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

                                                  FILED
                                                                                     March 6, 2009

                                            No. 08-60309                        Charles R. Fulbruge III
                                                                                        Clerk

GORDON REIGSTAD; KAREN REIGSTAD

                                                         Plaintiffs - Appellees
v.

DAVID PILGER; Individually and as President of Delta Title and
Escrow Company; DELTA TITLE AND ESCROW COMPANY

                                                         Defendants - Appellants




                      Appeal from the United States District Court
                        for the Southern District of Mississippi
                                USDC No. 1:06-CV-859


Before KING, STEWART, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
        Appellants David Pilger and Delta Title and Escrow Company (collectively
“Pilger”) appeal from a judgment in favor of Gordon and Karen Reigstad
(“Reigstads”) arising out of claims for legal malpractice and negligent
misrepresentation. The Reigstads alleged that they retained Pilger to handle all
aspects of the closing of the purchase of real estate in Ocean Springs,
Mississippi, and Pilger negligently failed to secure property insurance coverage
on the property, causing the Reigstads to have no insurance to cover the damage

        *
          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 R. 47.5, the court has determined that this opinion should not be published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.
to their property from Hurricane Katrina.                      Pilger also represented to the
Reigstads at the closing that the property was insured, when in fact it was not.
This diversity case was tried without a jury, and the court 1 entered findings of
fact and conclusions of law. For the reasons discussed herein, we affirm.
I.      Background
        Delta Title and Escrow Company was owned by David Pilger, a lawyer.
The Reigstads retained Pilger to represent them on the closing of a property in
Ocean Springs, Mississippi. By letter dated August 15, 2005, Pilger wrote to the
Reigstads: “Please call us with the name of your Homeowner’s Insurance Agent.
We must have proof of coverage prior to closing. We will collect and pay any
necessary premiums at closing.” Gordon Reigstad contacted his carrier, USAA,
who informed Mr. Reigstad that it did not provide windstorm coverage. USAA
referred Mr. Reigstad to The Insurance Barn. Mr. Reigstad contacted The
Insurance Barn and spoke with its agent, Kim Rushing. Although Ms. Rushing
could not specifically recall what she told Mr. Reigstad, the trial court made a
factual finding that Ms. Rushing informed Mr. Reigstad during the call “that his
premiums would be collected at closing.”
        Ms. Rushing later faxed an instruction sheet directly to Pilger.                            The
instruction sheet stated that “[n]o coverage for windstorm can be put into effect
until the signed application and check for the premium is received in our office.”
At trial, Pilger acknowledged receipt of the instruction sheet and admitted that
he did not inform the Reigstads or their real estate agent of the instructions.
        The closing took place on August 24, 2005. The Registads; Nancy Dorroh,
the Reigstads’ realtor; David Pilger; and Charlotte Farisse, the seller’s agent,


        1
          The parties consented to a trial before the United States Magistrate Judge pursuant to 28 U.S.C.
§ 636(c) and Federal Rule of Civil Procedure 78. The direct appeal to this court is proper pursuant to 28
U.S.C. § 636(c)(3).

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attended the closing. The Reigstads were to deliver to Pilger the purchase price
for the property 2 and a sum representing one year’s hazard insurance premium
set by The Insurance Barn.               Pilger specifically assured the Reigstads that
insurance coverage was in place on the home at the closing. Pilger did not
dispute that he made the statement to the Reigstads, but he testified that he
could not remember specific statements. The Reigstads testified that they would
not have gone forward with the closing unless insurance coverage was in place.
      On the afternoon of August 24, 2005, Hurricane Katrina was in the news.
Pilger knew that a storm was pending, but he could not recall any details at the
time of the trial. On August 25, 2005, the day after the closing, Pilger sent the
Reigstads’ unsigned application for coverage and check to The Insurance Barn,
which received the documents on August 26, 2005. Upon receipt of the package,
The Insurance Barn called Pilger, informed him that the application was
unsigned, called Mr. Reigstad, and faxed Mr. Reigstad an application which he
signed and returned the same day. By the time The Insurance Barn received the
signed policy, it could not bind coverage because Hurricane Katrina had entered
the Gulf of Mexico earlier that day.
      Hurricane Katrina struck the Mississippi Gulf Coast on August 29, 2005.
The Reigstads’ new house was severely damaged by Hurricane Katrina. At the
trial, Mr. Reigstad, a civil structural engineer, testified that the house was built
on stilts. The base elevation was about fifteen (15) feet, and the water level
inside the first level of the house was about four (4) feet.                 Therefore,
approximately nineteen (19) feet of water was in the Reigstads’ yard. The
parties stipulated that the Reigstads sustained damages in the amount of
$327,000.00. Mr. Reigstad testified that, based on what he saw when he went


