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            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT
                                                                          United States Court of Appeals
                                                                                   Fifth Circuit

                                     No. 13-60291                                FILED
                                                                             May 29, 2014
                                                                            Lyle W. Cayce
NANCY B. GARZIANO; RICHARD A. GARZIANO, SR.,                                     Clerk

                                                Plaintiffs–Appellants,
v.

LOUISIANA LOG HOME COMPANY, INCORPORATED,

                                                Defendant–Appellee.




                    Appeal from the United States District Court
                      for the Southern District of Mississippi
                              USDC No. 1:11-CV-393


Before REAVLEY, PRADO, and OWEN, Circuit Judges.
PER CURIAM:*
          The Garzianos entered into a sales contract with Louisiana Log Home
(LLH) for a log-cabin kit. After paying roughly 88 percent of the purchase price
the Garzianos informed LLH that they could not afford the final installment
plus higher than expected shipping costs. LLH refused to deliver the log cabin
and the Garzianos sued. The district court granted summary judgment in
favor of LLH on all of the Garzianos’ claims. After summary judgment was
ordered, LLH sold a substantial portion of the logs to a third party. The


     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.
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Garzianos filed a Federal Rule of Civil Procedure 59(e) motion alleging that
allowing LLH to keep the installment payments plus the proceeds from selling
the logs was unreasonable. The district court denied this motion. We affirm
the district court’s order granting summary judgment on all issues except for
the dismissal of the unjust enrichment claim. We conclude that the district
court’s summary judgment award on this claim, and its subsequent denial of
the Rule 59(e) motion, was in error, because the Garzianos successfully
demonstrated that permitting LLH to keep both the logs and the substantial
bulk of the purchase price paid by the Garzianos constituted an unreasonable
penalty under Mississippi law. Therefore we reverse this part of the district
court’s summary judgment ruling and render summary judgment on this issue
in favor of the Garzianos. We remand the case back to the district court to
conduct findings of fact on the extent of actual damages suffered by LLH.
                                       I
      Plaintiffs–Appellants Nancy and Richard Garziano signed a written
sales agreement with Defendant–Appellee LLH to purchase a log-home kit and
have it delivered to their property in Pass Christian, Mississippi. The sales
agreement provided for the Garzianos to pay off the log-home kit in three
installments. They agreed to make a down payment, a second payment within
thirty days of delivery, and a third and final payment at delivery.       After
executing the first sales agreement, the Garzianos signed a second agreement
for the purchase of additional logs to raise the ceiling height of the proposed
home. Both sales agreements contained identical terms. They both specified
that “[a]ll costs of transportation shall be borne by the purchaser,” and that
“[s]hipping charges are paid directly to the trucking company at the time of
delivery by cash or personal check.” Reading the two contracts together, LLH

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agreed to deliver the entire log-cabin package at an “F.O.B. Factory Price” of
$43,656.43. The sales agreements also stated that “all monies paid on this
contract are earnest monies and that no refund will be made if delivery is
refused or if this contract is terminated by the purchaser without the mutual
consent of the seller.”
      The Garzianos successfully made the first two installment payments on
the sales agreements, totaling $38,595. When the log-home package was in
transit LLH notified the Garzianos that it would soon be delivered and that
the Garzianos still owed $7,686.43. That amount included the third and final
installments on both sales agreements as well as an additional $2,625.60 for
transportation costs. The Garzianos informed LLH that they could not pay
this last installment because they thought they had paid off the balance for the
logs and that the shipping costs would be lower. LLH diverted the log kit to a
warehouse and demanded the remaining payment for the logs.
      The Garzianos filed this lawsuit against LLH in Mississippi state court
alleging a number of causes of action including breach of contract, unjust
enrichment, and various violations of the Mississippi Deceptive Trade
Practices Act. The Garzianos alleged that LLH had represented that the
second installment payment of $32,095 constituted the “full and final payment”
for the log-home package and thus they did not believe they owed the third
installment payment. The Garzianos also alleged that LLH had not informed
them that the logs would be shipped from a third-party manufacturer in
Tennessee rather than from LLH’s headquarters in Holden, Louisiana. They
alleged that this misrepresentation caused them to underestimate the
potential shipping costs so that they did not have sufficient funds to pay for
delivery when the logs were in route. LLH removed the case to the Southern

