IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 16-60134

Summary Calendar

SMITHGROUP JJR, P.L.L.C., 

 Plaintiff - Appellant

v.

FORREST GENERAL HOSPITAL, 

 Defendant - Appellee

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 2:13-CV-150

Before DAVIS, SOUTHWICK, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:*

SmithGroup JJR, PLLC (“SmithGroup”) appeals the district court’s 

judgment, after a bench trial, rejecting its claim that Forrest General Hospital 

(“FGH”) breached a contractual obligation to pay SmithGroup all of the fees it 

was owed for architectural design services. The sole issue SmithGroup raises 

on appeal is whether the district court erred by considering extrinsic evidence 

 

* 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.

United States Court of Appeals

Fifth Circuit

FILED

September 9, 2016

Lyle W. Cayce

Clerk

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bearing on the meaning of the term “actual construction cost” in the parties’ 

agreement. We affirm. 

I.

FGH hired SmithGroup to design and oversee the construction of a new 

hospital and an adjacent medical office building in Picayune, Mississippi. That 

relationship was memorialized in a contract executed in February 2010—

several months before construction was to begin. This contract outlined 

architectural, engineering, and related “Basic Services” that SmithGroup 

would provide at each stage of the project’s planning and construction, for 

which FGH would pay a fixed percentage of the construction cost. The 

agreement also contemplated the performance of “Additional Services,” which 

would be compensated separately. 

Most of SmithGroup’s work was to be performed and paid for before 

construction or even the bidding process for a general contractor began. 

Accordingly, the contractual terms of how FGH would compensate SmithGroup 

for Basic Services—set forth at paragraph 11.1, and providing the crux of this 

appeal—contained estimated construction costs:

The Basic Services for the Project shall be compensated at a rate 

of 6.0% of the construction costs. The construction costs shall be 

assumed to be $33 Million ($1,980,000.00 in fees) for the Hospital, 

Administrative Build-Out and Logistics Building and $5.2 Million 

($312,000 in fees) for the Administrative Building Core-and-Shell 

until the actual construction cost is established. At that time, the 

Basic Services Fees shall be recalculated and locked in as a lump 

sum amount.

In May 2011—after the chosen contractor signed a contract, and after

construction had begun—Travis Beatty, who works for a consulting firm hired 

by FGH, emailed SmithGroup a letter about the Basic Services Fees. That 

letter stated that per paragraph 11.1, those fees were to “be at an assumed rate 

of cost until the construction contract was executed. At that point, the fees 

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would be ‘locked in’ as a lump sum amount.” The letter’s purpose was to “serve 

to convey a detailed breakdown of the accepted fees that are now established.” 

A SmithGroup vice president, Paul Tonti, responded asking how fees for design 

services regarding owner-supplied equipment would be handled. Beatty 

replied that he would revise the letter to address that concern. A few weeks 

later, Beatty sent a revised letter calculating the “Total Construction Contract 

Price” as $38,418,704. We refer to this as the “bid cost.” Six percent of that 

total yields $2,305,122, and that is the amount FGH paid in Basic Services 

Fees. Because of unanticipated design changes, however—some but not all of 

which were due to “errors or contractual violations by SmithGroup”—the total 

cost to complete the buildings was $40,799,669. We call this the “completion 

cost.”

SmithGroup filed this lawsuit in July 2013. In Count I of its operative 

complaint, SmithGroup alleged that FGH breached the parties’ contract by 

failing to pay six percent of the difference between the completion cost and the 

bid cost, which comes to $155,980.14 plus interest. FGH maintained that it 

properly calculated and paid six percent of the “actual construction cost” based 

on the bid cost. Neither party moved for summary judgment, and the case 

proceeded to a bench trial.

