other biological parent, the Court will require the appointment of a Guardian Ad Litem, as in other termination cases, and the grounds for terminating the parental rights will have to be proved by clear and convincing evidence. It has been my experience, at least in the three (3) counties in the area, that in an uncontested stepparent adoption with the consent of the other biological parent, the Courts do not require a home study, nor do they require the appointment of a Guardian Ad Litem. Finally, even though section 93-17-3 was amended in 2006-2007, subparagraph 5 still provides that adoptions by a couple of the same gender is prohibited. (Florida is the only other state with a similar law that has an express prohibition).

G.    Issues That May Arise If Something Goes Wrong
1.    Rights of the Biological Parents vs Adoptive Parents: Who Takes Precedence?
Natural parents may not revoke their consent to adoptions to which they have previously agreed, unless there is a clear and convincing showing of fraud, duress or undue influence. CCI v. Natural Parents, 398 So.2d 220, 226 (Miss. 1981). Absent a clear and convincing showing of fraud, duress, or undue influence, the surrender of a child to an adoption agency is also irrevocable by statute. See Miss. Code Ann. section 93-17-9. “Strong policy reasons support such a holding. If a parent is allowed an unrestricted right to challenge his act of surrender, uncertainty and confusion among adoption agencies would undoubtedly result, making placement more difficult which would be detrimental to the children involved as well as to the public welfare.” CCI, 398 So. 2d at 226. 
In Grafe v. Olds, 556 So.2d 690, 696 (Miss. 1990), the Court reiterated that an adoption cannot be revoked unless there is fraud, duress or undue influence. However, the Court further explained that “we do not mean to pronounce that consent may never be withdrawn. We emphasize that such a determination must be made on a case-by-case basis in timely fashion without unnecessary delay in the proceedings, always keeping in mind that the best interest of the child is paramount.” Id. at 695-96. 
In L.T. v. J.H., 787 So. 2d 1268 (Miss. 2001), the natural father consented to the adoption of his child and relinquished any rights to the child, having been told by the mother that he was not the natural father. When the natural father discovered that he was the natural father of the child, he joined the custody suit and contested the validity of his consent and relinquishment of rights. However, the Court would not allow the revocation of consent despite the fraud because the natural father sought to assert his parental rights only so he could assign them to the grandmother. Id. at 1272.
As to the rights of the biological parents following the adoption, legal “abandonment” is held to have occurred at the time of the decision to forever relinquish any parental claims with a consent to adoption. See In re Adoption of D.N.T., 843 So. 690, 707 (Miss. 2003); see also Pace v. Barrett, 205 So. 2d 647, 649 (Miss. 1968)(parental grandparents can assert right to custody upon proof of abandonment by natural mother). As to any future claim for custody by the biological parents, they lose any “natural parent presumption” of custody. See Carter v. Taylor, 611 So. 2d 874, 876 (Miss. 1992) (natural parent is entitled to custody as against any third party unless there is clear proof of abandonment, immoral conduct adversely affecting child’s interest or unfitness). Once an adoption is finalized and complete, all parental rights of the natural parent, or parents, are considered abandoned and shall be terminated by the decree. Miss. Code Ann. section 93-17-13 (decree is to include language regarding termination of parental rights of the natural parents). 
In A.D.R. v. J.L.H., 994 So. 2d 177 (Miss. 2008), a natural mother consented to the adoption of her child to a married couple, but the adoption was never finalized. Because the adoption to which she consented was denied by the Court, the mother challenged the parental rights subsequently asserted by the natural father. The A.D.R. Court found that only where a parent consents to specific individuals to adopt her child and that adoption fails, then the parent may seek to regain custody of the child since the policy underlying the relevant Mississippi law is not furthered by preventing the parent from even contesting the custody of the child in that particular situation. Id. at 183. 
