IN THE MISSISSIPPI SUPREME COURT NO TS ON APPEAL FROM THE CIRCUIT COURT FOR THE SECOND JUDICIAL DISTRICT OF HARRISON COUNTY, MISSISSIPPI

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1 E-Filed Document Aug :59: CA Pages: 53 IN THE MISSISSIPPI SUPREME COURT NO TS GROUND CONTROL, LLC VERSUS CAPSCO INDUSTRIES, INC., W.G. YATES & SONS CONSTRUCTION CO., HARRAH S ENTERTAINMENT, INC., and CHRISTOPHER KILLION APPELLANT / CROSS- APPELLEE APPELLEES / CROSS- APPELLANTS ON APPEAL FROM THE CIRCUIT COURT FOR THE SECOND JUDICIAL DISTRICT OF HARRISON COUNTY, MISSISSIPPI BRIEF OF APPELLEES / CROSS-APPELLANTS W.G. YATES & SONS CONSTRUCTION CO. AND HARRAH S ENTERTAINMENT, INC. ORAL ARGUMENT REQUESTED R. Mark Alexander, Jr. (MB No ) Matthew W. McDade (MB No ) BALCH & BINGHAM LLP 1310 Twenty Fifth Avenue Gulfport, MS Telephone: (228) Facsimile: (228) ATTORNEYS FOR APPELLEES / CROSS- APPELLANTS, W.G. YATES & SONS CONSTRUCTION CO., and HARRAH S ENTERTAINMENT, INC

2 CERTIFICATE OF INTERESTED PERSONS The undersigned counsel of record certifies that the following listed persons have an interest in the outcome of this case. These representations are made in order that the Justices may evaluate possible disqualification or recusal pursuant to Miss. R. App. P Honorable Judge Roger T. Clark, Circuit Judge for the 2 nd Judicial Circuit, Mississippi 2. Capsco Industries, Inc., Appellee/Cross-Appellant 3. Harrah s Entertainment, Inc., Appellee/Cross-Appellant 4. Caesar s Entertainment, Corp., successor to Harrah s Entertainment, Inc., Appellee/Cross-Appellant 5. W. G. Yates & Sons Construction Company, Appellee/Cross-Appellant 6. Christopher Killion, Appellee/Cross-Appellant 7. Balch & Bingham LLP, Counsel for Appellees/Cross-Appellants 8. R. Mark Alexander, Esq., Counsel for Appellees/Cross-Appellants 9. Matthew W. McDade, Esq., Counsel for Appellees/Cross-Appellant 10. Ground Control, LLC, Appellant/Cross-Appellee 11. Blewett Thomas, Esq., Counsel for Appellant/Cross-Appellee 12. Frank A. Beaton, Other Party W.G. YATES & SONS CONSTRUCTION CO., and HARRAH S ENTERTAINMENT, INC. BY: BALCH & BINGHAM LLP BY: /s/ R. Mark Alexander, Jr. Counsel for Appellees / Cross-Appellants R. Mark Alexander, Jr. (MB No ) Matthew W. McDade (MB No ) i

3 STATEMENT REGARDING ORAL ARGUMENT This case presents no unique or novel areas of the law with respect to Ground Control s claims against Harrah s or Yates. It is well-settled in Mississippi that a sub-subcontractor, such as Ground Control, simply has no equitable claims for recovery against either Harrah s as the owner or Yates as the general contractor on the Project. Notwithstanding, given Ground Control s attempt to muddy the waters in this near decade-long litigation, Harrah s and Yates would respectfully request oral argument to the extent the same is granted at Ground Control s request ii

4 TABLE OF CONTENTS CERTIFICATE OF INTERESTED PERSONS... i STATEMENT REGARDING ORAL ARGUMENT... ii TABLE OF AUTHORITIES...v STATEMENT OF THE ISSUES ON APPEAL...1 STATEMENT OF THE CASE...2 I. Nature of the Case...2 II. Summary of Judicial Proceedings...6 SUMMARY OF THE ARGUMENT...8 STANDARD OF REVIEW...10 ARGUMENT...11 I. Ground Control Concedes There is No Evidence to Support A Jury Award of Quantum Meruit Damages...11 II. Ground Control Has No Remaining Claims Against Harrah s or Yates...13 III. IV. A. Ground Control Was Not in Privity of Contract With Harrah s or Yates...14 B. Ground Control Has No Equitable Claims Under Mississippi Law...16 C. Ground Control Has No Statutory Claims...20 D. Neither Harrah s or Yates Contracted with Ground Control for Change Order Work...21 E. Ground Control Has No Third-Party Beneficiary of Contract Claims...25 F. The Jury Properly Disregarded Ground Control s Agency Claim...26 G. Ground Control Has No Self-Dealing Tort Claims Against Harrah s or Yates The Trial Court Could Have Properly Disposed of the Tort Claims Because They Have No Legal Basis No Evidence Was Presented That Harrah s or Yates Acted In Concert to Support Joint and Several Tort Liability...34 Ground Control s Agreement to the Jury Instructions Waives Any Appeal of the Jury Instructions...35 A. The Jury Was Properly Instructed on Apportionment of Liability...38 Ground Control s Appeal Against Yates and Harrah s Should be Dismissed in its Entirety Due to Satisfaction of the Judgment iii