At trial, both parties presented extrinsic evidence concerning the 

meaning of paragraph 11.1. For example, SmithGroup’s counsel referred Tonti 

to key language in that paragraph and asked, “What did you understand that 

to mean when you read it?” Tonti responded: “My interpretation of this is when 

the project is complete, because I don’t know how you can achieve total actual 

construction costs until the project is complete and all those costs are rolled 

into a final construction number.” SmithGroup also elicited Tonti’s testimony 

that he was not aware of any project with “an interim lock-in period.” The 

district court additionally heard testimony from Beatty, and from FGH’s expert 

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Robert Luke, who testified that paragraph 11.1’s verbiage about locking in a 

lump sum was “rather unique language” that referred to fixing fees “once an 

actual construction amount is known,” which he distinguished from a “final 

construction amount or total construction amount.” SmithGroup never 

objected during trial to the introduction or consideration of any evidence on 

parol evidence rule grounds. 

After trial, the district court issued detailed written findings of fact and 

conclusions of law. Implicitly deeming the contract ambiguous and relying in 

part on extrinsic evidence, the court concluded “that the fee due SmithGroup 

should be based on the construction cost of $38,418,704.00, and that the proper 

amount has been paid by FGH.” The district court therefore entered judgment 

in favor of FGH on Count I of SmithGroup’s operative complaint.1 SmithGroup 

timely appealed and now argues that the language “actual construction cost” 

unambiguously refers to the total amount FGH paid to finish the project, which 

could only be determined after all construction ended. Therefore, SmithGroup 

contends, the district court erred by considering evidence beyond the four 

corners of the contract in determining the meaning of paragraph 11.1.2 

II.

“The standard of review for a bench trial is well established: findings of 

fact are reviewed for clear error and legal issues are reviewed de novo.” 

Guzman v. Hacienda Records & Recording Studio, Inc., 808 F.3d 1031, 1036 

(5th Cir. 2014) (quoting One Beacon Ins. Co. v. Crowley Marine Servs., Inc., 648 

F.3d 258, 262 (5th Cir. 2011)). In a diversity case, “[w]e look to state law for 

rules governing contract interpretation.” ACS Constr. Co., Inc. of Miss. v. 

 

1 The district court entered judgment in SmithGroup’s favor for approximately 

$57,000 on a different breach-of-contract claim, and entered judgment in FGH’s favor for 

approximately $310,000 on two counterclaims. None of these claims is at issue on appeal. 

2 SmithGroup does not argue that even if the district court properly considered 

extrinsic evidence, its factual conclusions were clearly erroneous.

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CGU, 332 F.3d 885, 888 (5th Cir. 2003) (quoting FDIC v. Firemen’s Ins. Co. of 

Newark, 109 F.3d 1084, 1087 (5th Cir. 1997)). Here, that means that we apply 

Mississippi law “as interpreted by the state’s highest court.” Barfield v. 

Madison County, 212 F.3d 269, 271–72 (5th Cir. 2000).

Mississippi courts analyze contracts using “a three-step analysis.” 

Epperson v. SOUTHBank, 93 So.3d 10, 16 (Miss. 2012). First, the court “must 

determine whether the contract is ambiguous, and if it is not, then it must be 

enforced as written,” without consideration of parol evidence. Id. Determining 

whether a contract is ambiguous is a question of law. Tupelo Redev. Agency v. 

Abernathy, 913 So. 2d 278, 283 (Miss. 2005). If the court is unable to discern 

a clear meaning from this “four corners” inquiry, it should then “apply the 

discretionary ‘canons’ of contract construction.”3 Id. at 284. “Finally, if the 

contract continues to evade clarity as to the parties’ intent, the court should 

consider extrinsic or parol evidence.” Id. With these principles in mind, we 

turn to the case at hand. 

III.

SmithGroup’s theory on appeal is that the contract at issue is 

unambiguous, so the district court erred by venturing beyond its four corners. 

FGH, though, responds that SmithGroup waived that argument by failing to 

raise it in the trial court and by itself eliciting parol evidence. Our usual rule 

is that “[a]n argument not raised before the district court cannot be asserted 

for the first time on appeal.” XL Specialty Ins. Co. v. Kiewit Offshore Servs., 

Ltd., 513 F.3d 146, 153 (5th Cir. 2008); see also Liberty Combustion Co. v. 