There is a case out of LeFlore County Chancery Court concerning this area of the law as to the rights of the biological parent(s). The case involves a very unusual set of facts, but most of these cases always involve complicated and unusual facts. The biological mother, C.F., of a two-year old, D.F., and the biological father, C.L., both released their parental rights to D.F. to allow the maternal grandparents to adopt him. The adoption was accomplished and approved by the Chancery Court of LeFlore County and the Judgement of Adoption included the usual language that by virtue of the adoption being approved and finalized that the parental rights of C.F. and C.L. were terminated. The adoption made C.F. the legal sister of her biological son, D.F. Thereafter, within the next eight months, both of the adoptive parents (maternal grandparents) died, leaving D.F. without legal parents. C.F. was pursuing another career described by her as an “artistic dancer,” and C.L. was incarcerated in prison, so the Court awarded custody and guardianship of D.F. to the paternal grandfather and his wife, the step-paternal grandmother. All of this occurred from 2005 to 2007. Sometime after 2007, C.F. showed back up with renewed interest in obtaining custody of D.F., her biological child. The A.D.R. case is the basis of her attempt to regain custody of D.F. Until September 2009, she had been unsuccessful, and the Court had even found her to be unfit and to have abandoned D.F. under the holding of the Grafe case when she executed her consent to the adoption by her parents. In September of 2009, the court, sua sponte, asked the DHS, Division of Division of Child Support Enforcement, Mississippi Access and Visitation Program, to become involved and to attempt to facilitate a visitation schedule for C.F. to have visitation with D.F. This was accomplished, and then C.F. again sought primary custody of D.F. claiming she should be accorded the “natural parent presumption” and utilizing her visitations as evidence of her bonding with the child. The paternal grandparents, as guardians of D.F., had also filed for adoption of D.F. Although the lower court ruled in favor of the biological mother, the Mississippi Supreme Court reversed and awarded custody to the paternal grandparents, finding that the previous adoption by the maternal grandparents established abandonment and that the biological mother was not entitlted to the natural parent presumption at any time thereafter, thus preserving the finality of a valid adoption as to any future claims by the biological parents. 
2.    Proving a Parent is Unfit in Contested Adoptions 
Miss. Code Ann. section 93-17-7 governs contested adoptions by a third party and proof of the objecting parent’s unfitness. It provides the following:
No infant shall be adopted to any person if either parent, after having been summoned, shall appear and object thereto before the making of a decree for adoption, unless it shall be made to appear to the court from evidence touching such matters that the parent so objecting had abandoned or deserted such infant or is mentally, or morally, or otherwise unfit to rear and train it, including, but not limited to, those matters set out in subsection (2) of this section, in either of which cases the adoption may be decreed notwithstanding the objection of such parent, first considering the welfare of the child, or children sought to be adopted. Provided, however, the parents shall not be summoned in the adoption proceedings nor have the right to object thereto if the parental rights of the parent or parents have been terminated by the procedure set forth in Sections 93-15-101 through 93-15-111, and such termination shall be res judicata on the question of parental abandonment or unfitness in the adoption proceedings.