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District of Mississippi on the basis of diversity because the Garzianos had
alleged punitive damages far in excess of $75,000.        In its answer, LLH
counterclaimed for breach of contract and sought either specific performance
or contractual damages. LLH did not specify the amount of damages it was
claiming.
      LLH filed a joint motion to dismiss the complaint or in the alternative a
motion for summary judgment. The district court granted summary judgment
and dismissed each of the Garzianos’ claims. The district court found that the
Garzianos had breached the contract by failing to make the third installment
payment and therefore could not recover on their claims. The district court did
not evaluate the alternative argument of the Garzianos that contended that,
even if the district court found that they had breached the contract, allowing
LLH to keep both the amount paid as earnest money, about 88 percent of the
full purchase price, as well as the actual log-cabin kit, was an unconscionable
penalty. The Garzianos raised this argument multiple times in the district
court. In their complaint, they labeled it as an unjust enrichment argument.
In their response to LLH’s motion for summary judgment, under the heading
“Count Two-Unjust Enrichment,” they stated, “[t]he non-refundable deposit or
earnest money provisions of the Sales Agreement are unconscionable and,
therefore void” with a citation to Mississippi Code Annotated § 75-2-718, a
provision that prohibits unreasonable liquidated damages. In their reply brief
to the second motion for summary judgment they again raised the issue that
“[i]t is unconscionable that LLH[] claims both the log package and the whole
purchase price.” But the district court granted summary judgment without
ever reaching the merits of this claim.



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      Following the grant of summary judgment LLH moved for entry of final
judgment under Rule 54(b) and both parties moved for summary judgment on
LLH’s counterclaims. At some point after this briefing, the Garzianos became
aware that LLH had sold nine of the twelve logs intended for the Garzianos for
$24,644.88 to another buyer. The Garzianos filed a motion for sequestration
asking for this money to be deposited in the court’s registry. On the same day,
LLH filed a combined response and rebuttal to the outstanding motions
notifying the court of this development. In this response, LLH claimed an
outstanding $8,125.94 in damages which constituted lost profits due to the
Garzianos breach as well as $5,700 in marketing costs. Four months later LLH
corrected the record and notified the district court that far from suffering
losses, LLH was actually “$5000.00 ‘up’ on the total transaction.”        LLH
requested that the court dismiss its now meritless counterclaims against the
Garzianos.
      The Garzianos then filed a motion to alter or amend the judgment under
Rule 59(e). The motion reiterated their original breach of contract claims as
well as their unjust enrichment claim. In this briefing, the Garzianos repeated
the argument that “allow[ing] [LLH] to retain the overpayment by the
[Garzianos] plus the remaining materials results in an unjust enrichment of
[LLH] and an obvious injustice.” This proposition was supported with citations
to germane Mississippi case law dealing with unconscionable earnest money
penalties. The district court summarily denied this motion repeating the same
language used in the initial summary judgment: “The proceeds from the
subsequent partial sale of the log home kit would have become relevant if it
were necessary to address mitigation of damages.          Because they were



