     Case: 12-60516       Document: 00512224786         Page: 1     Date Filed: 04/30/2013




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

                                                                            FILED
                                                                           April 30, 2013
                                     No. 12-60516
                                   Summary Calendar                        Lyle W. Cayce
                                                                                Clerk



ABS SERVICES, INCORPORATED; ANTHONY J. BERTAS,

               Plaintiffs - Appellants

v.

NEW YORK MARINE & GENERAL INSURANCE COMPANY; ALLSTAR
FINANCIAL GROUP,

               Defendants - Appellees



                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             Docket No. 3:10-CV-339


Before SMITH, PRADO, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       This case arises out of an indemnity agreement between Plaintiff-
Appellants ABS Services, Incorporated (“ABS”) and Anthony Bertas and
Defendant-Appellees New York Marine & General Insurance Company (“New
York Marine”) and Allstar Financial Group (“Allstar”). Appellants argue that
the district court erred in enforcing the indemnity agreement’s choice-of-law

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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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provision, granting summary judgment on their breach of fiduciary duty and
conspiracy claims, and giving the deadlocked jury a modified Allen charge.
Finding no error, we AFFIRM.
                        FACTS AND PROCEEDINGS
      ABS entered into a subcontract agreement with W.G. Yates & Sons
Construction Company (“Yates”) to install a mechanically stabilized earthen
retaining wall (“the Project”) at the Emerald Star Casino in Natchez,
Mississippi. New York Marine, as surety, through Allstar, its managing general
agent, issued a subcontract performance bond in the amount of $678,145
securing ABS’s full, proper, and timely performance of the subcontract and
completion of the Project (the “performance bond”). As a condition for the bond’s
issuance, ABS posted a $68,000 letter of credit as collateral, and ABS, along with
Bertas, its principal, executed a General Agreement of Indemnity (the
“indemnity agreement”) promising to indemnify and hold harmless New York
Marine from any and all liability, loss, damage, or expense arising out of or in
any way connected with the bond. Under the indemnity agreement, ABS and
Bertas assigned their rights arising out of the bonded contract to New York
Marine, and gave New York Marine the right to determine whether any bond
claims should be paid or settled and the authority to apply the collateral to pay
any debts owed. The indemnity agreement contained a choice of law provision
stating that it “shall be interpreted and governed in all respects in accordance
with the laws of the State of Georgia.”
      Soon after it began, the Project experienced delays and cost overruns. The
Project, which was scheduled to be completed by November 2007, stood only 12%
complete as of February 2008. In January 2008, ABS advised Yates by letter of
the issues hindering completion of the Project and the impact costs suffered by
ABS, and informed Yates that if it did not resolve the outstanding issues and
compensate ABS for cost overruns, ABS would suspend work on the Project.

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When Yates refused to pay, ABS suspended work on the project, declared Yates
to be in material breach of contract, and submitted to Yates a claim for damages
in the amount of $874,909 (the “ABS claim”). In turn, Yates declared ABS in
default of its obligations under the subcontract and demanded that New York
Marine meet its obligations under the performance bond. Allstar, as agent for
New York Marine, met with representatives of ABS and Yates to investigate the
default, and, from April through July of 2008, negotiated with the parties in
search of a compromise solution. Negotiations were unsuccessful, and New York
Marine entered into a settlement agreement with Yates whereby it agreed to pay
Yates $155,000 and release and assign the ABS claim to Yates in exchange for
a full and final release of New York Marine’s obligations under the performance
bond.
        ABS and Bertas then filed suit in Mississippi state court against New York
Marine and Allstar for breach and bad faith breach of the indemnity agreement,
breach of fiduciary duty, conspiracy to wrongfully convert assets, tortious
interference with the subcontract and business relationship, and outrage. The
defendants removed to federal court on diversity grounds, counterclaimed for
breach of the indemnity agreement, and, after discovery, moved for summary
judgment. After holding a hearing, the court orally granted defendants’ motion
for summary judgment with respect to plaintiffs’ claims for breach of fiduciary
duty, conspiracy to wrongfully convert assets, tortious interference with a
business relationship, and outrage; and denied summary judgment with respect
to plaintiffs’ claims for breach and bad faith breach of the indemnity agreement
and tortious interference with the subcontract. The court ruled also that if the
parties were to proceed to trial, the contract claims would be evaluated under
Georgia law.
        The parties proceeded to trial, which lasted for six days. After seven hours
of deliberations, the jury reported that it was “at an impasse” and “d[id] not

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believe [it] w[ould] be able to reach a unanimous decision.” The parties orally
joined in moving the court to give a modified Allen charge, but disagreed as to
its form. Over plaintiffs’ objections, the court delivered the following instruction
to the jury:
            Members of the jury, I'm going to ask that you continue your
      deliberations in an effort to agree upon a verdict and dispose of this
      case. And I have a few additional comments I would like for you to
      consider as you do so.