      2
          Reigstad paid $327,000 for the house, and it was a cash sale.

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to the house and how the windows blew out, he estimated that 95% of the
damage “was done long before the water got there.”
        In their application of windstorm and hail coverage, the Reigstads sought
coverage for the house in the amount of $220,000 and coverage for contents in
the amount of $25,000. There was a 2% deductible for the coverage.3 The trial
court rejected the Reigstads’ request for the value of the home, stating that
“Plaintiffs should not be awarded the value of the home because if insurance had
been procured, Plaintiffs would only be entitled to a maximum of $220,000, the
policy limits.”
        The Reigstads had two written estimates for damages: one estimate for
$363,473.08 was based on repairs made to the house, but the estimate does not
specify whether wind or water caused the damage; another estimate for
$117,391 was based on damages caused specifically by wind damage. In making
the damages calculation, the trial court stated as follows:
        The Court finds that the Baird estimate (P-14) is the best evidence
        of wind and/or wind driven rain damage to the home. Baird’s
        estimate of $117,391.37 should be enhanced by the replacement of
        the HVAC of $5176 (P-15) to $122,567.37. However, it is clear when
        the Court compares the estimate (P-14) and the actual receipts (P-
        15) which Plaintiffs expended, that this estimate (P-14) was not
        wholly realistic.

The court then stated that the “wind and wind driven water damage to the home
prior to any flood damage” was $163,500, half of the stipulated amount of
damages of $327,000. The court awarded this amount minus the deductible that
would have been due under the policy, $4,400, resulting in an award in the
Reigstads’ favor in the amount of $159,100.


        3
          The application does not specify the percentage of the deductible. Neither Pilger nor the Reigstads
dispute the amount of the deductible.

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      The court added the following:
              The Court notes that there was no expert testimony presented
      with regard to the wind versus flood issue. Further, the Court does
      not have before it the terms of an insurance policy which would have
      been in place if insurance had been procured. Finally there is very
      little explicit documentation with regard to the correlations between
      Baird’s wind damage estimate found in (P-14) and the actual
      receipts of the Plaintiffs’ (P-15) for repair of the entire dwelling.
      The Court has attempted to correlate these damages to the best of
      its ability.

Pilger appealed.
II.   Discussion
      Pilger does not contest negligence on appeal. Pilger argues, however, that
in order to recover damages from Pilger, the Reigstads had to prove that had
Pilger not been negligent, they would have had insurance coverage for the
specific damages to their property.      To do that, Pilger contends that the
Reigstads had to produce some evidence of the terms and conditions of the
insurance policy that would have been issued to them had Pilger not been
negligent. Pilger argues that the only evidence presented at trial of the coverage
was the application for insurance, and it was insufficient to carry their burden
of proof. Alternatively, Pilger contends that the award amount is excessive
because the only reliable estimate of wind damage was $117,391.37, and after
subtracting the deductible, the judgment should be reduced to $112,991.37.
      The Reigstads argue that they were seeking the full amount of damages
to the house because had they known the accurate status of the insurance
coverage on the day of closing, they would have rescheduled the closing and
suffered no loss in Hurricane Katrina, as they would not have been the owners
of the house. Even though the trial court did not award the Reigstads the full
amount of damages, they argue that sufficient evidence supports the damages