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unsuccessful on their claims, Plaintiffs were not entitled to damages.” The
Garzianos appealed.
                                                 II
         We review a district court’s grant of summary judgment de novo,
applying the same legal standards as the district court. 1 Summary judgment
is appropriate if “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” 2
         We review the denial of a Rule 59(e) motion to alter or amend a judgment
for the abuse of discretion. 3 “A district court abuses its discretion if it bases its
decision on an erroneous view of the law or on a clearly erroneous assessment
of the evidence.” 4 Purely legal questions, however, are still reviewed de novo. 5
         As a federal court sitting in diversity we apply the substantive law of the
forum state. 6 The forum state in the present case is Mississippi. “If a state’s
high court has not spoken on a state-law issue, we defer to intermediate state
appellate court decisions, unless convinced by other persuasive data that the
higher court of the state would decide otherwise.” 7 We review a federal district
court’s determination of state law de novo. 8




   1   Lindquist v. City of Pasadena, Tex., 669 F.3d 225, 232 (5th Cir. 2012).
   2 FED. R. CIV. P. 56(a); see also Travelers Lloyds Ins. Co. v. Pac. Emp’rs Ins. Co., 602 F.3d
677, 681 (5th Cir. 2010).
   3   Johnston & Johnston v. Conseco Life Ins. Co., 732 F.3d 555, 562 (5th Cir. 2013).
   4   Id.
   5   Id. (citing Tyler v. Union Oil Co. of Cal., 304 F.3d 379, 405 (5th Cir. 2002)).
   6   Learmonth v. Sears, Roebuck & Co., 710 F.3d 249, 258 (5th Cir. 2013).
   7   Id. (internal quotation marks omitted).
   8   Johnston & Johnston, 732 F.3d at 562.
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                                              III
         The Garzianos appeal the district court’s grant of summary judgment on
their breach of contract and misrepresentation claims, as well as their claim
that LLH breached the duty of good faith and fair dealing. The Garzianos first
allege that LLH violated § 75-2-503(1) of the Mississippi Code which imposes
a duty to “hold conforming goods at the buyer’s disposition and give the buyer
any notification reasonably necessary” to enable the buyer to take delivery.
Section 75-2-503(1) also states that the “manner, time and place for tender are
determined by the agreement and this chapter . . . .” 9 The Garzianos contend
that LLH violated this statute and thereby breached the contract by failing to
notify them of the amount of shipping charges until only two days before
delivery which constructively prohibited them from accepting delivery. The
Garzianos allege that they were only informed that the shipping costs would
be $2,625 on July 17, two days before delivery despite the fact that LLH was
aware of this price months earlier. The argument seems to be that LLH’s
failure to inform the Garzianos of the price of delivery in a timely manner
excused the Garzianos’ later breach of the contract by refusing delivery.
         This argument fails. As this is a breach of contract case any analysis
must begin with the contracts themselves. Under Mississippi law, a contract
should be read in its entirety so as to “give effect to all of its clauses.” 10 “Our
concern is not nearly so much with what the parties may have intended, but




   9   MISS. CODE ANN. § 75-2-503(1).
   10   Brown v. Hartford Ins. Co., 606 So. 2d 122, 126 (Miss. 1992).
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with what they said, since the words employed are by far the best resource for
ascertaining the intent and assigning meaning with fairness and accuracy.” 11
          The contracts in this case were simple and easily understood. They
provided that “[a]ll costs of transportation shall be borne by the purchaser,”
that “[s]hipping charges are paid directly to the trucking company at the time
of delivery by cash or personal check,” and specified an “F.O.B. Factory Price.”
These contracts also made clear that the final price that would be paid, absent
shipping costs, was $43,656.43. Thus the explicit terms of the contract put the
Garzianos on notice that they had both not paid off the balance on the log-home
kit and that they were responsible for any shipping costs.
         The Garzianos only cite one case, Ward v. Merchants & Farmers Bank, 12
for the proposition that this lack of notice excused their performance under the
contract. In Ward, the Mississippi Supreme Court held that the plaintiffs had
sufficiently alleged a violation of § 75-2-503 to survive a motion to dismiss. 13
The plaintiffs, purchasers of personal property from the conservator of an
estate, had alleged two violations of the statute. First, they alleged that the
conservator had refused the plaintiffs access “to a substantial amount of the
personal property they had purchased.” 14 Second, they alleged that they had
not been given notice that the time window to retrieve the property would
expire seven months after they purchased it due to a clause in the deed to the
real property on which the personal property was located. 15