An adoption may be allowed over the objection of a parent where:
(a)    The parent has abused the child. For purposes of this paragraph, abuse means the infliction of physical or mental injury which causes deterioration to the child, sexual abuse, exploitation or overworking of a child to such an extent that his health or moral or emotional well-being is endangered. (b)    The parent has not consistently offered to provide reasonably necessary food, clothing, appropriate shelter and treatment for the child. For purposes of this paragraph, treatment means medical care or other health services provided in accordance with the tenets of a well-recognized religious method of healing with a reasonable, proven record of success. (c)    The parent suffers from a medical or emotional illness, mental deficiency, behavior or conduct disorder, severe physical disability, substance abuse or chemical dependency which makes him unable or unwilling to provide an adequate permanent home for the child at the present time or in the reasonably near future based upon expert opinion or based upon an established pattern of behavior. (d)    Viewed in its entirety, the parent’s past or present conduct, including his criminal convictions, would pose a risk of substantial harm to the physical, mental or emotional health of the child. (e)    The parent has engaged in acts or omissions permitting termination of parental rights under Section 93-15-103. (f)    The enumeration of conduct or omissions in this subsection (2) in no way limits the court’s power to such enumerated conduct or omissions in determining a parent’s abandonment or desertion of the child or unfitness under subsection (1) of this section.