5 CONCLUSION...44 CERTIFICATE OF SERVICE iv

6 TABLE OF AUTHORITIES CASES Aaron v. Aaron, 147 So. 3d 370 (Miss. Ct. App. 2014)... 21, 34 Ace Pipe Cleaning, Inc. v. Hemphill Constr. Co., 134 So. 3d 799 (Miss. Ct. App. 2014) Adams v. Carter, 47 So. 409 (Miss. 1908) Aladdin Constr. Co., Inc. v. John Hancock Life Ins. Co., 914 So. 2d 169 (Miss. 2005)... 27, 28, 30 Bullard v. Guardian Life Ins. Co. of America, 941 So. 2d 812 (Miss. 2006) Caston v. State, 823 So. 2d 473 (Miss. 2002) Chancellor v. Melvin, 52 So.2d 360 (Miss. 1951) Chic Creations of Bonita Lakes Mall v. Doleac Elec. Co., 791 So. 2d 254 (Miss. Ct. App. 2000) Ciba-Giegy Corp. v. Murphree, 653 So. 2d 857 (Miss. 1994)... 27, 29 Citizens National. Tupelo Redev. Agency v. Gray Corp., 972 So. 2d 495 (Miss. 2007) Citizens Nat'l Bank v. L. L. Glascock, Inc., 243 So. 2d 67 (Miss. 1971)... 24, 25 Contracting Corp. v. Kimmins Indus. Serv. Corp., 743 So. 2d 954 (Miss. 1999) Cope v. Thrasher Const., Inc., 2016 Miss. App. Lexis 429, *7 (Miss. Ct. App. June 28, 2016) Davis v. State, 568 So. 2d 277 (Miss. 1990) Denbury Onshore, LLC v. Precision Welding, Inc., 98 So. 3d 449 (Miss. 2012)... 10, 11, 14 Derr Planation v. Swarek, 14 So. 3d 711 (Miss. 2009) Dixie Ins. Co. v. Mooneyham, 684 So. 2d 574 (Miss. 1996) Elec. Supply Co. v. Hazlehurst Lumber Co., 932 So. 2d 863 (Miss. Ct. App. 2006)... 17, 30, v

7 Estate of Johnson v. Adkins, 513 So. 2d 922 (Miss. 1987) Falkner v. Stubbs, 121 So. 3d 899 (Miss. 2013)... 20, 33 Fitch v. Valentine, 959 So. 2d 1012 (Miss. 2007) Goodyear Tire & Rubber Co. v. Kirby, 156 So. 3d 281 (Miss. Ct. App. 2009)... 30, 36, 39 Gorton v. Rance, 52 So. 3d 351 (Miss. 2011) Ground Control, LLC v. Capsco Indus., Inc., et al., 120 So. 3d 365 (Miss. 2013)... passim Heber E. Costello v. Edwards & Son, 1998 U.S. Dist. Lexis 1301, *5 (N.D. Miss. Jan. 22, 1998) HWCC-Tunica, Inc. v. Jenkins, 907 So. 2d 941 (Miss. 2005) In re Estate of Fitzner, 881 So. 2d 164, (Miss. 2003) Investors Prop. v. Watkins, Pitts, Hill & Assoc., 511 So. 2d 1379 (Miss. 1987) Madison County v. City of Canton, 158 So. 149 (Miss. 1934)... 42, 43, 44 McLain v. West Side Bone & Joint Ctr., 656 So. 2d 119 (Miss. 1995) McMorris v. Tally, 163 So. 3d 289 (Miss. 2015) Meridian City Lines v. Baker, 39 So. 2d 541 (Miss. 1949)... 41, 42 Noatex Corp. v. King Constr. of Houston, L.L.C., 732 F.3d 479 (5th Cir. Miss. 2013)... 20, 33 Noble House, Inc. v. W & W Plumbing & Heating, Inc., 881 So. 2d 377 (Miss. Ct. App. 2004) Redd v. L&A Contracting Co., 151 So. 2d 205 (Miss. 1963)... passim Savory v. First Union Nat l Bank of Del., 954 So. 2d 930 (Miss. 2007) Sears Roebuck & Co. v. Learmonth, 95 So. 3d 633 (Miss. 2012) Seaward Marine Servs. v. Grillot Constr., LLC, 2010 U.S. Dist. Lexis 82479, *4-9 (S.D. Miss. 2010)... 24, 25, vi

8 Sentinel Indus. Contr. Corp. v. Kimmins Indus. Serv. Corp., 743 So. 2d 954, 970 (Miss. 1999)... 17, 34, 40, 41 Serv. Elec. Supply Co. v. Hazlehurst Lumber Co., 932 So. 2d 863 (Miss. Ct. App. 2006) Shields v. Easterling, 676 So. 2d 293 (Miss. 1996)... 39, 41 Sperry-New Holland v. Prestage, 617 So. 2d 248 (Miss. 1993) Sullivan v. Protex Weatherproofing, Inc., 913 So. 2d 256 (Miss. 2005) Summerall Elec. Co. v. Church of God at Southaven, 25 So. 3d 1090 (Miss. Ct. App. 2010) T.C.B. Const. Co. v. W.C. Fore Trucking, 134 So. 3d 752 (Miss. Ct. App. 2012) Taylor v. Morris, 609 So. 2d 405 (Miss. 1992) Thames & Co. v. Eicher, 373 So. 2d 1033, (Miss. 1979) Tupelo Redevelopment Agency v. Gray Corp., 972 So. 2d 495 (Miss. 2007) United States use of Control Systems, Inc. v. Arundel Corp., 896 F.2d 143 (5th Cir. Miss. 1990) STATUTES Miss. Code Ann , 42 Miss. Code Ann passim Miss. Code Ann passim Miss. Code Ann passim OTHER AUTHORITIES Black's Law Dictionary 979 (8th ed. 2004) Miss. R. Civ. P. 49(b) vii

9 STATEMENT OF THE ISSUES ON APPEAL 1. Whether the Court erred in denying summary judgment in favor of Harrah s Entertainment, Inc. ( Harrah s ) and W.G. Yates & Sons Construction Company ( Yates ) pursuant to Mississippi law that precludes recovery, under any theory, by a sub-subcontractor against an owner and a general contractor of a construction project? 2. Whether the Court erred in denying summary judgment in favor of Harrah s and Yates when the undisputed evidence showed that Ground Control, LLC ( Ground Control ) did not meet the elements of a quantum meruit claim or any other claims for recovery against these two Defendants? 3. Whether the Court erred in denying a directed verdict to Harrah s and Yates based on the evidence at trial that Ground Control failed to make a prima facie case against Harrah s and Yates under unjust enrichment and/or quantum meruit theories for failing to show that Ground Control expected to receive compensation for its work on the project from Harrah s and Yates? 4. Whether the Court erred in denying Harrah s and Yates Motion for Judgment Notwithstanding the Verdict on all claims against these Defendants? 5. Whether Ground Control waived its objection to certain jury instructions which Ground Control did not contemporaneously object to and actually helped draft? 6. Whether Ground Control s appeal should be dismissed in its entirety because Ground Control has already executed on a portion of the judgment favorable to it?