             This is an important case. The trial has been expensive in time,
      effort and money to all parties. If you should fail to agree on a verdict,
      the case is left open and must be tried again. Obviously, another trial
      would only serve to increase the costs to both sides, and there is no
      reason to believe that the case can be tried again by either side better
      or more exhaustively than it has been tried before you.

            Any future jury must be selected in the same manner and
      from the same source as you were chosen, and there is reason [sic]
      to believe that the case could ever be submitted to men more
      conscientious, more impartial, more competent to decide it or that
      more or clearer evidence would be produced.

             Those of you who believe that the plaintiffs have proved their
      case by a preponderance of the evidence should stop and ask
      yourselves if the evidence is really sufficient enough, given that
      other members of the jury are not convinced. And those of you who
      believe that the plaintiffs have not proved their case by a
      preponderance of the evidence should stop and ask yourselves if the
      doubt you have is sufficient, given that other members of the jury do
      not share your view. Those of you who believe that the defendants
      have proved their counterclaim by a preponderance of the evidence
      should stop and ask yourselves if the evidence is really sufficient
      enough, given that other members of the jury are not convinced.
      And those of you who believe that the defendants have not proved
      their counterclaim by a preponderance of the evidence should stop
      and ask yourselves if the doubt you have is sufficient, given that
      other members of the jury do not share your view.




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             Remember at all times that no juror is expected to yield a
      conscientious opinion he or she may have as to the weight or effect
      of the evidence. But remember also that after full deliberation and
      consideration of the evidence in the case, it is your duty to agree
      upon a verdict if you can do so without surrendering your
      conscientious opinion. You must also remember that if the evidence
      in the case fails to establish plaintiff's case by a preponderance of
      the evidence, the defendants should have your unanimous verdict.
      Likewise, you must also remember that if the evidence in the case
      fails to establish defendant's counterclaims by a preponderance of
      the evidence, the plaintiffs should have a unanimous verdict.

             You may be as leisurely in your deliberations as the occasion
      may require and should take all the time which you feel is necessary.
      I will ask now that you retire once again and continue your
      deliberations with these additional comments in mind to be applied,
      of course, in conjunction with all of the instructions I have previously
      given to you. You may be excused to continue to deliberate.
The jury deliberated for three more hours, and then returned a general verdict
for the defendants on all counts. The court entered final judgment for the
defendants, which plaintiffs timely appealed.
                                 DISCUSSION
      Plaintiffs argue on appeal that the district court erred in ruling that
Georgia law applied to the contract claims, granting summary judgment on the
conspiracy and breach of fiduciary duty claims, and giving the jury a modified
Allen charge. We address each claim in turn.
I.    Choice of Law
      Plaintiffs contend that Mississippi law, not Georgia law, should have
governed the contract claims because Mississippi has a materially greater
interest than does Georgia in the resolution of the contract claims. Defendants
respond that the choice-of-law provision in the indemnity agreement was
properly enforced by the district court because Georgia had a relationship to the
contract and there was a reasonable basis for the parties’ choice. We review a


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district court’s choice-of-law determination de novo. Ellis v. Trustmark Builders,
Inc., 625 F.3d 222, 225 (5th Cir. 2010).
       A federal court sitting in diversity follows the choice-of-law rules of the
forum state. Id. Mississippi, the forum state, follows the choice-of-law rules set
forth in the Restatement (Second) of Conflicts of Laws. Id. at 225–26. Where, as
here, the contract at issue contains a choice-of-law provision, the Restatement
provides that the laws of the chosen state will be applied unless “the chosen
state has no substantial relationship to the parties or the transaction and there
is no other reasonable basis for the parties’ choice,” or “application of the law of
the chosen state would be contrary to a fundamental policy of a state which has
a materially greater interest than the chosen state in the determination of the
particular issue and which . . . would be the state of the applicable law in the
absence of an effective choice of law by the parties.” Restatement (Second) of
Conflicts of Laws § 187 (1971).
       We agree with the district court that the indemnity agreement is governed
by Georgia law. First, Georgia, the chosen state, has a substantial relationship
with the parties and the transaction: Allstar is a Georgia corporation, its
principal place of business in Georgia, and the bond claim was investigated,
managed, and negotiated exclusively by Allstar in Georgia. Second, appellants
contend that Mississippi law differs from Georgia law, but do not identify a
fundamental policy of Mississippi that the application of Georgia law would
violate. Accordingly, the district court did not err in enforcing the parties’
choice-of-law provision. See Herring Gas Co. v. Magee, 22 F.3d 603, 605–09 (5th
Cir. 1994); Asbury MS Gray-Daniels, L.L.C. v. Daniels, 812 F. Supp. 2d 771,
778–80 (S.D. Miss. 2011).
II.    Summary Judgment
       Appellants argue that, by settling with Yates, appellees breached their
fiduciary duty arising out of the indemnity agreement, and conspired with Yates