Thoreson Sales Co., 322 F.2d 790, 791 (5th Cir. 1963) (holding that an 

appellant waived a parol evidence rule argument). But in reply, SmithGroup 

 

3 SmithGroup does not argue that the district court should have applied any 

discretionary canon of construction, so we do not address any. 

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contends that it did raise its argument in the district court and that, in any 

event, under Mississippi law such an argument cannot be waived. 

We treat the latter reply argument first, assuming without deciding that 

SmithGroup is correct that state law controls this waiver issue.4 In Kelso v. 

McGowan, the Mississippi Supreme Court rejected an argument that the 

appellant “waived the exclusion of parol evidence by failing to raise the issue 

at trial,” stating: “This Court has clearly held . . . that since the parol evidence 

rule is substantive, it prevails even in the absence of objection.” 604 So. 2d 

726, 730 n.4 (Miss. 1992) (citing Edrington v. Stephens, 114 So. 387 (Miss. 

1927)). That statement from Mississippi’s highest court, albeit in a footnote,

would seem to defeat FGH’s waiver argument. 

More recently, however, the Mississippi Supreme Court reaffirmed “the 

holding in [Service Fire Ins. Co. v. Craft, 67 So. 2d 874 (Miss. 1953)] that a 

party may not raise an objection to evidence on the grounds that it is violative 

of the Parol Evidence Rule for the first time on appeal.” Estate of Parker v. 

Dorchak, 673 So. 2d 1379, 1384 (Miss. 1996). Although the court did not cite 

Kelso or Edrington, it noted that “the Parol Evidence Rule is a rule of 

substantive law”; for that reason, the court held that “a party should not lose 

the right to claim the benefit of said law merely because he failed to make a 

contemporaneous objection at the time the evidence was offered.” Id. (emphasis 

added). Rather, so long as a proper objection is raised “prior to the 

consideration of said evidence by the trier of fact, such evidence should properly 

be disregarded.” Id. (emphasis added). In Dorchak, a bench trial, a motion to 

exclude testimony about contractual intent was filed after the evidence was 

offered, but “prior to the consideration of such testimony by the Chancellor as 

 

4 Cf. Harville Rose Serv. v. Kellogg Co., 448 F.2d 1346, 1349 (5th Cir. 1971) (“This 

court is bound in this diversity case to apply the parol evidence rule as the state court 

would.”). 

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trier of fact”—so it was timely. Id. at 1383–84. But in the Craft case that

Dorchak reaffirmed, no objection was ever made in the trial court to testimony 

that the appellant claimed contradicted the written instrument; therefore, that 

“testimony was before the jury for what it was worth,” and the Supreme Court 

made clear that it could “rest [its] decision on that state of the record.” Craft, 

67 So. 2d at 876. 

More recently still, the Mississippi Supreme Court considered an

argument raised for the first time on appeal that an “agreement [spoke] for 

itself and that parol evidence of an additional provision should not be 

considered.” Chantey Music Publ’g, Inc. v. Malaco, 915 So. 2d 1052, 1060 (Miss. 

2005). Citing the principle that a trial court cannot be held to have erred on a 

matter not presented to it, the high court held that the parol evidence issue 

was not properly before it. Id. 

Thus, the more recent cases show that the present state of Mississippi 

law does not allow a parol evidence argument such as SmithGroup’s to be 

raised for the first time on appeal. See Savoie v. Huntington Ingalls, Inc., 817 

F.3d 457, 464 n.5 (5th Cir. 2016) (noting that federal courts are Erie-bound on 

state-law questions by the state supreme court’s most recent authority);

Broussard v. S. Pac. Transp. Co., 625 F.2d 1242, 1245 n.3 (5th Cir. 1980)

(similar). Bolstering this conclusion, the en banc Court of Appeals of 

Mississippi recently relied on Dorchak in holding that because an appellant 

never raised a parol evidence rule objection in the trial court, he could not do 

so on appeal. DeJean v. DeJean, 982 So. 2d 443, 448–49 (Miss. Ct. App. 2007) 

(en banc).5 Thus, SmithGroup waived this argument unless it objected to the 

consideration of parol evidence before the trial court made its decision.