                                        5
award. The Reigstads emphasize that their claims were based on tort theories,
not contract law, and Pilger’s reliance on insurance contract construction cases
is misplaced.
      A.    Standard of Review
      Mississippi substantive law applies in this diversity suit. See Specialty
Rental Tools & Supply, LP v. Shoemaker, 553 F.3d 415, 419 (5th Cir. 2008). We
review finding of fact for clear error and conclusions of law de novo. City of New
Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501, 506 (5th Cir. 2004); F ED. R.
C IV. P. 52(a)(6) (“Findings of fact, whether based on oral or other evidence, must
not be set aside unless clearly erroneous, and the reviewing court must give due
regard to the trial court’s opportunity to judge the witnesses’ credibility.”).
Under the clear error standard, “if the [trial] court’s account of the evidence is
plausible in light of the record viewed in its entirety, the court of appeals may
not reverse it even though convinced that had it been sitting as the trier of fact,
it would have weighed the evidence differently.” Anderson ex rel. Anderson v.
Canton Mun. Separate Sch. Dist., 232 F.3d 450, 453 (5th Cir. 2000) (citation
omitted). Even where there are different views of the evidence, “the factfinder’s
choice between them cannot be clearly erroneous.” Id. (citation omitted).
      B.    Analysis
      To recover for legal malpractice under Mississippi law, “a plaintiff must
prove by a preponderance of the evidence the existence of a lawyer-client
relationship, negligence on the part of the lawyer in handling his client’s affairs
entrusted to him, and some injury proximately caused by the lawyer’s
negligence.” Baker Donelson Bearman & Caldwell, P.C. v. Muirhead, 920 So. 2d
440 (Miss. 2006). The Mississippi cases discussing legal malpractice require that
the plaintiffs “show that but for their attorney’s negligence, they would have
been successful in the prosecution or defense of the underlying action.” Pierce

                                         6
v. Cook, 992 So. 2d 612, 612 (Miss. 2008) (citations omitted). Based on the facts
of this case, the trial court made a legal conclusion that “Pilger committed legal
malpractice.”
      To establish a claim for negligent misrepresentation, a plaintiff must show
(1) a misrepresentation or omission of fact, (2) that the representation is
material or significant, (3) failure to exercise reasonable care on the part of the
defendant, (4) reasonable reliance on the misrepresentation, and (5) damages as
a direct result of the reasonable reliance. Powell v. Cohen Realty, Inc., 803 So.
2d 1186, 1186 (Miss. Ct. App. 1999) (citing Levens v. Campell, 733 So. 2d 753
(Miss. 1999)). The trial court also made a legal conclusion that “Plaintiffs have
established liability for negligent misrepresentation.” On appeal, Pilger takes
issue with liability based on the sufficiency of the evidence and the amount of
damages.
            1. Sufficiency of the Evidence
      The trial court recognized that the Reigstads had not produced any policy
as evidence. The court, therefore, relied on the stated terms of the Mississippi
Windstorm Underwriting Association (“MWUA”) application to find that the
value of the policy would have been $220,000. Based on the “standard deduction
in most policies,” the court also found that the policy amount would have had a
2% deductible, applied against the policy value. We find no clear error in these
findings.
      Pilger argues that the Reigstads had to produce evidence of the specific
terms and conditions of the policy or policies which they sought. The Mississippi
cases upon which Pilger relies are inapposite. See Pope v. Schroeder, 512 So. 2d
905 (Miss. 1987) (discussing legal malpractice where lawyer failed to timely file
an appeal); Hickcox v. Holleman, 502 So. 2d 626 (Miss. 1987) (discussing legal
malpractice claim for failure to file suit within limitations period). In Williams