10 I. NATURE OF THE CASE STATEMENT OF THE CASE This case revolves around the construction of the Margaritaville Spa and Hotel (the Project ) in Biloxi, Mississippi. Harrah s Entertainment, Inc. ( Harrah s ) was the owner of the Project, and contracted with W.G. Yates & Sons Construction Company ( Yates ) to complete all construction work. Yates then sub-contracted with Capsco Industries, Inc. ( Capsco ) for certain piping and other related work for the Project. Capsco, in turn, sub-subcontracted with Ground Control, LLC ( Ground Control ) to perform part of this work. Ground Control was therefore a sub-subcontractor and has no contractual relationship with either Harrah s or Yates. Additionally, Harrah s retained a construction manager for the Project, an entity by the name of Foxcore. (Tr. Trans. Vol., 4, pp ) (RE-1) (Depo. of Harrah s Rule 30(b)(6) Representative read into the record, Tr. Ex. J-41) (RE-3). To illustrate, Harrah s contracted with Yates for the total construction of the Project. (R. at ). In accomplishing this task, Yates was to contract in its own name and serve as an independent contractor to Harrah s. (R. at ) (Tr. Trans. Vol. 4, p. 456) (RE-1). Yates also self-performed work on the Project and profited from that work. (Tr. Trans. Vol. 4, pp ) (RE-1). In fact, Yates self-performed work on the Project to the tune of about $10,000, (Id.). The Harrah s-yates contract was entered solely for the benefit of the two (2) parties, and contained the following relevant provisions: The obligation of the Contractor to pay its Subcontractors is an independent obligation from the obligation of the Owner to make payment to the Contractor. The Owner shall have no obligation to pay or to see to the payment of any monies to any Subcontractor or sub-subcontractor. The foregoing shall not be construed to prevent the use of pay-if-paid or similar contractual arrangements between the Contractor and Subcontractor. (Harrah s-yates Contract, 8.2, Tr. Ex. J-2) (RE-2). Nothing contained in the Contract Documents or otherwise shall create any contractual relationship between the Owner and any Subcontractor or sub

11 subcontractor, and no subcontract or sub-subcontract shall relieve the Contractor of its responsibilities and obligations should any Subcontractor or sub-subcontractor fail to perform its Work in a satisfactory manner. (Harrah s-yates Contract, 7.2, Tr. Ex. J-2) (RE-2). This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors, assigns and legal representatives. (Harrah s- Yates Contract, 26.8, Tr. Ex. J-2) (RE-2). Yates, in turn, as the general contractor, subcontracted with Capsco for fire suppression and installation of water and sewer lines. (Tr. Trans. Vol. 4, p. 461 and Vol. 7, pp ) (Tr. Ex. J-4). It is undisputed that Ground Control was not a party or signatory to either the Harrah s- Yates contract or the Yates-Capsco subcontract. (Tr. Ex. J-2) (RE-2). Rather, Capsco as subcontractor entered a sub-subcontract with Ground Control to perform the removal or capping of existing structures and piping, installation of storm drainage piping and structures, portable water lines and structures, and sanitary sewer lines and structures. (Tr. Ex. J-1) (RE-4). Again, neither Harrah s nor Yates was a party to the Caspco- Ground Control sub-subcontract, and at no time did Ground Control have an express contract with either Harrah s or Yates. (Tr. Ex. J-1) (RE-4). Pursuant to its sub-subcontract with Capsco, Ground Control looked to and received payment from Capsco on the project. (Tr. Trans. Vol., 7, pp and Vol. 8, pp ) (RE-5 and RE-6). At no point did Ground Control expect payment from either Harrah s or Yates, as evidenced by the trial testimony of its corporate representative Mr. Frank Beaton. (Tr. Trans. Vol., 7, pp and Vol. 8, pp ) (RE-5 and RE-6). In particular, Mr. Beaton admitted that Ground Control only expected to receive payments from Capsco and did not receive or anticipate receiving checks directly from Yates or Harrah s. (Tr. Trans. Vol. 8, pp. 1071) (RE-6) ( Q. And you never expected to get paid directly from Harrah s? A. No, I didn't. That's not the way it works Q. You worked for Capsco and that's who you expected to pay you? A. That's where it was going to come from ultimately. ) Mr. Beaton s trial testimony was

12 substantiated by his prior deposition testimony that was introduced in support of Harrah s and Yates Motion for Summary Judgment, which provides in pertinent: Q. Did you ever expect to receive payments directly from Yates? A. No. I don't think I expected to receive payments from them, because they - - according to Jay Dollar, that they very slow in getting Capsco their money. Q. Did you ever expect to receive any payments from Harrah's -- or did you expect to see did you expect to receive direct payment from Harrah's for the work that you did? A. No. Q. The party you looked to for payment was Capsco; correct? A. That's correct..... Q. At the time you did the work and submitted invoices, who were you expecting to get paid from when you did the work? A. Capsco. (Rule 30(b)(6) Depo. Tr. of Beaton, pp , lines 12-20, R. at ) (RE-7). Simply put, the only party from whom Ground Control expected payment was Capsco. The Capsco-Ground Control contract contained a change order provision to compensate for certain extra-contractual work within the general scope of their original contract. (Tr. Ex. J-1, 5) (RE-4) (Tr. Trans., Vol. 7, p. 912) (RE-5). Ground Control s testimony at trial was that all of its work on the Project was performed under its contract with Capsco and the subsequent change orders to that contract (Tr. Trans., Vol. 7, p. 912) (RE-5). Ground Control s representative, Mr. Beaton, stated that: Ground Control s contract with Capsco included a change order mechanism by which it could be paid for the extra-contractual work it claims to have performed. (Tr. Trans., Vol. 7, pp ) (RE-5)

