Can the Mississippi State Port Authority sign an exclusive 99-year lease and operating agreement with a private operator at the Port of Gulfport, and would sovereign immunity block a breach-of-contract claim?

Plain-English summary

The Mississippi State Port Authority (MSPA) was negotiating a long-term lease and operating agreement with a third-party operator for the Port of Gulfport. Under the proposed deal, the operator would have exclusive use and possession of certain operating areas of the Port and the exclusive right to provide operational services to maritime users at those areas. The MSPA's attorney asked whether the agency had legal authority for this kind of deal, and whether sovereign immunity would protect the State from contract claims if a dispute arose.

On the first question, the AG walked through the State Ports and Harbors Law (Miss. Code Ann. § 59-5-3 et seq.). § 59-5-35 authorizes the Mississippi Development Authority, "acting jointly with the state port authority," to lease port property for up to 99 years. The AG said such a lease may give the lessee exclusive use and possession of the leased area. § 59-5-37 grants the MSPA broad authority to make contracts incidental or necessary to port operation. The opinion did not determine whether the proposed exclusive service rights or other terms complied with state law.

The AG declined to interpret the specific contract terms, which it said was a question for the MSPA itself, subject to judicial review.

On the second question, Mississippi case law was settled: the State does not enjoy sovereign immunity for claims of breach of an express contract. When the legislature authorizes the State to enter contracts, it impliedly waives immunity for breach. So a third party with a valid express-contract claim against the MSPA could sue. The AG flagged a footnote: claims for breach of implied contractual terms (including the implied covenant of good faith and fair dealing) are governed by the Mississippi Tort Claims Act, which has different procedures and immunities.

Currency note

This opinion was issued in 2021. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion said for each audience, at the time

For the Mississippi State Port Authority

The opinion confirmed authority for MSPA and MDA jointly to lease portions of the Port, including exclusive use and possession for no more than 99 years. It also identified MSPA's broad power to contract for port operations under § 59-5-37. MSPA had to assess the proposed agreement's specific terms under applicable state law, subject to judicial review.

For a third-party operator at the Port

Under the opinion, MSPA and MDA jointly may lease portions of the Port with exclusive use and possession for up to 99 years. MSPA may also make contracts incidental or necessary to port operation. The operator's proposed exclusive service rights were part of the request; the AG did not determine whether those rights or the agreement's other terms complied with state law.

For attorneys litigating with the MSPA

The opinion stated that the State does not enjoy sovereign immunity for claims of breach of an express contract: when the legislature authorizes the State to enter a contract, it waives immunity for breach (Cig Contractors; Gulfside Casino; Weible). A footnote added that a claim for breach of an implied contractual term, including the implied covenant of good faith and fair dealing, is instead governed by the Mississippi Tort Claims Act (Jones; City of Jackson v. Estate of Stewart; § 11-46-3).

For the Mississippi Development Authority

The opinion read § 59-5-35 to authorize MDA to lease port property "acting jointly with the state port authority." The request stated MDA would sign the proposed agreement; the AG framed its leasing conclusion as joint action by the two agencies.

Common questions

Q: What role does the Mississippi Development Authority have in the lease?
A: § 59-5-35 authorizes MDA to lease port property "acting jointly with the state port authority." The request said MDA would sign the proposed agreement, and the AG's answer describes the lease authority as joint.

Q: What's the longest lease the Port can grant?
A: 99 years, per § 59-5-35. The statute also authorizes outright sale ("conveyance of sale") in some circumstances, but the typical structure is a long-term lease.

Q: Did the AG approve the proposed operator's exclusive service rights?
A: No. The AG said the lease could give a lessee exclusive use and possession of the leased area, and that MSPA has broad contracting authority. It declined to decide whether the specific agreement's terms complied with state law; MSPA had to make that determination, subject to judicial review.

Q: Why isn't sovereign immunity a defense for express contract claims?
A: Mississippi courts have long held that when the legislature authorizes the State to enter contracts, it necessarily waives immunity for breach. The reasoning, articulated in Cig Contractors and confirmed in later cases, is that "There is no mutuality or fairness where a state or county can enter into an advantageous contract and accept its benefits but refuse to perform its obligations." Without waiver, no sensible private party would contract with the State.