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to wrongfully convert the ABS claim. They contend that the district court erred
in granting summary judgment on those claims because a reasonable jury,
reviewing the summary judgment record in a light most favorable to plaintiffs,
could have resolved them in favor of the plaintiffs.
      We review a district court’s summary judgment de novo, applying the same
standard as the district court. Moss v. BMC Software, Inc., 610 F.3d 917, 922
(5th Cir. 2010). Summary judgment is warranted if, viewing all evidence in the
light most favorable to the non-moving party, the record demonstrates that there
is no genuine issue of material fact and that the moving party is entitled to
judgment as a matter of law. Id. (citing Fed. R. Civ. P. 56(c), subsequently
renumbered 56(a)). A fact is material if it “might affect the outcome of the suit
under the governing law,” and a dispute is genuine if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
      A.    Breach of fiduciary duty
      The parties dispute whether appellees owed appellants any fiduciary duty,
but assuming, arguendo, that they did, we conclude that the summary judgment
record contains no evidence from which a jury could reasonably infer that
appellees breached any such duty. The record discloses that New York Marine,
through Allstate, worked closely with both sides over a number of months to find
an equitable solution, and only when it became clear that ABS would not agree
to perform its obligations did New York Marine exercise its contractual right to
settle the claim. Appellants do not point to any specific evidence supporting
their allegations of bad faith, as they are required to do to survive summary
judgment, Copsey v. Swearingen, 36 F.3d 1336, 1347 (5th Cir. 1994), and, by
entering a verdict for appellees on the bad faith breach of contract claim, which
shared the same factual basis, the jury made an implicit finding that appellees
performed in good faith.

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        B.    Conspiracy to convert assets
        Under Mississippi law, which governs the conspiracy claim, conspiracy is
“a combination of persons for the purpose of accomplishing an unlawful purpose
or a lawful purpose unlawfully,” Levens v. Campbell, 733 So. 2d 753, 761 (Miss.
1999); and conversion is an act of dominion wrongfully exerted over another
person’s tangible personal property in denial of or inconsistent with the owner’s
title or rights therein, Mossler Acceptance Co. v. Moore, 67 So.2d 868, 872 (Miss.
1953).
        The district court concluded, and we agree, that the summary judgment
record furnished no evidence from which a jury could reasonably infer that New
York Marine, Allstar, and Yates conspired to assign ABS’s unliquidated claim
to Yates; and, in any event, an unliquidated claim is not tangible personal
property and therefore cannot be the subject of a claim for conversion under
Mississippi law. See id. at 873 (“An action will not lie for the conversion of a
mere debt or chose in action.”).
III.    Allen charge
        In Allen v. United States, 164 U.S. 492, 501 (1896), the Supreme Court
held that if a jury is having difficulty reaching a unanimous verdict, the court
may instruct:
        that in a large proportion of cases absolute certainty could not be
        expected; that, although the verdict must be the verdict of each
        individual juror, and not a mere acquiescence in the conclusion of
        his fellows, yet they should examine the question submitted with
        candor, and with a proper regard and deference to the opinions of
        each other; that it was their duty to decide the case if they could
        conscientiously do so; that they should listen, with a disposition to
        be convinced, to each other’s arguments; that, if much the larger
        number were for conviction, a dissenting juror should consider
        whether his doubt was a reasonable one which made no impression
        upon the minds of so many men, equally honest, equally intelligent
        with himself. If, [on] the other hand, the majority were for acquittal,
        the minority ought to ask themselves whether they might not

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      reasonably doubt the correctness of a judgment which was not
      concurred in by the majority.
Any similar supplemental instruction that urges members of a deadlocked jury
to put aside their differences is now known as an “Allen charge.” Courts have
broad discretion to “give modified versions of the Allen charge, so long as the
circumstances under which the district court gives the instruction are not
coercive, and the content of the charge is not prejudicial.” United States v. Hitt,
473 F.3d 146, 153 (5th Cir. 2006). Appellants joined appellees in requesting the
Allen charge, but requested that portions of the pattern instruction be deleted
and amended. Accordingly, we confine our review to an assessment of whether
the district court’s deviation from the Fifth Circuit pattern Allen charge was
prejudicial and requires reversal. See United States v. Fields, 483 F.3d 313,
339–40 (5th Cir. 2007); United States v. Jefferson, 432 F. App’x 382, 387–88 (5th
Cir. 2011) (unpublished).
      The district court’s lone substantive modifications to the Fifth Circuit
pattern charge, Fifth Circuit Pattern Jury Instructions (Criminal Cases) § 1.45
(2012), were to replace references to “the Government” and “the Defendant” with
“the Plaintiffs” and “the Defendants,” and references to “beyond a reasonable
doubt” with “preponderance of the evidence.” Because the district court did not
deviate from the accepted pattern Allen charge except to the extent necessary to
conform it to a civil jury trial, we perceive no error. See United States v. Winters,
105 F.3d 200, 204 (5th Cir. 1997) (rejecting challenge to modified Allen charge
on the ground that it was “virtually identical to the language this Circuit has
repeatedly approved in the past”).
                                 CONCLUSION
      Having concluded that the district court properly enforced the choice-of-
law provision, granted summary judgment on the breach of fiduciary duty and
conspiracy claims, and gave a modified Allen charge, we AFFIRM.


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