13 The extra work Ground control allegedly performed on the Project was charged directly to Capsco through such change orders. (Tr. Trans., Vol. 7, pp ) (RE-5) (Tr. Ex. J-7) (RE-9). Indeed, as is evident from the face of the change order invoices themselves, every single change order invoice of Ground Control was billed directly to Capsco. (Tr. Ex. J-7) (RE-9). Mr. Beaton s trial testimony regarding the change orders was similar to his deposition testimony (submitted in support of Harrah s and Yates Motion for Summary Judgment), which unequivocally shows that all work performed by Ground Control on the Project including change order work was performed pursuant to its contract with Capsco: Q. These changes that came down were still within the scope of installing underground utilities as provided in your subcontract agreement; correct? A. Yes. Q. Okay. These didn't create new contracts? A. Just change orders. Q. That's right. It was still operating under that same subcontract? A. That's correct. Q. And all your work performed on the project operated under that same scope of those same subcontracts? A. We were all under the same -- that's correct -- under the same contract. And any repairs or any change orders -- right. Q. Sure. It was all done pursuant to your subcontract? A. Pursuant to Q. Including the changes to that? A. That's correct. Including the change orders. That's right. Q. All right. Okay. What I'm getting at, is, you didn't have any separate contracts with Yates, did you? A. No

14 Q. You didn't have any contracts with Harrah's, did you? A. No. My only contract I had was with the contractor, Capsco. (Rule 30(b)(6) Depo. Tr. of Beaton, pp. 228:17-20, :13-12, R. at 538 and R. at ) (RE-7) (emphasis added). At some point in time, all of the work on the Project ceased and was ultimately abandoned. On August 25, 2009, Ground Control brought this litigation against Capsco, Harrah s and Yates, asserting various claims for the purpose of seeking recovery of the value of unpaid labor and materials allegedly expended by Ground Control during the performance of its contract with Capsco. II. SUMMARY OF JUDICIAL PROCEEDINGS Despite its lack of any contractual privity with either Harrah s or Yates, Ground Control has maintained this near decade-long litigation against these Defendants, pursuing an equitable theory of recovery under claims of unjust enrichment and quantum meruit. Under Mississippi law, however, a sub-subcontractor such as Ground Control has no equitable claims against a project owner or general contractor for work performed pursuant to its express contract with a third party. Accordingly, on April 7, 2011, the Trial Court granted summary judgment in favor of Harrah s and Yates on all of Ground Control s claims, including unjust enrichment and quantum meruit. (2012 R. at pp ). The Trial Court also granted summary judgment in favor of Capsco on all claims because Ground Control s failure to obtain the requisite contractor s license, per statute, rendered the Capsco-Ground Control contract null and void. (2012 R. at ). Ground Control took an interlocutory appeal of both Orders. With regard to Harrah s and Yates, the Mississippi Supreme Court did not overturn the Trial Court s holding that Ground Control had no viable claims against these Defendants, but rather reversed summary judgment on procedural grounds. See Ground Control, LLC v. Capsco

15 Indus., Inc., et al., 120 So. 3d 365, 374 (Miss. 2013) ( The grant of summary judgment in favor of Yates and Harrah's is reversed, and the case is remanded to the trial court for failure to give proper notice of the conversion of the Rule 12 motion to dismiss to a Rule 56 motion for summary judgment. ). With regard to Capsco, this Court made the limited holding that, because Ground Control s contract with Capsco was null and void due to its failure to obtain a contractor s license, Ground Control should be allowed to proceed on its quantum meruit claim for the value of what it expended in labor and supplies on the project. Id. at 371. Nothing in this Court s opinion stated that Ground Control had any viable claims for the value of such labor and supplies against either Harrah s or Yates. See id. Nonetheless, on remand, the Trial Court summarily denied Harrah s and Yates motion for summary judgment on all of Ground Control s claims in a one (1) page Order. (Order Denying Defendants Motion for Summary Judgment, R. at 1389) (RE-8). In October of 2014, this case proceeded to trial on all of Ground Control s claims against all Defendants. In particular, the following claims against Harrah s and Yates were submitted to the jury: statutory claims under Miss. Code Ann and , quantum meruit recovery, estoppel and waiver, self-dealing by Yates in violation of , and third-party beneficiary of the Harrah s-yates contract. (Corrected Final Judgment, R. at ) (RE-10). Following Ground Control s case-in-chief, the Trial Court granted directed verdict in favor of Harrah s and Yates on the claims under Miss. Code Ann , , and , and well as the third-party beneficiary of contract claims. (Id.). The jury returned a verdict awarding Ground Control $862, for the value of its claimed unpaid labor and materials expended on the Project. (Jury Verdict, R. at 1712 and the Corrected Final Judgment, R. at ) (RE-11 and RE-10). Pursuant to the parties agreed-to jury instruction to apportion the liability for any damage award among the Defendants,

16 the jury found the respective liability of the parties as follows: Capsco 95.75%, Harrah s 0% and Yates 4.25% liable. (Jury Verdict, R. at 1712) (RE-11). Final Judgment was rendered on September 9, 2015, in the amount of $36, against Yates and $0.00 against Harrah s, representing the jury s allocation their respective liability. (Final Judgment, R. at ). 1 Ground Control noticed this appeal on September 14, (Notice of Appeal, R. at ). Ground Control thereafter issued a Writ of Garnishment and collected $36, from Yates bank accounts to satisfy the Judgment. (Suggestion and Writ of Garnishment, R. at ) (RE-12); (Answer of Regions Bank, R. at 2667) (RE-13). On December 2, 2015, the Trial Court entered an Order declaring Yates had satisfied the Judgment in full. (Order, R. at 2710) (RE-14). Nonetheless, on appeal Ground Control now argues that the entire damage award should be reallocated among the Defendants, seeking to recover from Harrah s and others what it has already recovered from Yates. SUMMARY OF THE ARGUMENT On April 7, 2011, the Trial Court granted summary judgment in favor of Harrah s and Yates on all of Ground Control s claims, including its unjust enrichment and quantum meruit claims. The Trial Court found that since Ground Control had an express contract with Capsco for the work performed, Mississippi law precluded Ground Control from ignoring that contract and pursuing quasi contract claims against Harrah s and Yates. On Ground Control s interlocutory appeal of this ruling in 2013, the Mississippi Supreme Court did not overturn the Trial Court s legal reasoning in this respect, but rather reversed summary judgment on procedural grounds. See Ground Control, LLC v. Capsco Indus., Inc., et al., 120 So. 3d 365, 374 (Miss. 2013). The Supreme Court made the limited holding that, 1 The Trial Court subsequently issued a Corrected Final Judgment on September 18, 2015 to properly reflect the grant of a JNOV in favor of Harrah s and Yates on Ground Control s third-party beneficiary claim. (Corrected Final Judgment, R. at ) (RE-10)

