Mac Long Homes v. Olvera Constr.

385 So.3d 835

MAC LONG HOMES, LLC and Nationwide Mutual Insurance Company a/s/o Mac Long Homes, LLC, Appellants

v.OLVERA CONSTRUCTION, LLC, Appellee

NO. 2022-CA-00938-COA

Court of Appeals of Mississippi.

05/07/2024

BOLIVAR COUNTY CIRCUIT COURT, SECOND JUDICIAL DISTRICT, HON. ALBERT B. SMITH III, JUDGE

ATTORNEYS FOR APPELLANTS: JAY MARSHALL ATKINS, VICTOR BRIAN BISHOP, Oxford

ATTORNEYS FOR APPELLEE: CHRISTOPHER SOLOP, ROBERT A. BIGGS III, Jackson

BEFORE WILSON, P.J., WESTBROOKS AND SMITH, JJ.

SMITH, J., FOR THE COURT:

¶1. Mac Long Homes LLC and its insurance carrier, Nationwide Mutual Insurance Company (Nationwide) (collectively, Mac Long), filed a complaint in the Bolivar County Circuit Court against Olvera Construction LLC (Olvera) regarding masonry work that Olvera performed on fireplaces for a residential construction project. As the general contractor of the project, Mac Long asserted causes of action against Olvera for breach of contract, negligence, breach of the common-law duty to defend and indemnify, and negligent misrepresentation. Olvera moved to dismiss Mac Long’s complaint, and Mac Long moved to amend its complaint. The circuit court entered an order granting Olvera’s motion to dismiss and denying Mac Long’s motion to amend. On appeal, Mac Long argues the circuit court erred.

¶2. Upon review, we find that Mac Long’s common-law indemnity claim against Olvera was premature and not ripe for review at the time Mac Long filed the complaint. We therefore affirm the portion of the circuit court’s order dismissing the common-law indemnity claim, but we do so without prejudice to Mac Long’s ability to renew its claim. We also find that the statute of limitations had run on Mac Long’s claims for breach of contract and negligent misrepresentation. Thus, under Mississippi Rule of Civil Procedure 12(b)(6), we affirm the circuit court’s decision to dismiss these two claims with prejudice. As to Mac Long’s remaining cause of action for negligence, we find that the filing of the complaint tolled the applicable statute of limitations. We therefore reverse the portion of the circuit court’s order dismissing the negligence claim, and we remand to allow for further proceedings as to that claim. As for the circuit court’s decision to deny Mac Long’s motion to amend its complaint, we find no abuse of discretion and affirm.

FACTS

¶3. In November 2015, Mac Long entered into a written contract with homeowners to build a residence in Arkansas. Mac Long then entered into an oral agreement with Olvera for Olvera to perform masonry work on the residence’s interior and exterior fireplaces. The homeowners took possession of the residence in November 2016 following Mac Long’s completion of the construction. A little over two years later, on December 30, 2018, a fire occurred at the residence. The homeowners and their insurer filed a claim with the American Arbitration Association and sought damages from Mac Long. Despite Mac Long’s attempt to include Olvera in the arbitration, Olvera never became a party in the arbitration proceedings.

¶4. On February 24, 2021, Mac Long filed a complaint in circuit court against Olvera and alleged that Olvera’s deficient construction of the fireplaces caused the fire at the homeowners’ residence. Mac Long asserted claims against Olvera for breach of contract, negligence, breach of the common-law duty to defend and indemnify, and negligent misrepresentation.

¶5. The parties agreed to stay their litigation pending the outcome of mediation. The mediation between Mac Long and Olvera occurred on June 17, 2021, and proved unsuccessful. On July 19, 2021, Olvera moved to dismiss Mac Long’s complaint under Rule 12(b)(1) and (6). Ten days later, Mac Long sought a stay of the parties’ legal proceedings pending the resolution of its arbitration with the homeowners. Mac Long’s motion to stay the proceedings stated that the arbitrator’s award was scheduled to be provided on August 27, 2021. Mac Long acknowledged that although its complaint against Olvera sought attorney’s fees and arbitration expenses, the homeowners had not yet been awarded any damages pursuant to the arbitration proceedings.