Q: What about implied-contract claims?
A: Those fall under the Mississippi Tort Claims Act (MTCA), per Jones v. Miss. Inst. of Higher Learning, 264 So. 3d 9 (Miss. Ct. App. 2018). The MTCA governs implied-warranty and implied-covenant breach claims against the State, including the implied covenant of good faith and fair dealing.

Background and statutory framework

The Mississippi State Port Authority is an agency of the State that performs an essential governmental function "for the benefit of the people of the State of Mississippi" (§§ 59-5-21, 59-5-7) and is charged with oversight of the Mississippi State Port at Gulfport (Miss. State Port Auth. at Gulfport v. S. Indus. Contractors LLC). The opinion arose from the MSPA's advanced negotiation of a long-term lease and operating agreement that would give a third-party operator the exclusive use and possession of certain operating areas of the Port and the exclusive right to provide operational services there.

The State Ports and Harbors Law declares it the State's "public policy to aid and encourage the promotion, development, improvement, and expansion of the state's ports, harbors and inland waterways" (§ 59-5-3), and instructs that its provisions "shall be construed liberally and broadly" to effectuate that policy (§ 59-5-5(1)).

Sections 59-5-35 and 59-5-37 are the operational core. The first authorizes long-term leases of port property; the second authorizes contracts incidental to port operation. § 59-5-31 also extends to the MSPA the powers of county port authorities and county development commissions under §§ 59-9-15 to 59-9-35, providing additional authority where the MSPA's express grants might be ambiguous.

On the separate sovereign-immunity question, the opinion cited Mississippi decisions holding that the State does not enjoy immunity from claims for breach of an express contract. Its footnote says claims involving implied contractual terms are governed by the Mississippi Tort Claims Act, and it expressed no view on the facts that would create an express or implied obligation in the proposed agreement.

Citations and references

Statutes:

• Miss. Code Ann. § 11-46-3, MTCA immunity for breach of implied warranty or contract
• Miss. Code Ann. § 59-5-3, declaration of public policy on ports
• Miss. Code Ann. § 59-5-5(1), liberal construction
• Miss. Code Ann. § 59-5-7, MSPA's essential governmental function
• Miss. Code Ann. § 59-5-11, broad lease authority over port facilities
• Miss. Code Ann. § 59-5-21, MSPA's status as agency of the State
• Miss. Code Ann. § 59-5-31, additional powers from county port authorities and development commissions
• Miss. Code Ann. § 59-5-35, MDA acting jointly with MSPA may lease for up to 99 years
• Miss. Code Ann. § 59-5-37, MSPA contract authority for port operations
• Miss. Code Ann. § 59-9-15 to § 59-9-35, county port authority powers (incorporated into MSPA's authority)

Cases cited:

• Miss. State Port Auth. at Gulfport v. S. Indus. Contractors LLC, 271 So. 3d 742 (Miss. Ct. App. 2018), MSPA's oversight of the Port
• Tradigrain, Inc. v. Miss. State Port Auth., 701 F.2d 1131 (5th Cir. 1983), MSPA's contract authority
• Cig Contractors, Inc. v. Miss. State Bldg. Comm'n, 399 So. 2d 1352 (Miss. 1981), no sovereign immunity for breach of express contract
• Weible v. Univ. of S. Miss., 89 So. 3d 51 (Miss. Ct. App. 2011), same
• Gulfside Casino P'ship v. Miss. State Port Auth. at Gulfport, 757 So. 2d 250 (Miss. 2000), waiver of immunity rationale
• Jones v. Miss. Inst. of Higher Learning, 264 So. 3d 9 (Miss. Ct. App. 2018), MTCA governs implied-contract claims
• City of Jackson v. Estate of Stewart ex rel. Womack, 908 So. 2d 703 (Miss. 2005), § 11-46-3 immunity for implied terms

Prior AG opinions cited:

• MS AG Op., Matthews (Nov. 1, 2019), AG cannot interpret specific contractual language
• MS AG Op., Cheney (Nov. 14, 2011), contract interpretation is a matter for the agency, subject to judicial review

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/03/B.Stone_March-3-2021-Mississippi-State-Port-Authoritys-Power-to-Lease-and-Contract.pdf

Original opinion text

March 3, 2021

Ben H. Stone, Esq.
Attorney for the Mississippi State Port Authority
1310 Twenty Fifth Avenue
Gulfport, Mississippi 39501

Re: Mississippi State Port Authority's Power to Lease and Contract

Dear Mr. Stone:

The Office of the Attorney General has received your request for an official opinion.

