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Liberty Mutual Fire Insurance Co. v. Fowlkes Plumbing, L.L.C.

United States Court of Appeals, Fifth Circuit

August 12, 2019

LIBERTY MUTUAL FIRE INSURANCE COMPANY, as subrogee of Chickasaw County School District, Plaintiff - Appellee
v.
FOWLKES PLUMBING, L.L.C.; SULLIVAN ENTERPRISES, INCORPORATED; QUALITY HEAT; AIR, INCORPORATED, Defendants - Appellants

          Appeal from the United States District Court for the Northern District of Mississippi

          Before HIGGINBOTHAM, JONES, and COSTA, Circuit Judges.

          PER CURIAM.

         We allowed this interlocutory appeal that asks how the Supreme Court of Mississippi would interpret the subrogation waiver in a common form contracting agreement. The question has split courts nationwide. Because of the closeness and importance of this question, we certify again, this time to the state supreme court so that it can answer the difficult question for itself.

         I.

         This insurance dispute resulted from a fire that destroyed a small-town school. Chickasaw County School District needed to restore the windows at one of its schools over the summer break, so its school board entered into a contract with Sullivan Enterprises. The agreement was memorialized in the board's minutes as follows:

Motion to accept the bid from Sullivan Enterprises, Inc. for the 1935 Window Restoration Project based on Mr. Hood reviewing the bid documents, reviewing the contracts, and checking the credentials of the company was made by Mr. Collums and seconded by Ms. Butler. Four approved, and one abstained. . . . The motion passed.

         During the work on the windows, a fire broke out that destroyed the entire school. The school district had previously obtained a Liberty Mutual insurance policy that covered fire damage. Liberty Mutual paid $4.3 million after the fire.

         Liberty Mutual then brought a subrogation claim against Sullivan and two subcontractors claiming that they negligently caused the fire. The district court bifurcated the case, so that it could first determine whether there was a waiver of subrogation in the contract between the school district and Sullivan, and only then (if still relevant) determine who was at fault for the fire. This stage of the case is only about the subrogation waiver.

         The subrogation controversy centers around the meaning of American Institute of Architects Document A201-2007, a widely-used form contract that was part of the district's contracting agreement with Sullivan.[1] The key provision is section 11.3.7; the district court correctly noted that a deep division exists about how to interpret this provision's subrogation waiver. It opted for the minority view and then certified an interlocutory appeal, which we accepted.

         II.

         Before we can interpret the waiver language-or ask the state supreme court to do so-we must determine whether a valid contract even existed between the school board and Sullivan. If not, interpreting A201-2007 would be a moot point. Though the two sides signed an agreement, there is some question regarding its validity. Mississippi strictly enforces a rule that public boards can only speak through their minutes. KPMG, LLP v. Singing River Health Sys., ___So. 3d___, 2018 WL 5291088, *5 (Miss. 2018);[2] Wellness, Inc. v. Pearl River Cty. Hosp., 178 So.3d 1287, 1290-91 (Miss. 2015); Thompson v. Jones Cty. Cmty. Hosp., 352 So.2d 795, 796 (Miss. 1977). The minutes must contain enough of the contract for the court to evaluate its terms. Wellness, 178 So.3d at 1291. The onerous duty falls on the contracting party-not the school board-to make sure the contract is in the minutes. Id. at 1293.

         The school board minutes may fall far short of this requirement. They cite no contractual provisions, only reciting that a bid was accepted. But we do not have to decide the minutes question as Liberty Mutual forfeited this claim by not advancing it in the district court. See Shell Offshore, Inc. v. Tesla Offshore, L.L.C., 905 F.3d 915, 920 n.3 (5th Cir. 2018). The closest Liberty Mutual came to arguing contractual invalidity was in its opposition to summary judgment, when it discussed the school board's requirement to approve the project and then questioned whether A201-2007 was part of the contract that the school board approved. But that discussion never mentions the minutes rule or ...


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