17 because Ground Control s contract with Capsco was null and void due to its own failure to obtain a contractor s license, Ground Control could proceed on its quantum meruit claim against Capsco for the value of what it expended in labor and supplies on the project. Id. at 371. Nothing in the Supreme Court s opinion, however, stated that Ground Control had any viable claims for the value of such labor and supplies against either Harrah s or Yates. Indeed, well-established case law precludes quantum meruit or other equitable claims by a sub-subcontractor (Ground Control) against general contractors (Yates) or project owners (Harrah s). The fact that Ground Control was allowed to pursue such equitable claims directly against Capsco as a result of the Supreme Court s ruling does not change this settled law. The Trial Court thus respectfully erred when it summarily denied Harrah s and Yates motion for summary judgment on these claims in its one (1) page Order. (Order Denying Defendants Motion for Summary Judgment, R. at 1389) (RE-8). This case proceeded to trial on all of Ground Control s claims against Harrah s and Yates, including its quantum meruit and equitable claims. The jury returned a verdict finding Harrah s 0% and Yates 4.25% liable for the alleged value of Ground Control s unpaid services performed on the Project. As Ground Control concedes on appeal, however, no evidence at trial would substantiate an award of quantum meruit damages under Mississippi law. (Br. of Ground Control, at p. 62) (emphasis added). In light of this unequivocal admission, this Court must reverse the Trial Court s denial of Harrah s and Yates motions for summary judgment, directed verdict and/or JNOV. The reason Ground Control abandons its quantum meruit claims on appeal is to attempt to argue joint and several liability of the damage award to get into the deeper pockets of Harrah s and Yates. The jury flatly rejected Ground Control s theory, however, by finding Harrah s was not liable for any damages and Yates only 4.25% liable. (Corrected Final

18 Judgment, R. at and Jury Verdict, R. at 1712) (RE-10 and RE-11). Moreover, none of Ground Control s alleged basis for imposing joint and several liability are supported by law or the evidence presented at trial thus warranting reversal of the damage award against Yates in its entirety. Simply put, Ground Control has no viable claims against Harrah s or Yates. In an attempt to get a retrial of this near decade-long litigation under its joint and several liability theory, Ground Control appeals the use of the jury verdict form and its apportionment of damages among the Defendants. This argument is quickly disposed of by the fact that Ground Control did not object to, agreed to, and actually helped draft, the verdict form which it now appeals. Ground Control therefore waived any appeal of the verdict form which, for reasons enumerated herein, properly instructed the jury on apportionment of liability. Finally, after trial Ground Control collected on the 4.25% of the Judgment awarded against Yates. On appeal, however, Ground Control now contests that portion of the Judgment, arguing for reallocation of the entire damage award. Ground Control cannot have it both ways, and its inconsistent positions result, at the least, in a waiver of its appeal with respect to the Judgment and apportionment of liability against either Harrah s or Yates. STANDARD OF REVIEW The Mississippi Supreme Court applies the same de novo standard of review to appeals from the denial of summary judgment, directed verdict and JNOV. See Denbury Onshore, LLC v. Precision Welding, Inc., 98 So. 3d 449, 452 (Miss. 2012). [S]ummary judgment is mandated where the respondent has failed to make a showing sufficient to establish the existence of an element essential to that party s case, and on which that party will bear the burden of proof at trial. Gorton v. Rance, 52 So. 3d 351, 355 (Miss. 2011). To withstand summary judgment, the non-movant must set forth specific facts that demonstrate a genuine issue of a material fact that merits trial instead of mere unsubstantiated allegations. Id

19 Similarly, a motion for JNOV is a challenge to the legal sufficiency of the evidence, and this Court will affirm the denial of the JNOV only where substantial evidence supports the verdict. Denbury Onshore, 98 So. 3d at 452 (reversing trial court s denial of contractor s motions for summary judgment, directed verdict and JNOV). This Court defines substantial evidence as evidence of such quality and weight that reasonable fair-minded jurors in the exercise of impartial judgment might have reached different conclusions. Id. ARGUMENT I. GROUND CONTROL CONCEDES THERE IS NO EVIDENCE TO SUPPORT A JURY AWARD OF QUANTUM MERUIT DAMAGES On April 7, 2011, the Trial Court granted summary judgment in favor of Harrah s and Yates on all of Ground Control s claims, including unjust enrichment and quantum meruit. (April 7, 2011 Order, 2012 R. at pp ). The Trial Court found that since Ground Control had an express contract with Capsco for the work performed, Ground Control cannot ignore that contract and pursue quasi contract claims against Harrah s and Yates. (2012 R. at pp. 412) (citing Redd v. L&A Contracting Co., 151 So. 2d 205 (Miss. 1963)). On the first appeal, this Court did not overturn the Trial Court s legal reasoning in this respect, but rather reversed summary judgment on procedural grounds because of inadequate notice [to Ground Control] of the conversion from a motion to dismiss to a motion for summary judgment. Ground Control, LLC v. Capsco Indus., Inc., et al., 120 So. 3d 365, 367 (Miss. 2013). On remand, Harrah s and Yates renewed their motion for summary judgment on all claims, citing the undisputed testimony of Ground Control s Rule 30(b)(6) representative. However, this motion was summarily denied by the Trial Court in a one (1) page Order with no explanation or reasoning for the same. (Order, R. at 1389) (RE-8). This case proceeded to trial on all of Ground Control s claims against Harrah s and Yates, including its unjust enrichment and quantum meruit claims. Ground Control was given