The burden of proof in a contested adoption and termination case is clear and convincing evidence. On appeal from a chancellor’s decision regarding adoption and termination of parental rights, the standard of review by the Mississippi Supreme Court is one of manifest error/substantial credible evidence test. N.E. and R.H. v. L.H. Jr. and L.T. 761 So.2d 956 (No.1998-CA-01242-COA 2000). 
(a)    Abandonment or neglect.
First of all, “neglect” is not a label that is placed upon a parent, but is used to describe a child that has been neglected by his parent(s) according to Miss. Code Ann. section 43-21-105(l). Neglect can be shown where a child’s parent neglects or refuses, when able to do so, to provide proper and necessary care or support, or medical, surgical, or other care necessary for the child’s well being or who, for any reason, lacks the care necessary for his health, morals, or well being. In re A.M.A. 986 So.2d 999 (Miss. Ct. App. 2007). Neglect is usually predicated upon a finding that the offending parent has a history of drug or alcohol abuse, mental and physical disorders (such as severe bipolar disorder and depression) or a finding and adjudication of neglect by the Youth Court.
Abandonment must be for a continuous period of six (6) months for a child under three years of age, and for a period of one year for a child over the age of three. The offending parent must exhibit behavior which indicates a severance of all ties with the child. In re Adoption of a Minor Child, 931 So.2d 566, (Miss. 2006). Incarceration in prison, while constituting a significant factor, does not necessarily justify termination of a father’s parental rights where there was testimony that the father communicated with his children and exercised his visitation rights up until the time he went to jail. Gunter v Gray, 876 So.2d 315, (Miss. 2004) 
(b)    Erosion of parent/child relationship.
The grounds of erosion of the parent/child relationship must be shown by proving an extreme and deep-seated antipathy by the child toward the parent. This is usually done with expert testimony and using the best interest of the child standard. Vance v. Lincoln County Dept. Of Pub. Welfare ex rel Weathers, 582 So.2d 414 (Miss. 1991); May v. Harrison County Dept of Human Services, 883 So.2d 74 (Miss. 2004).
(c)    Commission of a crime or imprisonment.
Most often this is used in conjunction with a claim of abandonment or neglect. There must be substantial evidence to support the finding that the incarceration alone caused the erosion of the parent/child relationship to justify termination on this basis. However, incarceration seems to be sufficient to terminate parental rights if the parent committed a crime against children, whether or not they were his own, or was found guilty of abuse or neglect. H.D.H. v. Prentiss County DHS, 979 So.2d 6 (Miss. Ct. App. 2008).
(d)    Moral unfitness.
In today’s world this seems to be a real moving target. Our Mississippi Appellate Courts have held that the fact that the mother worked as a stripper did not constitute moral unfitness justifying terminating her parental rights, Hillman v Vance, 910 So.2d 43 (Miss. Ct. App. 2005); that a natural father was not morally “unfit” where he had failed to make child support payments, been arrested for possession of marijuana with intent to deliver, and had cohabited with someone other than his spouse. In re J.D. 512 So.2d 684 (Miss. 1987).

H.    Tackling Third-Party Challenges
We do have one reported decision in Mississippi regarding an adult adoption, which is the Estate of Reid v. Pluskat, 825 So.2d 1 (Miss. 2002). In this case, a young man named Michael Cupit, 24-years old, made an uninvited appearance at the home of Mary Lee Reid, a 78-year old widow. Mrs. Reid’s home is located in Liberty, Mississippi, and Cupit claims that his motivation for the visit was his interest in antebellum homes. That visit occurred in the summer of 1979, and shortly thereafter, Cupit begin attending the University of Mississippi Law School. However, his relationship with Mrs. Reid continued, and the record indicates that it may have even become intimate at some point in time. In 1986, Reid adopted Cupit, and by 1995, Cupit had managed to have Mrs. Reid change her Will and to grant him power of attorney. Mrs. Reid died in 1997, and Cupit sought to have Letters of Administration for her estate issued to himself, which resulted in the subject litigation. This case was instituted by Thomas Pluskat, who was a potential heir of Mrs. Reid, and who sought to have not only the Will, but the adoption overturned by the Chancery Court. Based upon Miss Code Ann. §93-17-7, only a natural parent has a statutory right to object to the adoption of a child. Also, there is a six-month statute of limitation for challenging final adoptions. Miss. Code Ann. section 93-17-15. Based on those two statutes, Cupit sought to have the attack by Pluskat dismissed because he lacked standing to challenge the adoption. The Mississippi Court stated as follows:
“We recognize that the adoption of children is sacred and the finality of adoption is of the upmost necessity. However, we are not dealing with the adoption of a child in this case. We are dealing with an adult with the adoption of an adult man with a law degree who gained the trust and dependance of an elderly lady”. 
Because the Supreme Court found that Cupit had committed a fraud on the adoption court, Thomas Pluskat was allowed to attack and set aside the adoption, even though he was not “a natural parent.” The Supreme Court in this case was careful to issue it admonishment that the ruling in this opinion and the Court’s findings concerning the adoption in this case are specific to the facts to this case and this alone. 
In 2008, in the case of In the Matter of the Adoption of B.C.S., Jr.: D.D.S. and D.J.S. v. Illinois Central Railroad Company, Mississippi No.: 2008-CA-00764-COA, the Court of Appeals again affirmed this State’s long-standing position that only a natural parent has the right to object to the adoption of a child.I.    Procedures for Dissolution of Adoption
The only procedure in Mississippi for the dissolution of an adoption would be judicial based on jurisdictional deficiencies such as:
1.    Obtaining the consent prior to the expiration of the seventy-two hour waiting period;
2.    Not meeting the residency requirements;
3.    Failing to obtain the consent of any person to be adopted that is fourteen years or older;
4.    Failure to join all necessary parties; and
5.    See Miss. Code Ann. section 93-17-17. 
J.    Withdrawal of Consent? What to do Next?
A valid consent cannot be “withdrawn” except by a judicial proceeding upon a showing that it was obtained by fraud, duress or undue influence. Any attempt by a parent who has freely and voluntarily given a consent is ineffective as to the adopting parents or the agency unless and until such parent obtains a court order allowing the consent to be withdrawn. There is a common misconception under Mississippi law that a birth parent has up to six months from the date of the consent to withdraw or cancel it. That is simply not the law in this state. Consents are effective upon their proper execution.