   11   Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857 So. 2d 748, 752 (Miss. 2003).
   12   394 So. 2d 1374 (Miss. 1981).
   13   Ward, 394 So. 2d at 1375.
   14   Id.
   15   Id. at 1376.
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      The facts of this case are noticeably different. First, LLH never refused
or restricted the access of the Garzianos to the log cabin. Just the opposite.
LLH was attempting to deliver the goods when the Garzianos breached by
refusing to pay either the balance on the contract or the shipping charges—
both of which they were obligated to pay under the contract. Second, there was
no undisclosed, expiring window of time during which the Garzianos were
required to claim the log cabin. According to the Garzianos’ own affidavit, they
were given reasonable notice of the date of delivery. The affidavit states that
LLH had contacted the Garzianos repeatedly in the month of July 2011
“insisting on a delivery date for the log cabin package.”       The Garzianos
successfully delayed the delivery date until July 17, 2011 when LLH advised
the Garzianos that the package would be delivered on July 19, 2011. It was at
this point that LLH informed the Garzianos that they still needed to make the
third installment payment and pay $2,625 for the delivery fee. While the
Garzianos may have been surprised at the size of the delivery fee, the notice
provided to the Garzianos was not so deficient as to prevent them from
effectively taking delivery so that their refusal to pay would be excused. The
only obstacle to taking delivery was the Garzianos’ refusal to pay for the goods
and the shipping costs. As the district court correctly held, LLH’s “‘method of
tender’ was in compliance with the terms of the contracts.”
      The Garzianos’ misrepresentation claim also fails. The Garzianos allege
that LLH misrepresented the source and geographic origin of the log cabin in
violation of the Mississippi Deceptive Trade Practices Act (DTPA), Mississippi
Code Annotated § 75-24-5. They contend that LLH and its representatives
misrepresented that the logs would be manufactured by LLH in Holden,
Louisiana when in reality they were purchased from a third-party

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manufacturer located in Tennessee. To support this argument they rely on
three pieces of evidence. First, Glen Hood, a sales representative of LLH,
allegedly told the Garzianos that “due to an ongoing drought his loggers had
an enhanced opportunity to harvest cypress logs in an area that would
normally be inundated by water.” Second, they point to the business card for
LLH which identifies its “[m]anufacturing” contact as being James A. Hood
from Holden, Louisiana. Third, they point to language on LLH’s website that
states that, “Louisiana Log Home Company is a manufacture [sic] of logs for
commercial and residential use” and which advertises that they use a superior
manufacturing method patented by LLH to prepare the logs. The district court
found that this evidence was insufficient to create a genuine issue of material
fact regarding a misrepresentation of geographic origin because none of these
sources mentioned or stated that the logs ordered by the Garzianos would be
manufactured by LLH or that they would be manufactured in Louisiana rather
than Tennessee. We agree.
         Section 75-24-5 prohibits the “(b) [m]isrepresentation of the source . . . of
goods . . .” and “(d) [m]isrepresentation of designations of geographic origin in
connection with goods . . . .” 16         The Garzianos have failed to proffer any
evidence of statements that were materially misleading. None of the tendered
evidence states that the logs would actually be manufactured by LLH. Nor
does any of the evidence represent that the logs would be manufactured in
Louisiana as opposed to Tennessee. The only evidence that could arguably
support the Garzianos’ belief that the logs would be manufactured in Louisiana
is the fact that LLH was headquartered in Louisiana and that James Hood’s