20 every opportunity to present evidence of its unjust enrichment and quantum meruit claims to the jury, but did not (and in fact could not) present any such evidence, as reflected by the jury verdict allocating 0% liability to Harrah s and only 4.25% liability to Yates. (Jury Verdict, R. at 1712) RE-11). Nonetheless, the Trial Court summarily denied Harrah s and Yates motion for a JNOV on these claims. (Dec. 15, 2015 Order, R. at ). On appeal, Ground Control now concedes that the jury s verdict does not, and cannot, support an award of quantum meruit or unjust enrichment in light of the evidence presented at trial and the law governing same, unequivocally stating: Ground Control would further show that quantum meruit damages could not have been awarded by the jury [sic] to a lack of evidence that either Harrah s, Yates or Capsco held money claimed by Ground Control at the time of trial. Under Mississippi law, quantum meruit damages can only be awarded when a defendant still retains funds that are subject to the plaintiff s claims. The jury could not have awarded quantum meruit damages due to the fact that neither Harrah s, Yates not [sic] Capsco possessed any money claimed by Ground Control at the time of trial. The trial testimony by Harrah s and Yates senior vice-present Chet Nadolski confirmed that both Harrah s and Yates disbursed all funds claimed by Ground Control through its final settlement with Capsco during October Christopher Killion s [Capsco shareholder] testimony confirms that Capsco did not possess or control any funds claimed by Ground Control as of December 31, The trial evidence was clear that none of the Appellees possessed money claimed by Ground Control at the time of trial, therefore no evidence at trial would substantiate an award of quantum meruit damages under Mississippi law. It is impossible to attribute any of the jury s verdict as being an award of quantum meruit damages. (Br. of Ground Control, at pp ) (emphasis added). Since Ground Control has conclusively admitted that it has no viable claim against either Harrah s or Yates for quantum meruit or unjust enrichment, these equitable claims are no longer at issue in this litigation. Ground Control s concession is for good reason. Established case law in this State precludes claims of quantum meruit or unjust enrichment by a sub-sub contractor (Ground Control) against the owner (Harrah s) or general contractor (Yates). See Serv. Elec. Supply Co. v. Hazlehurst Lumber Co., 932 So. 2d 863, (Miss. Ct. App. 2006) ( At common law,

21 materialmen and laborers who have dealt only with the prime contractor are general creditors of the prime contractor and have no right to recovery from the project owner. ); Redd v. L&A Contracting Co., 151 So. 2d 205, 208 (Miss. 1963) ( we are of the opinion that it is also true that a sub-subcontractor cannot sue on quantum meruit against a primary contractor for work done under an express contract with another person. ). The facts of Redd v. L&A Contracting are very similar to the facts of this case. In Redd, a sub-subcontractor, as Ground Control is here, attempted to collect for work performed under its contract with the subcontractor. 151 So. 2d at 206. Upon the subcontractor s filing of bankruptcy, the sub-subcontractor turned to the general contractor for payment under a quantum meruit or implied contract theory. Id. The Mississippi Supreme Court held that since the subsubcontractor had an express contract with the subcontractor, and thus expected payment from the subcontractor, it had no viable claims against the general contractor. Id. Ground Control s concession, coupled with this case law, warrants reversal of the Trial Court s denial of Harrah s and Yates motions for summary judgment, directed verdict and JNOV on the quantum meruit claims. This Court will affirm the denial of the JNOV only where substantial evidence supports the verdict. Denbury Onshore, 98 So. 3d 449 at 452. Here, Ground Control admits that no evidence at trial would substantiate an award of quantum meruit damages, and in fact there was no such evidence to support the jury s verdict. This Court should reverse and render judgment in favor of Harrah s and Yates on this issue. II. GROUND CONTROL HAS NO REMAINING CLAIMS AGAINST HARRAH S OR YATES Ground Control s post-trial abandonment of its quantum meruit claims was conspicuously done for one reason to argue joint and several liability under its alternative theories of recovery to get into the deeper pockets of Harrah s and Yates. The jury, however, has already heard Ground Control s evidence and arguments with respect to its alternative claims

22 and theories yet as its verdict demonstrates rejected such claims and limited its damage award to quantum meruit. The following claims against Harrah s and Yates were tried: statutory claims under Miss. Code Ann and , quantum meruit recovery, estoppel and waiver, selfdealing by Yates in violation of , and third-party beneficiary of the Harrah s-yates contract. (Corrected Final Judgment, R. at ) (RE-10). Following Ground Control s case-in-chief, the Trial Court granted directed verdict in favor of Harrah s and Yates on the claims under Miss. Code Ann , , and , and well as the thirdparty beneficiary of contract claims. (Corrected Final Judgment, R. at ) (RE-10). Although its briefing is difficult to follow, on appeal Ground Control appears to argue that the jury s award should be reversed to include its claims against Harrah s and Yates pursuant to: (i) equitable theories of unjust enrichment, quasi-estoppel and equitable estoppel; (ii) statutory claims under Miss. Code Ann , , and ; (iii) change order work performed under its contract with Capsco; (iv) third-party beneficiary of contract; (v) an agency theory that Yates acted as agent for Harrah s; or (vi) self-dealing tort claims premised on its statutory claims. (Br. of Ground Control, pp ). Essentially, Ground Control throws everything but the kitchen sink into this appeal with the hopes something will stick. Each of these claims is without merit for the following reasons. A. Ground Control Was Not in Privity of Contract With Harrah s or Yates All of the work performed by Ground Control on the Project was performed under its express contract with Capsco and change orders under that contract. At no point did Ground Control contract with, or expect payment from, either Harrah s or Yates for the work performed on this contract. The Rule 30(b)(6) representative of Ground Control gave the following