¶6. On August 24, 2021, the arbitrator rendered an interim award against Mac Long. The final arbitration award against Mac Long was rendered on September 21, 2021. The final arbitration award against Mac Long, which included damages, attorney’s fees, and expenses, totaled $1,276,706.99. Mac Long and the homeowners entered into an assignment of rights and a covenant not to sue. Under the agreement, Mac Long’s insurer, Nationwide, reimbursed the homeowners for certain arbitration expenses and paid Mac Long’s insurance policy limit of $1,000,000. In exchange for the homeowners’ agreement not to enroll and execute the judg- ment against Mac Long for the remaining amount of the arbitration award, Mac Long assigned to the homeowners and their insurance company a portion of Mac Long’s right to recover any damages from Olvera. On January 21, 2022, a corrected final award of $1,268,207.99 was rendered in the arbitration proceeding. Also on January 21, 2022, Mac Long sought leave to amend its complaint against Olvera to include the corrected final arbitration award as damages. To comply with Mac Long’s obligations to the homeowners and their insurance company, Mac Long also sought to amend the complaint to substitute the homeowners’ insurance company as a party in interest against Olvera.

¶7. On August 18, 2022, the circuit court entered an order granting Olvera’s motion to dismiss the complaint with prejudice. The circuit court’s order also denied Mac Long’s motion to amend the complaint. Aggrieved, Mac Long appeals.

DISCUSSION

¶8. Mac Long argues that the circuit court improperly dismissed its complaint under Rule 12(b)(1) and (6). We "review[ ] a trial court’s grant of a motion to dismiss de novo." W. World Ins. Grp. v. KC Welding LLC, 372 So. 3d 464, 467 (¶14) (Miss. 2023). In the complaint, Mac Long alleged that Olvera "breached the oral agreement entered between Mac Long and [Olvera] when [Olvera] negligently constructed the fireplaces" at the homeowners’ residence. Mac Long asserted causes of action against Olvera for breach of contract, negligence, breach of the common-law duty to defend and indemnify, and negligent misrepresentation. We address each cause of action separately.

I. Breach of Contract

¶9. With regard to its breach-of-contract claim against Olvera, Mac Long alleged in its complaint that Olvera contracted to "[c]onstruct fireplaces safe from defects and with good workmanship" and to "[c]omply with requirements of all building codes, housing codes, and local codes …. " Mac Long further contended that Olvera "undertook a contractual obligation … to provide a fit, safe, and working fireplace" but then "breached that contract."

[1, 2] ¶10. Mississippi Code Annotated section 15-1-49(1) (Rev. 2019) states that "[a]ll actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued, and not after." We have previously recognized that "[c]auses of action for breach of contract are subject to the three-year statute of limitations." Rives v. Ishee, 335 So. 3d 1098, 1101 (¶13) (Miss. Ct. App. 2022). "[I]f the claim is one that ‘involves latent injury,’ then ‘the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury.’ " Id. (quoting Miss. Code Ann. § 15-1-49(2)). We define a latent injury "as one where the plaintiff will be precluded from discovering harm or injury because of the secretive or inherently un-discoverable nature of the wrongdoing in question or when it is unrealistic to expect a layman to perceive the injury at the time of the wrongful act." W. World Ins. Grp., 372 So. 3d at 468 (¶18) (citation and internal quotation marks omitted). "For almost a century now, [the Mississippi] Supreme Court has held in the case of a breach of contract, the cause of action accrues at the time of the breach, regardless of the time when the damages from the breach occurred; this is the general rule." Rives, 335 So. 3d at 1102 (¶19) (citations and internal quotation mark omitted).

[3] ¶11. Here, Mac Long’s written contract with the homeowners provided that although Mac Long could engage the ser- vices of subcontractors, Mac Long would not "be relieved or released from any of its obligations and responsibilities" and would still be required to "warrant[] the [p]roject to be free from all latent defects and from any defects due to non-compliance … for a period of one (1) year following closing or occupancy, … and from major defects … for a period of six (6) years following closing or occupancy …. " Thus, despite engaging Olvera to perform masonry work on the residence’s fireplaces, Mac Long’s contractual duties to the homeowners still required Mac Long to supervise Olvera’s work. And through reasonable diligence in its supervisory capacity, Mac Long should have been able to discover any faulty masonry work that Olvera performed on the exterior patio fireplace at issue. We therefore can discern no latent injury implicated by Mac Long’s breach-of-contract claim against Olvera.

[4] ¶12. Mac Long completed the residence’s construction by November 2016, which was when the homeowners moved into the residence. The contractual breaches alleged by Mac Long focused solely on Olvera’s masonry work and fireplace construction, and these would have occurred prior to the date of occupancy. Based on the record before us, we conclude that the three-year statute of limitations on Mac Long’s breach-of-contract claim began to run—at the latest—upon the residence’s completion in 2016. As a result, the three-year limitations period would have ended in 2019, which was well before Mac Long filed its complaint against Olvera in February 2021. Due to the statutory time-bar, we find that Mac Long’s...