   16   MISS. CODE ANN. § 75-24-5(2).
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office in Louisiana was listed as the contact for “[m]anufacturing” inquiries.
Neither of these are misrepresentations. Further, the Garzianos have not
presented any evidence that they would have fulfilled the contract had the
shipping costs been lower. At the time of the breach, the Garzianos refused to
pay not only the shipping costs but also the third installment. The district
court did not err in granting summary judgment on this claim.
         Finally, the Garzianos allege that LLH breached its duty of good faith in
the performance of the contract, violating § 75-1-304 of the Mississippi Code.
This claim is based on the same alleged misrepresentations discussed above.
For the same reasons that these facts do not establish a violation of the DTPA,
we do not find that they are sufficient to show “bad faith” which “violates
standards of decency, fairness or reasonableness.” 17
                                              IV
         The Garzianos do not appeal the grant of summary judgment on their
unjust enrichment claim. Rather, they appeal the district court’s denial of
their Rule 59(e) motion that re-alleged the unjust enrichment/earnest money
claim. We hold that the district court abused its discretion in denying this
motion to alter or amend the judgment.
         The issue is whether LLH may have its cake and eat it too. Under the
district court’s judgment, LLH is allowed to keep both the logs and the
substantial payment made toward the logs by the Garzianos. The Garzianos
allege that having to forfeit their first two installment payments as earnest
money is unjust enrichment or an unenforceable penalty under these
circumstances. Prior to the lawsuit the Garzianos had paid $38,595 of the



   17   Cenac v. Murry, 609 So. 2d 1257, 1272 (Miss. 1992).
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$46,282.03 (including shipping costs) owed on the log cabin. After the district
court’s ruling on summary judgment, LLH disclosed to the court that they had
also sold nine of the twelve logs destined for the Garzianos for a sum of
$24,644.88.       In short, LLH recouped substantially more money from the
Garzianos’ breach than they would have received from the Garzianos’
performance under the contract.
         “A motion to alter or amend judgment must clearly establish either a
manifest error of law . . . or must present newly discovered evidence. . . . [T]hey
cannot be used to argue a case under a new legal theory.” 18 LLH’s main
argument on this issue is not that the Garzianos are incorrect on the merits,
but that “the merits are immaterial as the Motion should be denied for failure
to comply with the prerequisites of Rule 59(e) in addition to the fact that the
issue of damages was not relevant to any matter before the Court.” To support
their argument LLH states that a “motion to alter or amend the judgment . . .
‘cannot be used to raise arguments which could, and should, have been made
before the judgment issued.’” 19
         But the Garzianos made this argument prior to the Rule 59(e) motion.
The Garzianos raised the issue of the reasonableness of treating their
installment payments as earnest money a number of times at the district court
level. In their complaint, they labeled it as an unjust enrichment argument.
In their response to LLH’s motion for summary judgment, under the heading
“Count Two-Unjust Enrichment,” they stated, “[t]he non-refundable deposit or
earnest money provisions of the Sales Agreement are unconscionable and,



   18   Ross v. Marshall, 426 F.3d 745, 763 (5th Cir. 2005) (internal quotation marks omitted).
   19   See Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990).
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therefore void” citing Mississippi Code Annotated § 75-2-718, a provision that
bars unreasonable liquidated damages. They also cited Maxey v. Glindmeyer, 20
a Mississippi case, which held that it was “inequitable” to award a seller both
“the entire down payment,” which constituted half the purchase price, and
allow them to keep the goods (in that case a house), after the buyer breached
the contract. 21 Instead, the court held that recovery should be limited to actual
damages. 22 In rebuttal, LLH engaged this argument, contending that the
earnest money forfeiture was not unconscionable. Next, before the court ruled
on summary judgment, LLH filed a second, supplemental summary judgment
motion. In this motion, LLH again put forward the argument that the amount
of earnest money was reasonable because it had “largely served” its intended
purpose. The Garzianos filed a response that again raised the issue that LLH
had “failed to produce any proof that its position is commercially reasonable
that the Garziano[s’] payments were ‘earnest money.’” The Garzianos then are
not seeking to shoehorn a new legal theory via Rule 59(e)—rather they are re-
alleging a legal theory raised in the district court.