I.    Correctly Handling an Appeal of an Adoption Decree
The appeal of an adoption case will be no different from that of other cases with two possible exceptions:
1.    Contested Adoptions. Miss. Code Ann. section 93-17-8 provides that the Chancery Court shall schedule all such hearings concerning the contested adoption as expeditiously as possible. Because a contested adoption is a case that is to be expedited in the trial court, you will be entitled to request by motion that the Appellate Court designate the case as one that is to be expedited on its docket. This will potentially shorten considerably the appeal time and get you a decision from the Court much sooner than the standard appeal track for other cases.
2.    In the appeal of a contested adoption, be it a case to terminate rights or one where the birth parent(s) seek to withdraw their consent, the issue of the custody of the baby or child may be an issue pending the appeal. Even on an expedited basis, the appeal is going to take several months, if not longer, and the welfare, care and custody of the child needs to be addressed during that time period. M.R.A.P. 8 allows you to make a motion for a stay, first in the trial court, and then in the Supreme Court for an order keeping the baby or child in the custody of the adoptive parents if that is an issue.

*This web page is provided only for the purpose of facilitating your search for legal counsel and the additional research that will be critical in determining the needs of your particular adoption matter.

Representative Decisions of Jernigan, Copeland & Anderson

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State Decisions

Borne, et al. v. Estate of Carraway, Jr. et. al., No. 2011-CA-00267-SCT (Miss. July 18, 2013); Stribling v. Rushings, Inc., 115 So. 3d 103 (Miss. App. 2013); Noble Real Estate, Inc. v. Seder, 101 So. 3d 197 (Miss. App. 2012); Driver Pipeline Company, Inc. v. Williams Transport, LLC, 104 So. 3d 845 (Miss. 2012); Pickering v. Hood, 95 So. 3d 611 (Miss. 2012); Pickering v. Langston Law Firm, P.A., 88 So. 3d 1269 (Miss. 2012); Mississippi Windstorm Underwriting Association v. Union National Fire Insurance Co., 86 So. 3d 216 (Miss. 2012); Lampkin v. Thrash Construction Co., 81 So. 3d 1193 (Miss. App. 2012); Beaumont Homes, LLC v. Colonial Jordan Properties, LLC, 71 So. 3d 1238 (Miss. App. 2011); D.M. v. D.R., 62 So. 3d 920 (Miss. 2011); Nunaley v. Horace Mann Life Insurance Co., 960 So. 2d 455 (Miss. 2007); Riggenbach v. AXA Re Property and Casualty Insurance Co., et al., 982 So. 2d 432 (Miss. App. 2007); Brewer Construction Co., Inc. v. David Brewer, Inc., 940 So. 2d 921 (Miss. 2006); Leary v. Stockman, 937 So. 2d 964 (Miss. 2006); Evans v. Horace Mann Life Insurance Co., 946 So. 2d 410 (Miss. App. 2006); Warren v. Horace Mann Life Ins. Co., 949 So. 2d 770 (Miss. App. 2006); Parker v. Horace Mann Life Ins. Co., 949 So. 2d 57 (Miss. App. 2006); Watts v. Horace Mann Life Ins. Co., 949 So. 2d 833 (Miss. App. 2006); Union National Life Insurance Co. v. Crosby, 870 So. 2d 1175 (Miss. 2004); Terminix International, Inc., et al. v. Rice, 904 So. 2d 1051 (Miss. 2004); Mauldin v. Branch, 866 So. 2d 429 (Miss. 2003); Janssen Pharmaceutica, Inc. v. Stuart, 856 So. 2d 431 (Miss. App. 2003); Anderson v. Claiborne County Recreation Club, Inc., 812 So. 2d 965 (Miss. 2002); Pearl Public School Dist. v. Groner, 784 So. 2d 911 (Miss. 2001); Titan Indemn. Co. v. American Justice Ins. Reciprocal, 758 So. 2d 1037 (Miss. App. 2000); Weeks v. Mississippi College, 749 So. 2d 1082 (Miss. 1999); Sullivan v. Kolb, 742 So. 2d 771 (Miss. App. 1999); Davis v. State of Mississippi, 743 So. 2d 326 (Miss. 1999); Coleman v. Rice, 706 So. 2d 696 (Miss. 1997); Carter v. Allstate Indem. Co., 592 So. 2d 66 (Miss. 1991); Wennerlund v. Wennerlund, 555 So. 2d 736 (Miss. 1990); Bailey v. Chancellor,545 So. 2d 739 (Miss. 1989); In re Validation of $19,800,000 General Obligation School Bonds, Series 1987, Madison County MS Dated November 1, 1987, 534 So. 2d 1025 ( Miss. 1988); McGory v. Allstate Ins. Co., 527 So. 2d 632 (Miss. 1988); Pioneer Life Ins. Co. of Illinois v. Moss, 513 So. 2d 927 (Miss. 1987); Wray v Poole, 498 So. 2d 392 (Miss. 1986); Brandon v. City of Hattiesburg, 493 So. 2d 324 (Miss. 1986); Merchant v. Board of Trustees of Pearl Mun. Separate School Dist., 492 So. 2d 959 (Miss. 1986); In re Validation of $7,800,000 Combined Utility System Revenue Bond, Gautier Utility Dist., Jackson County dated as of Date of Delivery, 465 So. 2d 1003 (Miss. 1985); Allstate Ins. Co. v. Moulton, 464 So. 2d 507 (Miss. 1985); Grenada Municipal Separate School Dist. v. Jesco, Inc., 449 So. 2d 226 (Miss. 1984); Reserve Life Ins. Co. v. McGee, 444 So. 2d 803 (Miss. 1983); In re: Validation of $6,000,000 General Obligation Bonds of 1980 of Mississippi Gulf Coast Junior College District of Mississippi, 395 So. 2d 967 (Miss. 1981); Sooner Federal Sav. & Loan Ass’n v. Depositors Sav. Ass’n, 386 So. 2d 1125 (Miss. 1980); Jones v City of Pearl, 386 So. 2d 1121 (Miss. 1980); In re Extension of Boundaries of City of Pearl, 365 So. 2d 952 (Miss. 1978); Strong v. Pearl Municipal Separate School Dist. For City of Pearl, 350 So. 2d 1388 (Miss. 1977); Ward v. Valley Steel Products Co., 339 So. 2d 1361 (Miss. 1976); Robinson Industries v. City of Pearl, 335 So. 2d 892 (Miss. 1976); Brown v. City of Vicksburg, 319 So. 2d 222 (Miss. 1975); City of Jackson v. Petitioners for Incorporation of City of Richland, 318 So. 2d 843 (Miss. 1975).