23 unequivocal deposition testimony (that was submitted in support of Harrah s and Yates Motion for Summary Judgment) in this respect: Q. At the time you did the work and submitted invoices, who were you expecting to get paid from when you did the work? A. Capsco..... Q. Okay. These didn't create new contracts? A. Just change orders. Q. That's right. It was still operating under that same subcontract? A. That's correct. Q. And all your work performed on the project operated under that same scope of those same subcontracts? A. We were all under the same -- that's correct -- under the same contract. And any repairs or any change orders -- right. Q. Sure. It was all done pursuant to your subcontract? A. Pursuant to Q. Including the changes to that? A. That's correct. Including the change orders. That's right. Q. All right. Okay. What I'm getting at, is, you didn't have any separate contracts with Yates, did you? A. No. Q. You didn't have any contracts with Harrah's, did you? A. No. My only contract I had was with the contractor, Capsco. (Rule 30(b)(6) Depo. Tr. of Beaton, pp. 228:17-20, :13-12, R. at 538 and R. at ) (RE-7). This testimony was substantiated in full by the testimony of Ground Control s same representative at trial: Q. So your checks came from Capsco? A. Well, the few I got came from Capsco, yes. Q. And you never expected to get paid directly from Harrah's? A. No, I didn t. That's not the way it works. Q. You worked for Capsco and that's who you expected to pay you? A. That's where it was going to come from ultimately. (Tr. Trans., Vol. 8, pp ) (RE-6). Ground Control s deposition testimony should have precluded any potential claims against Harrah s or Yates from proceeding to trial under Mississippi law. Simply put, Ground Control has never put forth evidence that it provided work

24 for Harrah s or Yates with the expectation of receiving payment from Harrah s or Yates. Ground Control rather, at all times, expected to receive payment for its work (including the Change Order or extra-contractual work) from Capsco and Capsco alone. B. Ground Control Has No Equitable Claims Under Mississippi Law In light of the above testimony, the Trial Court erred in denying Harrah s and Yates summary judgment, directed verdict and JNOV on Ground Control s equitable claims for quantum meruit, unjust enrichment, quasi-estoppel and equitable estoppel. In Mississippi, a third party (Harrah s and Yates) cannot be liable for equitable claims premised on work performed by Ground Control under an express contract with another (Capsco), including any change order work. It is equally clear that sub-subcontractors such as Ground Control do not have equitable claims against a general contractor (Yates) or an owner (Harrah s) of a project. As explained by the Mississippi Supreme Court: 1. Where there is a contract, parties may not abandon same and resort to quantum meruit. See Sentinel Indus. Contr. Corp. v. Kimmins Indus. Serv. Corp., 743 So. 2d 954, 970 (Miss. 1999) (quoting Redd v. L&A Contracting Co., 246 Miss. 548, 555, 151 So. 2d 205, 208 (1963)). 2. [W]e are of the opinion that it is also true that a sub-subcontractor cannot sue on quantum meruit against a primary contractor for work done under an express contract with another person. Id. at 970. These fundamental precepts of contract law and equity have been the law in Mississippi for over a half-century. See Redd v. L & A Contracting Co., 151 So. 2d 205, 208 (Miss. 1963) (holding that a sub-subcontractor could not recover under a quantum meruit theory against the general contractor); Serv. Elec. Supply Co. v. Hazlehurst Lumber Co., 932 So. 2d 863, (Miss. Ct. App. 2006) ( At common law, materialmen and laborers who have dealt only with the prime contractor are general creditors of the prime contractor and have no right to recovery from the project owner. ) (citing Chancellor v. Melvin, 52 So.2d 360, 364 (Miss. 1951))

25 On the first appeal in this case, the Mississippi Supreme Court held that due to Ground Control s own failure to follow Mississippi law and obtain a contractor s license its contract with Capsco was null and void. Ground Control, LLC v. Capsco Indus., Inc., et al., 120 So. 3d 365, 371 (Miss. 2013). The Mississippi Supreme Court, however, did not expressly find that since the contract was void, that Ground Control could proceed to recover on equitable grounds against Harrah s or Yates. See id. (merely reversing summary judgment in favor of Harrah s and Yates on procedural notice grounds). Nothing in this Court s prior opinion abolishes or otherwise retreats from the long-standing law cited above holding that sub-subcontractors do not have equitable claims against owners and general contractors. In fact, the Court of Appeals recently reaffirmed that even a subcontractor (from which Ground Control is one step removed) cannot recover against an owner under quantum meruit when it had an express contract with the general contractor. See Cope v. Thrasher Const., Inc., 2016 Miss. App. Lexis 429, *7 (Miss. Ct. App. June 28, 2016) ( The error in this whole proceeding arises from the assumption that [the owners] might become liable and that [the owners] should pay the reasonable worth of services [to the subcontractor] notwithstanding such services were rendered under an express agreement with another person. ) (quoting Redd, 151 So. 2d at 208)). Had Ground Control followed Mississippi law and obtained a contractor s license, its claims against Yates and Harrah s would be subject to dismissal pursuant to this well-established law. Ground Control should not be able to use the fact that its contract was deemed null and void (due to its own negligence) to escape this consequence and be placed in a better position than it would have been if it had complied with the law. This is particularly so given Ground Control s clear motivation for its equitable theories of recovery is simply to get into the deeper

26 pockets of Harrah s and Yates. The Trial Court thus respectfully erred in denying Harrah s and Yates summary judgment on these claims. Indeed, if this Court were to deviate from precedent and permit equitable claims against third-parties, it would undoubtedly have a chilling effect on ensuring regulatory compliance. For example, as the law currently stands after this Court s initial opinion in this case, an unlicensed sub-subcontractor can proceed under an equitable theory of recovery against the party with whom its contract was declared void (i.e. Capsco). See Ground Control, 120 So. 3d at 367. This holding can be fairly interpreted as placing an affirmative duty on contracting parties to ensure that the party contracted to perform the work is properly licensed and registered in this State, or risk liability under an equitable theory of recovery. Should this Court extend this holding to allow potential equitable recovery by the subsubcontractor against third parties (i.e. project owners and general contractors), it would completely undermine the intended deterrent effect of the Court s initial decision. That is, subcontractors would not be inclined to ensure regulatory compliance because if their contract is declared void, it would allow the sub-subcontractor to simply go up the chain and pursue recovery on equitable grounds against the general contractor and owner. The subcontractor could thus potentially be relieved from any liability whatsoever by simply looking the other way as to whether its sub-subcontractor is actually licensed to perform the work. Yet it is the subcontractor, who is in direct privity with, and oversees the work of, its sub-subcontractors, who is in the best position to ensure compliance with the licensing requirements. In any event, the undisputed evidence presented before trial in Harrah s and Yates Motion for Summary Judgment and the evidence at trial as now admitted by Ground Control was insufficient to support an award of damages under quantum meruit, unjust enrichment, or