         Now, it is true that by labeling the claim “unjust enrichment” the
Garzianos appear to have confused the district court.                   The district court
granted summary judgment on the “unjust enrichment” claim on the ground
that such claims cannot be brought in a contract case. 23 But the Garzianos
were not alleging a traditional unjust enrichment claim. They were alleging



   20   379 So. 2d 297 (Miss. 1980).
   21   Maxey, 379 So. 2d at 298, 300-01.
   22   Id. at 301.
   23   See Johnston v. Palmer, 963 So. 2d 586, 596 (Miss. Ct. App. 2007).
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that the earnest money provision of the contract was an unenforceable penalty.
The fact that the Garzianos may have mislabeled this argument is not
dispositive. “Courts must focus on the substance of the relief sought and the
allegations pleaded, not on the label used.” 24 Further, it is not at all clear
labeling the claim as one for “unjust enrichment” was even incorrect. The
Mississippi Supreme Court has previously framed the inequity of permitting a
nonbreaching party to collect on the contract and keep the goods as “unjust
enrichment.” 25
         Thus, this claim was raised before the district court. This is the proper
use of a Rule 59(e) motion if it is based on either of the following: an alleged
legal error by the district court or the discovery of new evidence. 26 Here, both
are present. First, the district court committed a legal error because it never
addressed the merits of their claim.                Instead, the district court granted
summary judgment by summarily stating that an unjust enrichment claim
cannot be based on contract. The court said that, “to bring a successful unjust
enrichment claim in Mississippi, the ‘claimant must show there is no legal
contract but the person sought to be charged is in possession of money or
property which in good conscience and justice he should not retain, but should
deliver to another.’” 27 The court did not address either the substance of the



   24 Gearlds v. Entergy Servs., Inc., 709 F.3d 448, 452 (5th Cir. 2013) (citing Edwards v.
City of Hous., 78 F.3d 983, 995 (5th Cir. 1996) (en banc)).
   25 See G.B. “Boots” Smith Corp. v. Cobb, 860 So. 2d 774, 779 (Miss. 2003) (“Use of this
calculation, however, would result in unjust enrichment because [the nonbreaching party]
would receive lost profits and still be in possession of the [goods], which they could sell to
another purchaser.”).
   26   Ross v. Marshall, 426 F.3d 745, 763 (5th Cir. 2005).
   27   See Johnston, 963 So. 2d at 596 (alterations and internal quotation marks omitted).
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Garzianos’ argument which was primarily about the punitive nature of the
earnest money/liquidated damages provision of the sales agreement, nor did it
address the Mississippi case law cited by the Garzianos that linked liquidated
damages to unjust enrichment. The failure to address a key legal argument is
an appropriate basis for a Rule 59(e) motion. 28                   Second, the motion for
summary judgment was granted before LLH notified the district court that it
had sold a substantial portion of the remaining logs—new evidence that
justified reevaluating the Garzianos’ claim. Thus, the Rule 59(e) motion was
procedurally proper.
         Not only was the Rule 59(e) motion procedurally proper, but it should
have been granted. Under Mississippi law, the “earnest money” provision in
this contract was an unconscionable penalty.                       The Supreme Court of
Mississippi has held that it is inequitable for a seller to retain both part of the
product that was the subject of the sales contract as well as the entire sales
price. 29 In G.B. “Boots” Smith Corp. v. Cobb, 30 the defendant, “Boots,” entered
into a contract with a landowner, Cobb, to buy all the “fill dirt” Boots needed
to carry out a specific contract with the Mississippi highway department. 31
The price was set at 40 cents per cubic yard. 32 After purchasing roughly


