Davis v. McHanna & Associates

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 7, 2000
• Docket: 99-60607
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 99-60607 Summary Calendar Civil Action No. 97-CV-640

JARRED DAVIS

Plaintiff,

v.

MCHANNA & ASSOCIATES, INC.

Defendant-Third-Party Plaintiff-Appellant,

NEWTON REGIONAL HOSPITAL

Third-Party Defendant-Appellee.

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

July 5, 2000 Before JOLLY, JONES, and BENAVIDES, Circuit Judges.

PER CURIAM:*

McHanna & Associates, Inc. (“McHanna”) appeals from the

district court’s grant of summary judgment to the third-party

defendant, Newton Regional Hospital (“Newton”). McHanna impleaded

Newton on claims of negligent misrepresentation and breach of the

implied duty of good faith and fair dealing in a contract under

which McHanna assumed management of Newton’s cardiopulmonary

department. McHanna was first sued by a respiratory technician for

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

1 violation of the Fair Labor Standards Act, and McHanna asserted

that Newton never informed McHanna of an investigation by the U.S.

Department of Labor on compensation of respiratory technicians

during the parties’ contract negotiations. Like the trial court,

however, we see no genuine issue of material fact and therefore

affirm.

Although the district court did not expressly or

impliedly exhibit an intent to enter a partial final judgment under

Rule 54(b), we still have jurisdiction over this appeal. The fact

that the district court dismissed the case as to all parties after

McHanna filed its notice of appeal cures any jurisdictional defect.

See Fed. R. Civ. P. 54(b); Sandidge v. Salen Offshore Drilling Co.,

764 F.2d 252, 255 (5th Cir. 1985).

This court reviews the granting of summary judgment de

novo and applies the same criteria as the district court. See

Baker v. Putnal, 75 F.3d 190, 197 (5th Cir. 1996). Summary

judgment is appropriate when, viewing the evidence in the light

most favorable to the non-moving party, the record shows that there

is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. See Celotex Corp. v.

Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552-53 (1986); see

also Fed. R. Civ. P. 56(c).

In order to establish negligent misrepresentation under

Mississippi law, McHanna must show, inter alia, a misrepresentation

or omission of a material fact and reasonable reliance on that

misrepresentation. See Stonecipher v. Kornhaus, 623 So.2d 955, 964

2 (Miss. 1993). The record shows that McHanna did not learn about

the Labor Department’s investigation of Newton until after the

Management Contract was in place. McHanna contends that Newton’s

failure to disclose the federal investigation during the contract

negotiations is a “nondisclosure” amounting to a misrepresentation.

Under Mississippi law, silence gives rise to a claim of

nondisclosure if the silent party (1) has a legal duty to

communicate material facts to the other party, or (2) has knowledge

of a change in facts or circumstances previously represented. See

Guastella v. Wardell, 198 So.2d 227, 230 (Miss. 1967). Under the

terms of the contract, McHanna did not assume any of Newton’s past

liabilities, and McHanna was responsible for paying its employees

in accordance with all applicable regulations. Thus, the

investigation into Newton’s possible liability for Wage and Hour

violations was not material to the negotiations. In addition,

Newton did not make any representation about the Labor Department’s

investigation prior to entering the contract with McHanna.

Therefore, Newton’s nondisclosure of the investigation does not

constitute a misrepresentation.

Furthermore, the record shows that McHanna did not rely

on representations made by Newton to determine McHanna’s method of

compensation. Candy McCarver (“McCarver”), a co-owner of McHanna,

testified that she relied, at least in part, on her experience in

healthcare management to determine the payment method for McHanna’s

employees. McCarver also consulted with McHanna’s bookkeeper, a

representative from the Meridian Wage and Hour office, and a

3 certified public accountant to determine whether McHanna’s payment

methods were appropriate. After consulting these various

resources, McHanna implemented a payment method that was different

from the method used by Newton.1 For all these reasons, McHanna’s

negligent misrepresentation claim fails.

McHanna also cannot establish that Newton breached an

implied duty of good faith and fair dealing with respect to the

Management Contract. Under the terms of the contract, McHanna is

an independent contractor. The people hired by McHanna to work at

Newton Regional Hospital are employees of McHanna, not Newton. The

contract further provides that McHanna is responsible for complying

with all regulations promulgated by any federal or state regulatory

agency and that McHanna’s employees cannot bring a claim against

Newton for salary, wages, or any other employee fringe benefit.

Since the express terms of the contract do not impose any duty on

Newton with respect to the payment of McHanna’s employees, McHanna

cannot prove that Newton breached its implied duty of good faith

and fair dealing in its performance or enforcement of the contract.

See UHS-Qualicare v. Gulf Coast Community Hosp., 525 So.2d 746, 757

n.8 (Miss. 1987).2

1 Even if McHanna relied on an alleged representation by Newton concerning employee compensation, such reliance was unreasonable since every person has a duty to know the law and ignorance of the law is no excuse. See Quinn v. Mississippi State Univ., 720 So.2d 843, 850 (Miss. 1998). 2 On appeal, McHanna has failed to brief its original claim that Newton breached the express terms of the contract. This issue is, therefore, waived. See Yohey v. Collins, 985 F.2d 222, 229 (5th Cir. 1993)(issues not briefed on appeal are waived).

4 For these reasons, the district court’s grant of summary

judgment to Newton is affirmed.

AFFIRMED.