27 any other theory against Harrah s or Yates. In order to recover under an implied contract the Mississippi Supreme Court requires the following: As a general rule, in order to recover for work and labor on the theory of an implied contract, it is ordinarily deemed essential to show that the services were rendered under the reasonable expectation that they would be paid for by the person sought to be charged, and the person sought to be charged knew that the services were being performed with the expectation that he would pay for such work. Redd, 151 So. 2d at 209 (emphasis added). A federal court applying Mississippi law has summed up this requirement as follows: The plaintiff seeks to recover from Anderson the value of the work performed on the theory of unjust enrichment, also known as quantum meruit. To recover on such a theory, it is essential to show that the services were rendered under the reasonable expectation that they would be paid for by the person sought to be charged and that the person sought to be charged knew that the services were being performed with the expectation that he would pay for such work. Heber E. Costello v. Edwards & Son, 1998 U.S. Dist. Lexis 1301, *5 (N.D. Miss. Jan. 22, 1998) (citing Redd, 151 So. 2d at 209) (emphasis added). Ground Control failed to establish this requirement as the undisputed testimony of its representative, set forth above, clearly shows that at the time work it performed on the Project, Ground Control only expected to be paid by Capsco, and not Harrah s and Yates. (Rule 30(b)(6) Depo. Trans. of Beaton, pp. 228:17-20, :13-12, R. at 538 and R. at ) (RE-7); (Tr. Trans., Vol. 8, pp ) (RE-6). First and foremost, the Trial Court erred in allowing Ground Control s implied contract claims against Harrah s and Yates to proceed to trial and should have granted their Motion for Summary Judgment. Additionally at trial, the Trial Court also erred, respectively, in denying Harrah s and Yates motions for directed verdict and JNOV on Ground Control s equitable claims, including quantum meruit and unjust enrichment

28 C. Ground Control Has No Statutory Claims Ground Control s reliance on its statutory claims under Miss. Code Ann , , and as grounds for reversal of the verdict can be disposed of in short order. None of these statutes applies in favor of Ground Control as a sub-subcontractor who lacks privity of contract with Harrah s and Yates. The Trial Court correctly granted JNOV in favor of Harrah s and Yates on these claims. Ground Control argues that Harrah s and Yates violated by releasing retainage funds in 2009 to the subcontractor, Capsco, while those funds were subject to Ground Control s stop pay notice. (Br. of Ground Control, pp ). Section was the former stop payment notice statute and was repealed by Laws 2014, ch. 487, 24 (April 11, 2014). In fact, was declared facially unconstitutional by the Fifth Circuit well before this case proceeded to trial. See Noatex Corp. v. King Constr. of Houston, L.L.C., 732 F.3d 479, 487 (5th Cir. Miss. 2013). Common sense dictates that Ground Control cannot premise a claim upon an alleged violation of an unlawful statute. Moreover, , even if otherwise lawful, was limited to subcontractors and does not apply to the benefit of sub-subcontractors such as Ground Control. See Falkner v. Stubbs, 121 So. 3d 899, 903 (Miss. 2013) ( This stop-notice statute was designed to provide a remedy for subcontractors who are excluded from the protection of Mississippi s contractor s lien statute [ ]. ). Ground Control has absolutely no claim premised on Ground Control s lien claim under Mississippi s general contractor lien statute, , fails as a matter of law for the same reason. This statute requires a direct contractual relationship with the owner. Id.; see also Noble House, Inc. v. W & W Plumbing & Heating, Inc., 881 So. 2d 377, 386 (Miss. Ct. App. 2004) (holding that the remedy provided by To the extent Ground Control claims that it was a subcontractor because Yates was the construction manager or agent of Harrah s, that argument was rejected by the jury. See supra

29 does not extend to subcontractors ). As a sub-subcontractor, Ground Control lacks such privity with Harrah s and therefore has no viable claim premised on this statute. Ground Control appears to alternatively argue that release of the retainage funds violated This statute, however, does not provide a sub-subcontractor (or a subcontractor, for that matter) with a private right of action. The wording of the statute indicates that it actually gives priority to owners as well as subcontractors in regards to a general contractor s assignment of its contract or the proceeds thereunder: No contractor or master workman except as hereinafter provided, shall have the right to assign, transfer, or otherwise dispose of in any way, the contract or the proceeds thereof, to the detriment or prejudice of the subcontractors, journeymen, laborers, and materialmen as declared hereinbefore and all such assignments, transfers, or dispositions shall be subordinate to the said rights of the subcontractors, journeymen, laborers and materialmen, as well as the owner. Provided, however, that this section shall not apply to any contract or agreement where the contractor or the master workman shall enter into a solvent bond conditioned as provided for in the following section. Miss. Code Ann (emphasis added). Nothing in this statute gives a sub-subcontractor a private right of action. The statute is entirely inapplicable. Ground Control cites to zero legal authority interpreting to the contrary, and [f]ailure to cite relevant authority results in a waiver of the issue on appeal. Aaron v. Aaron, 147 So. 3d 370, 374 (Miss. Ct. App. 2014). The Trial Court correctly granted directed verdict in favor of Harrah s and Yates on the claims under , and (Corrected Final Judgment, R. at ) (RE-10). D. Neither Harrah s or Yates Contracted with Ground Control for Change Order Work After its contract with Capsco was deemed void, Ground Control began to claim that it had multiple ad hoc contracts (i.e. change orders) for particular scopes of work on this Project. Ground Control argued to the jury that Harrah s and Yates should be estopped from denying payment to Ground Control for work performed pursuant to twenty-six (26) change orders under