   28 See, e.g., Smith v. Alumax Extrusions, Inc., 868 F.2d 1469, 1472 (5th Cir. 1989)
(remanding a case on the basis of a Rule 59(e) motion for the purpose of allowing the district
court to rule on contentions it had previously failed to address); see also United States v.
Carmouche, 70 F.3d 1269, 1995 WL 696814, at *6 (5th Cir. 1995) (unpublished) (“Because it
is unclear from the district court’s Order . . . which course of action the court pursued, we . . .
remand[] so that the court can make specific findings of fact and conclusions of law . . . .”).
   29   G.B. “Boots” Smith Corp., 860 So. 2d at 779.
   30   860 So. 2d 774 (Miss. 2003).
   31   G.B. “Boots” Smith Corp., 860 So. 2d at 776.
   32   Id.
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440,000 of the 550,000 cubic yards that were needed from Cobb, Boots started
purchasing fill dirt from a third party. 33 Cobb sued and the trial court awarded
damages by multiplying the contract price by the amount of dirt that was not
purchased from Cobb. 34 The Mississippi Supreme Court reversed on the basis
that this formula was erroneous, because it inequitably allowed Cobb to keep
the remaining 110,000 cubic yards of dirt and get the full value of the
contract. 35 “Use of this calculation . . . would result in unjust enrichment
because the Cobbs would receive lost profits and still be in possession of the fill
dirt, which they could sell to another purchaser.” 36 Instead, the appropriate
measure of damages could be calculated pursuant to Mississippi Code
Annotated § 75-2-708: either as the difference between the agreed price and
the market value of the remaining goods or as the “profit (including reasonable
overhead) which the seller would have made from full performance by the
buyer, together with any incidental damages.” 37               Under this measure of
damages the district court in this case—like the district court in Boots—
improperly allowed the non-breaching party to be unjustly enriched at the
expense of the breaching party.
         Boots is distinguishable because in the present case there was an earnest
money provision. The Sales Agreements state that, “[i]t is agreed that all
monies paid on this contract are earnest monies and that no refund will be
made if delivery is refused or if this contract is terminated . . . .” An earnest


   33   Id.
   34   Id.
   35   Id. at 779.
   36   Id.
   37   Id. at 778-79 (quoting MISS. CODE ANN. § 75-2-708).
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                                        No. 13-60291


money provision is the equivalent of a liquidated damages provision. 38 But
earnest money provisions are still subject to a review for reasonableness under
Mississippi law 39—a review that the district court did not undertake. The
district court did not address the merits of this argument despite it being
raised repeatedly below.
         Under Mississippi law, a liquidated damages provision will generally be
enforceable unless “the actual damage resulting from the breach may be
readily ascertained.” 40 Here the actual damages are readily ascertainable—it
is the contract price minus the amount paid minus the market value of the
remaining goods plus any incidental expenses. Not only are the damages
readily ascertainable, but the size of the earnest money provision likely makes
it too punitive to be enforceable. It is not self-evident precisely where
Mississippi draws the line for how large an earnest money provision must be
to be declared unreasonable, but it is clear that a forfeiture of 88 percent of the
purchase price falls on the unreasonable side of that line.
         While a provision that results in a forfeiture of 10 percent of the contract
price is considered reasonable, 41 damages provisions that require the forfeiture
of one-half or more of the purchase price are generally unenforceable under
Mississippi law. “[W]here the liquidated damages are unreasonable, such as
earnest money being fifty-percent of the purchase price, a party must then seek