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v. Henson, 42 F. Supp. 2d 628, 632 n.6 (N.D. Miss. 1999), the district court cited
a Mississippi case for the proposition that “the measure of damages recoverable
against an agent has been held to be the amount for which the insurer would
have been liable had proper insurance been effected.” Id. at 632 n.6 (quoting
Simpson v. M-P Enterprises, Inc., 252 So. 2d 202, 207 (Miss. 1971)). Neither
Williams nor Simpson supports Pilger’s argument that the “specific terms and
conditions of the policy” must be presented into evidence.
      Pilger relies heavily on Atlas Roofing Mfg. Co., Inc. v. Robinson &
Julienne, Inc., 279 So. 2d 625 (Miss. 1973). Pilger argues that “[t]he Mississippi
Supreme Court made it clear in the Atlas Roofing decision that in order to
recover damages, the prospective insured has to produce more proof than to
merely state, as the Reigstads have done, that they wanted ‘hurricane insurance’
or had applied for a policy through the ‘wind pool.’” In Atlas Roofing, the
plaintiff, Atlas Roofing, alleged that their agent, Robinson & Julienne, had
negligently failed to provide adequate fire insurance on its facility, and as a
consequence, plaintiff had been unable to collect the full amount of a fire loss
sustained. Id. at 626. Robinson & Julienne argued that Atlas Roofing could
have recovered the entire amount of their loss from the policy that was issued,
but Atlas Roofing accepted less and failed to recover that loss solely because it
neglected to pursue its claim in court. Id. at 628. Atlas Roofing countered by
arguing that it would not have been able to recover under the policy that was
issued. Id. The court indicated the difficulty of determining that issue in the
absence of the insurer who issued the policy obtained by Atlas Roofing, because
“there [was] no way of knowing what its position would be nor what defenses it
would interpose.” Id. The court, therefore, declined to determine if the absent
insurer was, in fact, liable for the full amount of sustained damages. See id.



                                        8
      The court then noted that five years had lapsed since the issuance of the
policy with no objection. See id. at 629. The court therefore concluded that
“upon the whole record that Atlas failed to meet the burden which rested upon
it to establish by evidence that it[s] loss was the result of negligence upon the
part of [Robinson & Julienne].” Id.
      In this case, there was no existing policy on the Reigstads’ property, so
there is no argument that an existing policy provided the requisite coverage.
Here, it is undisputed that there was no windstorm coverage. Further, Pilger
specifically told the Reigstads at the closing that insurance coverage was in
place, although there was no coverage. The court’s holding in Atlas Roofing does
not support Pilger’s argument. At trial, the Reigstads had to establish their
claims by a preponderance of the evidence, and the MWUA application and
testimony at trial are sufficient to support a finding on the amount of coverage
that would have been in place but for Pilger’s negligence. The trial court’s
assessment of the evidence is not clearly erroneous.
            2. Amount of Damages
      The trial court determined that the value of damages was $159,100. Pilger
argues that the maximum amount of damages that could have been awarded to
the Reigstads was $112,991.37, the amount of the wind damage estimate,
$117,391.37, minus the $4,400 deductible.           In making the damages
determination, the trial court considered the Reigstads’ exhibit substantiating
the Reigstads’ actual expenditures for repairs. Because this list of expenditures
did not indicate whether damages were caused by wind or flood, the court also
considered the estimate for only wind damage. Mr. Reigstad also testified that,
based on what he saw when he went to the house and how the windows blew out,
he estimated that 95% of the damage “was done long before the water got there.”



                                        9
       The court considered Baird’s estimate of wind damage to be the best
estimate of wind or wind-driven rain damage, but the court did not totally
disregard the other relevant evidence. The court undertook “an attempted
correlation” between the Baird estimate of wind damage and the itemized list of
total damages and concluded that the independent wind and wind-driven water
damage to the home prior to the flood damage was $163,500. The court deducted
the $4,400 deductible to reach the final award of $159,100. Although the court’s
calculation was not to a mathematical certainty, we do not find that the trial
court’s calculation of wind damage is clearly erroneous. The evidence of actual
expenses incurred and Mr. Reigstad’s testimony that 95% of the damages were
caused by wind or wind-driven rain sufficiently supports the trial court’s
determination of damages in excess of the wind damage estimate. See Green v.
Seariver Maritime, Inc., 248 F. App’x 517, 519 (5th Cir. 2007) (unpublished)
(“Trial testimony from both the plaintiff and his Captain substantiated the
court’s finding that the line used in that particular mooring was heavier and
larger than previous mooring lines.”); Snow-Sorapuru v. Greyhound Lines, Inc.,
54 F. App’x 405, 405 (5th Cir. 2002) (unpublished) (“The only evidence presented
on the issue of causation was the testimony of the plaintiff. . . . Because the
district court’s findings were not clearly erroneous, we affirm.”).

III.   Conclusion

       For the foregoing reasons, we AFFIRM the district court’s judgment.




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