Federal Decisions

Branch v. Smith, 538 U.S. 254, 123 S. Ct. 1429, 155 L. Ed. 2d 407 (2003); Nat’l Builders & Contractors Ins. Co. v. Slocum Construction, LLC, 428 Fed. Appx. 430 (5th Cir. 2011); Nationwide Mutual Insurance Co. v. A.H. ex. rel. Hunter, 444 Fed. Appx. 753 (5th Cir. 2011); QBE Insurance Corp. v. McFarland, et al., 428 Fed. Appx. 430 (S.D. Miss. 2011); Lafayette Insurance Company v. Edward Peerboom, et al., 813 F. Supp. 2d 823 (S.D. Miss. 2011); Accident Insurance Company v. Classic Building Design, LLC, Martha Pace, ABC Individuals and XYZ Entities, 2011 WL 1813268 (S.D. Miss. 2011); Nickell v. Beau View of Biloxi, LLC, 636 F.3d 752 (5th Cir. 2011); In re Supertrail Manufacturing Co., Inc., 383 Fed. Appx. 475 (5th Cir. 2010); L & T Construction, Inc. v. Mazuma Capitol Corp., 2010 WL 4174575 (N.D. Miss. 2010); QBE Ins. Corp. v. Brown & Mitchell, Inc., 591 F.3d 439 (5th Cir. 2009); QBE Ins. Corp. v. SRC Trucking & Transp., 2009 WL 692112 (S.D. Miss. 2009); Hillcrest Estates, LLC v. Nationwide Mut. Ins. Co., 2009 WL 605074 (N.D. Miss. 2009); Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395 (5th Cir. 2008); QBE Ins. Corp. v. Industrial Corrosion Control, Inc., 2008 WL 1868431 (S.D. Miss. 2008); QBE Ins. Corp. v. Eubanks and Bailey Investment Corp., 2008 WL 907460 (N.D. Miss. 2008); Scottsdale Ins. Co. v. A.F.C. Inc., 2007 WL 2475935 (S.D. Miss. 2007); ConeSolvents, Inc. v. Corvin, 2007 WL 628501 (Miss. 2007); United States ex rel. Shannon v. Federal Insurance Company, et al., 2006 WL 2349636 (S.D. Miss. 2006); AXA Re Property & Cas. Ins. Co. v. Day, 162 Fed. Appx. 316, 2006 WL 133532 (5th Cir. 2006); Barahona Rodriguez v. Kivett’s Inc., 2006 WL 2645190 (S.D. Miss. 2006); Essex Ins. Co. v. Massey Land & Timber, LLC, Brewer Construction Co., Inc., et al., 2006 WL 1454767 (S.D. Miss. 2006); Porter v. Bankers Life & Cas. Co., 2003 WL 22416702 (N.D. Ill. 2003); Goods v. Horace Mann Life Ins. Co., 2006 WL 2474001 (S.D. Miss. 2006); Adams v. General Motors Acceptance Corp., 307 F. Supp. 2d 812 (N.D. Miss. 2004); Williams v. Union Nat. Life Ins. Co.,2004 WL 2151283 (S.D. Miss. 2004); Bishop v. First Mississippi Financial Group, Inc., 221 F.R.D. 461 (S.D. Miss. 2004); Jenkins v. Union National Life Ins. Co., 2004 WL792474 (N.D. Miss. 2004); McDonald v. Union Nat’l. Life Ins. Co., 307 F. Supp. 2d 831 (S.D. Miss. 2004); Smith v. Union Nat’l. Life Ins. Co., 286 F. Supp. 2d 782 (S.D. Miss. 2003); Amos v. Ford Motor Credit Corp., 2003 WL 23199863 (N.D. Miss. 2003); Gipson v. Fleet Mortgage Group, Inc., 232 F. Supp. 2d 691 (S.D. Miss. 2002); Chambers v. Union National Life Insurance Co., 2002 WL 32397267 (S.D. Miss. 2002); Willow Creek Exploration LTD. v. Tadlock Pipe & Equipment, Inc., 186 F. Supp. 2d 675 (S.D. Miss. 2002); Neely v. Union Nat. Ins. Co., 2002 WL32397266 (S.D. Miss. 2002); Chambers v. Union Nat. Life Ins. Co., 2002 WL32397267 (S.D. Miss. 2002); Smith v. Clark,189 F. Supp. 2d 548 (S.D. Miss. 2002); Craft v. United Ins. Co. Of America, 2002 WL32509283 (S.D. Miss. 2002); Smith v. Union Nat. Life Ins. Co.,187 F .Supp. 2d 635 (S.D. Miss. 2001); Polk v. Sentry Ins.,129 F. Supp. 2d 975 (S.D. Miss. 2000); Union Nat. Life Ins. Co. v. Tillman, 143 F. Supp. 2d 638 (N.D. Miss. 2000); Head v. United Ins. Co. of America, 966 F. Supp. 455 (N.D. Miss. 1997); Rawlings v. Prater, 981 F. Supp. 988 (S.D. Miss. 1997); Wesley v. Union Nat. Life, 919 F. Supp. 232 (S.D. Miss. 1995); Magnolia Management Corp. v. Quest Rescue Partners-8, L.P.,792 F. Supp. 45 (S.D. Miss. 1992); Woodmen of the World Life Ins. Soc. v. Leitaker, 703 F. Supp. 1245 (S.D. Miss. 1988).

*Links are provided for decisions that are publicly accessible on-line without the purchase of additional subscriptions to legal database services. These decisions represent only a portion of the experience held by the attorneys at Jernigan, Copeland & Anderson, PLLC since most decisions obtained for clients in state and federal courts are not accompanied by a detailed written opinion or otherwise remain unpublished unless the matter proceeds through final appeal or the court has determined that the case significantly alters or provides important instruction as to a particular area of existing law.

Construction Defect Claims – A Proper Tender of Defense and Indemnification

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Few things are more professionally unjust than for you, a reputable contractor, to have to pay the bills to defend against a claim when your work or the work of one of your subs is called into question. However, there is something that you can do about it – when faced with such a claim, you should make a timely and proper tender of defense and coverage to all available insurance carriers. This article will address some of the issues related to that process.

First, it is important to understand from the outset that a liability insurance carrier potentially has two different duties to you as an insured – the duty to defend you against third-party claims that are covered by applicable insurance, and a duty to indemnify you against such claims. Examples of the latter duty include settling a claim made against you or paying a judgment against you. To be clear, third party claims are claims made for losses sustained by other persons/entities (not you, the insured), for which you may be legally responsible.