   38 Gunn v. Heggins, 964 So. 2d 586, 594 (Miss. Ct. App. 2007) (“Earnest money is
considered liquidated damages . . . .”).
   39 MISS. CODE ANN. § 75-2-718(1) (“A term fixing unreasonably large liquidated damages
is void as a penalty.”).
   40Hovas Constr., Inc. v. Bd. of Trs. of W. Line Consol. Sch. Dist., 111 So. 3d 663, 667 (Miss.
Ct. App. 2012).
   41   Culbreath Revocable Trust v. Sanders, 979 So. 2d 704, 712 (Miss. Ct. App. 2007).
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to recover actual damages by demonstrating such damages were actually
incurred.” 42 For instance, in Maxey, the Supreme Court of Mississippi found
that a liquidated damages provision that caused a forfeiture of fifty percent of
the purchase price of a residence ($75,000 of a purchase price of $150,000) was
unreasonable. 43 “Damages for breach . . . may be liquidated . . . but only at an
amount which is reasonable in the light of the . . . actual harm caused by the
breach.” 44
         In another case, a Mississippi Court of Appeals held that a liquidated
damages provision requiring the forfeiture of a $30,000 equity payment (plus
a small security deposit) as part of a 48-month lease-purchase agreement for a
piece of property was void as a penalty. 45 It was void because the lessor—like
LLH here—was actually better off after the breach (with the forfeiture) than
she would have been absent the breach. 46 In fact, the lessor had realized a
$32,873.67 profit over what she would have received had the contract not been
breached after she turned around and sold the property to a third party. 47 “In
light of this, the forfeiture of $31,750 [was] an unreasonable penalty.” 48
         The above cases seem to be on all fours with the present case. On their
own admission, LLH is at least $5,000 ahead on the entire transaction, not to
mention the three logs that evidently remain unsold. By allowing LLH to keep



   42   Id.
   43   Maxey v. Glindmeyer, 379 So. 2d 297, 298, 301 (Miss. 1980).
   44   Id. at 301 (quoting MISS. CODE ANN. § 75-2-718(1)).
   45   Thomas v. Scarborough, 977 So. 2d 393, 395, 398-400 (Miss. Ct. App. 2007).
   46   Id. at 399-400.
   47   Id.
   48   Id. at 400 (citing Maxey, 379 So. 2d at 301).
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                                 No. 13-60291


the logs and the earnest money payment the district court essentially granted
LLH an impermissible double recovery—making the earnest money provision
an unenforceable penalty. The district court’s rationale for rejecting the Rule
59(e) motion does not stand up to scrutiny. The district court rejected the Rule
59(e) motion by simply stating that “[t]he proceeds from the subsequent . . .
sale of the log home kit would have [only] become relevant if it were necessary
to address mitigation of damages.” This is circular. Damages were only not
an issue at that stage of the litigation because the district court had erred in
the first place by failing to address the Garzianos’ contention that the earnest
money provision was an unconscionable penalty. As we hold that the earnest
money clause was a penalty, then the issue of damages is squarely before the
court. Therefore, the district court abused its discretion in denying the
Garzianos’ Rule 59(e) motion. The record does not make clear the actual
amount of damages suffered by LLH. We remand this case with instructions
for the district court to make findings on the amount of actual damages that
LLH suffered and to amend the judgment to remit to the Garzianos any monies
paid to LLH under the contract that were in excess of LLH’s actual damages.
                                *      *     *
      The district court’s grant of summary judgment is AFFIRMED in part.
The district court’s grant of summary judgment on the unjust enrichment
claim, as well as its denial of the Rule 59(e) motion, is REVERSED. The case
is REMANDED to the district court for proceedings consistent with this
opinion.




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                                 No. 13-60291
THOMAS M. REAVLEY, Circuit Judge, dissenting:

      The court holds as a matter of law that the no-refund provision of the
contract is an invalid penalty, without consideration by the district court and
although unlikely prospects for resale of measured logs could justify that
provision. Only a claim of unjust enrichment was before that court, submerged
under the buyer’s breach of contract claim. And this court orders the district
court to award the seller his “damages” without saying anything about his
profit for the performance of the contract the buyer breached. Then the court
has issued a judgment saying the summary judgment for the seller is affirmed
at the same time it says the seller loses the benefit of the contract. The issues
now framed and resolved have not been developed and considered in the
district court. Our judgment should be to vacate the judgment being appealed
and to remand the case for that purpose.




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