 

5 SmithGroup cites Century 21 Deep South Prop., Ltd. v. Keys, 652 So. 2d 707 (Miss. 

1995), for the proposition that an objection to the consideration of parol evidence need not be 

made in the trial court to be preserved for appeal. But Keys does not support that rule. 

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SmithGroup does not dispute that it never objected at trial to the 

admission or consideration of extrinsic evidence, but does argue that it raised 

the issue in its post-trial proposed findings of fact and conclusions of law. 

SmithGroup points to its citation of case law for Mississippi principles of 

contract interpretation, including that a court “should first examine the four 

corners of the contract to determine how to interpret it” and “accept the plain 

meaning of a contract as the intent of the parties where no ambiguity exists.” 

SmithGroup’s filing also stated: “If found ambiguous, the subsequent 

interpretation of the contract is a finding of fact. Ambiguity analysis, unlike 

affirmative defense analysis, is by its very nature a necessary step in the 

examination of every contract.” After these case citations, SmithGroup 

summarily concluded that there was “no doubt as to when total cost for 

construction is achieved,” submitting that it “ha[d] offered evidence and 

testimony in support of its claim for fees which is irrefutable.” 

This was not enough to “properly object[]” to consideration of the parol 

evidence elicited by both parties. See Dorchak, 673 So. 2d at 1384. The 

highlighted statements were set forth as boilerplate legal rules in the form of 

case citations, not arguments tied to this dispute. And “[c]iting cases that may 

contain a useful argument is simply inadequate to preserve that argument for 

appeal; ‘to be preserved, an argument must be pressed, and not merely 

intimated.’” Butler Aviation Int’l, Inc. v. Whyte (In re Fairchild Aircraft Corp.), 

 

Instead, the Keys court rejected an argument that the trial court erred in finding parts of a 

contract to be ambiguous, even though the defendant-appellee had not pleaded as an 

“affirmative defense” that the contract was ambiguous. Id. at 716–17. The court reasoned 

that “[t]he clarity of a contract must always be considered before a contract may be enforced, 

whereas the consideration of non-plead affirmative defenses is not required.” Id. at 717. 

Tellingly, neither the Mississippi Supreme Court in Dorchak or Chantey Music, nor the Court 

of Appeals in DeJean, found Keys relevant when deciding more similar issues. Neither do 

we. The same goes for Rotenberry v. Hooker, 864 So. 2d 266 (Miss. 2003), which SmithGroup 

cites essentially for its recapitulation of Keys. 

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6 F.3d 1119, 1128 (5th Cir. 1993) (quoting Hays v. Sony Corp., 847 F.2d 412, 

420 (7th Cir. 1988)), abrogated on other grounds by Tex. Truck Ins. Agency, Inc.

v. Cure (In re Dunham), 110 F.3d 286 (5th Cir. 1997). What’s more, those 

citations included the instruction that a fact finder should interpret a contract 

as a factual matter if the contract is held ambiguous—which is what the 

district court did. Nowhere did SmithGroup make an actual argument that 

extrinsic evidence of paragraph 11.1’s meaning should not be considered, or 

even that the provision is unambiguous. Finally, even in the post-trial briefing 

on which it now relies, SmithGroup cited expert testimony in support of its 

argument about paragraph 11.1.6 Thus, SmithGroup never put the district 

judge on notice of any argument that extrinsic evidence should not be 

considered. See Chantey Music, 915 So. 2d at 1060; see also XL Specialty, 513 

F.3d at 153. Accordingly, we will not consider that argument on appeal. 

IV.

SmithGroup failed to preserve for appeal its argument that because the

relevant contractual term is unambiguous, the district court erred by

considering extrinsic evidence in determining its meaning. Because 

SmithGroup argues no other ground for reversal, we AFFIRM the district 

court’s judgment. 

 

6 We do not mean to suggest that a litigant cannot argue that a contract’s language is 

unambiguous and consideration of parol evidence therefore inappropriate, but rely in the 

alternative on extrinsic evidence. Here, SmithGroup did not present such alternative 

arguments to the district court. 

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