When contrasted, the insurer’s duty to defend you against a claim is much broader than the insurer’s duty of indemnification. The insurer’s duty to defend generally means that, if a claim is brought against you that seeks damages on any theory that, if proved, would be covered by the policy, then the insurer has an obligation to defend you by selecting and paying defense counsel to do so. This duty generally applies even if the claim against you is without merit. Under Mississippi law, a duty to defend arises when the potential for coverage exists. Mississippi has adopted the “allegations of the complaint” rule to determine whether an insurer has a duty to defend. What this means is that if the complaint alleges facts that are arguably within the policy’s coverage, a duty to defend arises. Stated another way, the insurer has a duty to defend when there is any basis whatsoever for potential liability under the policy. Therefore, so long as the allegations in a complaint make out some claim that has the possibility of triggering coverage, the liability insurance carrier has a duty to defend, even if the complaint does not pursue that particular legal theory as a basis for relief.

Moreover, in any lawsuit involving multiple claims, if any one claim in the lawsuit is potentially covered by the policy, then the insurer generally has a duty to defend the entire action, including any non-covered claims (though the insurer may choose to do so under a reservation of rights). Only when the allegations in support of a claim are completely outside the coverage of the policy is there is no duty on the liability carrier’s part to provide a defense of that claim.

Therefore, whenever a claim is made against a contractor, the contractor’s lawyer should investigate to determine all insurance policies available to provide liability coverage to the contractor for that claim. This can include not only those policies that the contractor purchased directly, but also any policies on which the contractor may be named as an “additional insured.” For example, a subcontractor may name the prime contractor as an additional insured on the subcontractor’s liability policy.

Once an available policy has been identified, the contractor’s lawyer should make a tender of defense by providing written notice of the claim. Generally, the language in a liability policy requires that notice of a claim be given as soon as practicable. In the event a lawsuit has been filed against you, a tender to the carrier should include a copy of the suit papers. In the event a suit has not yet been filed, a proper tender should include sufficient information regarding the time, place and circumstances of the claim such that the carrier can make an informed decision about picking up the defense of the claim, at the very least, under a reservation of rights. A proper tender should also include a reasonable deadline for the insurance carrier to either unconditionally acknowledge its duty to provide a defense, or to provide a defense under a reservation of rights, or to deny any obligation to provide a defense.

Disclaimer: The information and comments presented above are general in nature, are the author’s understandings for educational purposes only, and are not intended to offer a legal opinion for use in dealing with any specific set of facts or to create any attorney/client relationship. You should consult with an attorney before taking any action of a legal consequence. Further, the authority cited above is subject to change and/or re-interpretation.

Going Back to the Basics II: Indemnity Agreements – You Really Cannot Live Without Them

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One of the things that we see time and time again in insurance policies is the requirement that there be a written indemnity agreement between the general contractor, homebuilder, and his subcontractors.  So what is an indemnity agreement, and why is the insurance industry so keyed-up on the construction industry having them?

What is an indemnity agreement?  An agreement to indemnify one party from another is an agreement to pay the debts of that party.  In the construction world, we cannot require one party to pay our own debts, at least, those debts that we have caused ourselves through our own negligence, or our own actions, but we can require others to indemnify us from debts and obligations that we incur, but which they should, rightfully, be responsible.  This is the essence of an indemnity agreement.

At law, there are two types of indemnity agreements, written indemnity contracts or common law indemnity obligations.  The first is simple, at least on the surface.  A written indemnity agreement is one typically made by an owner to the general contractor, general contractor back to an owner, or a general contractor to a subcontractor that provides that the obligated party, let’s say as between a general contractor to a subcontractor, the subcontractor, agrees, in writing, to indemnify, the general contractor, who we will call the “indemnitee” for actions caused by the subcontractor, who we will also call  the “indemnitor”, that result in liability to the general contractor.

How does this happen, and how does it work?  Typically indemnity agreements are contained in construction contracts or subcontract agreements.  In a typical example, a subcontractor performs work for a general contractor, and does something to result in a defect or a loss, and indemnity agreement within the subcontract would be helpful to the general contractor.  For example, a framer miss-sizes spans while framing the second floor to a house, resulting in a structural instability in the house.  Homeowner makes a claim against the general contractor, because the homeowner’s contract was with general contractor, and the general contractor carries the warranty on the workmanship for the house.  Homeowner may not even know who the framer is, and for all practical purposes, may not care.  If there was an indemnity agreement between the general contractor and framer, the general contractor would make a claim on that indemnity agreement, depending on the language in the indemnity agreement and seeking reimbursement from the subcontractor.

There are many nuances involved in this process.  First, the wording of the indemnity agreement needs to be fairly particular.  It needs to not only seek indemnity for the acts of the indemnitor, but it should be broad enough to capture not only his negligent or inadvertent acts or omissions, but his intentional ones as well.  The indemnity agreement should also permit, in this case, the general contractor to seek indemnity, not only for his actual liability, but for claims and contingent liabilities as well.  Unless put in writing, under Mississippi law, an indemnitee, like our contractor here, cannot seek indemnity from an indemnitor, like our subcontractor, unless the obligation from which the Indemnification is being sought is an obligation at law, or what the law calls “under legal compulsion.”  In other words, unless there is a specific agreement between the parties to the contrary, if the contractor settles the claim while denying any liability for the claim, he cannot seek indemnity from the subcontractor, even if it is purely based upon the subcontractors work.  This is called the defense of “voluntary payment.”  The way to get around this is for the general contractor to put in his written indemnity agreements that the duty to indemnify applies not only to actual liabilities, but contingent claims, including claims that have been voluntarily settled.  Another important provision to have in any indemnity agreement is the right of contribution.  Contribution, unlike indemnity, allows parties to share liability.  In our example above, say the general contractor has 15% of the blame for the subcontractor’s mistake, because the general contractor was actively involved in measuring spans and providing some design for the subcontractor to follow.  Under traditional common law indemnification, which we will discuss below, any contributory fault by the general contractor, indemnitee, would result in nullifying any rights to indemnification that the contractor would have.  Again, a benefit of having a written indemnification agreement would be that the parties can agree that in the case of shared liability, each party would contribute up to his percentage of fault, and would indemnify the other party to the extent that other party was being called to pay the claimant more than his contributed share of fault.  Again, only in a written indemnity agreement does such a right exist.  No such right exists at common law.

Lastly, written indemnity agreements provide a very important defense to the Statute of Repose.  The Statute of Repose is the same thing, or similar to, a statute of limitations for construction projects.  The Statute of Repose runs six years after completion or first use of a building.  The Statute of Repose, under its own language, also cuts off common-law indemnity claims that are not made within that same six years.  Therefore, a real injustice can occur if a general contractor is sued by an owner on the very cusp of the running of the six-year Statute of Repose, such that he does not have the time to third-party in the at fault subcontractor, or from the subcontractor standpoint, the at fault sub-subcontractor.  If there is a written indemnity agreement in place, the statute of repose provides that the indemnity claim is saved from the statute, and is not subject to its bar.  If there is no written indemnity agreement, the indemnity claim is barred before it would ever even be able to be made.  Therefore, written indemnity agreements are vitally important, if for no other reason to simply provide a vehicle to preserve the right to make and indemnity claim, if necessary.

Like, so we talked about written indemnity agreements, what about common-law indemnity agreements?  Can the general contractor in our example make an indemnity claim against his subcontractor without a written indemnity agreement?  The short answer is yes.  However, his right is limited.  The general contractor may make a successful claim for indemnification from the subcontractor, indemnitor, where the subcontractor is 100% actively at fault, compared with the fault of the general contractor.  While the general contractor may have fault, he can only be passive, as opposed active.  This is known as the “active-passive dichotomy”.  What is active negligence?  Active negligence is the actual act or omission resulting in the harm.  Passive negligence occurs when a party is charged with oversight of the activity causing the harm, but not the actual activity that causes the harm.  It is easy for a general contractor, acting as a construction manager, to only have passive liability.  If his responsibilities are to merely oversee the work, contract with subcontractors, manage and approve the work, then a strong argument exist that his liability for any defects or claims is passive only.  It is when the general contractor actually engages, himself, in the work that his liability becomes active.  Under Mississippi common law, if the general contractor only has 1% of active fault, then he has no right to seek indemnification from the subcontractor, even if the subcontractor has 99% of the active fault.  This is a huge drawback to merely relying on common-law indemnification.

In addition, as indicated above, the general contractor, in order to seek common-law indemnity from a at fault subcontractor, must also show that the claim that he wishes to pass on to the subcontractor, by way of indemnification, is a claim that is enforced on him and he is legally compelled to pay.  As stated above, unless there’s a written indemnity agreement to the contrary, the general contractor cannot voluntarily settle a claim and then try to seek indemnity for that claim against the at fault subcontractor or supplier, or whatever the case.  If the general contractor does this, and has no written indemnity agreement, he is simply “out of luck.”

Lastly, as discussed above, with the Statute of Repose, a general contractor who does not have a written indemnity agreement, and is relying on the common-law to provide him the rights of indemnification against the subcontractor, is at the mercy of the Statute of Repose.  If a general contractor is sued on the day before the running of the Statute of Repose, but is served with the lawsuit 30 days thereafter (a claimant has up to 120 days to serve a lawsuit once it has been filed), the general contractor has no right to seek common-law indemnity from the at fault subcontractor.  His common-law right of indemnification has been barred by the operation of the Statute of Repose.

Therefore, we go back to a common theme: The importance, no, the vitality of having good written contracts, not only between general contractor and subcontractor, but also between general contractor and owner.  Indemnity agreements need to exist not only between general and sub, but also between general and owner for the same reasons discussed above.

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