Background Facts

According to your request, the Mississippi State Port Authority (the "MSPA") enters into long-term leases that provide lessees designated areas at the Mississippi State Port at Gulfport (the "Port") to conduct business operations. Your request further states that the MSPA is currently in advanced negotiation of a long-term lease and operating agreement that would provide a third-party operator with a lease for the exclusive use and possession of certain portions of the Port designated as the operating area and the exclusive right to provide the operational services to each respective maritime user or shipper at the Port. Your request goes on to provide additional details related to the proposed agreement. We understand that, along with the MSPA, the Mississippi Development Authority ("MDA") will be a signatory to the referenced agreement.

Issues Presented

1. Whether the MSPA has authority to enter into a binding contract granting a third party operator a lease for the exclusive use and possession of certain portions of the Port together with the exclusive right to provide the operational services to each respective maritime tenant and shipper utilizing that portion of the Port subject to the lease?
2. If the MSPA has the authority to enter into the binding contract, would sovereign immunity bar actions against the MSPA brought on a breach of contract theory under such contract?

Brief Response

1. The MSPA, acting jointly with the MDA, may lease certain portions of the Port to a third-party, with such lease providing the lessee exclusive use and possession of the leased area for a period not to exceed ninety-nine years. Further, the MSPA is authorized to enter into all contracts that are "incidental to or necessary for the . . . operation of any ports, harbors rivers, channels and waterways . . . ." Miss. Code Ann. § 59-5-37.

2. The state does not enjoy sovereign immunity for claims of breach of an express contract.

Applicable Law and Discussion

As an initial matter, whether the provisions of a specific long-term lease, operating agreement, and/or contract being negotiated by the MSPA comport with applicable state law requires this office to interpret the contractual language, which we cannot do. MS AG Op., Matthews at 2 (Nov. 1, 2019). Such determination must be made by the MSPA, subject to judicial review. MS AG Op., Cheney at 2 (Nov. 14, 2011). Similarly, this office cannot opine on any potential effect the long-term lease and operating agreement would have on existing leases or contractual agreements to which the MSPA is a party or any other existing rights or obligations.

The MSPA is an agency of the State that performs an essential governmental function "for the benefit of the people of the State of Mississippi." Miss. Code Ann. §§ 59-5-21, 59-5-7. It is charged with the oversight of the Port. Miss. State Port Auth. at Gulfport v. S. Indus. Contractors LLC, 271 So. 3d 742, 754 (Miss. Ct. App. 2018).

The "State Ports and Harbors Law", the legislation under which the MSPA was formed, declared that it was "the public policy of the state to aid and encourage the promotion, development, improvement, and expansion of the state's ports, harbors and inland waterways." Miss. Code Ann. § 59-5-3. The Mississippi Legislature further instructed that the provisions of this Law "shall be construed liberally and broadly" to effectuate its policy and purposes. Id. at § 59-5-5(1).

With respect to your first question, in relation to its operation of the Port, the MSPA has the following authority to lease real property and improvements:

> The [MDA], acting jointly with the state port authority, is authorized to set aside, or lease all or portions of any lands, roads, docks, sheds, warehouses, elevators, compresses, floating dry docks, graving docks, marine railways, tugboats, or any other necessary or useful improvements constructed or acquired by it to individuals, firms, or corporations, public or private, for port, harbor, commercial or industrial purposes for a period not to exceed ninety-nine years, or to execute a conveyance of sale, except as otherwise limited by law, on such terms and conditions and with such safeguards as would best promote and protect the public interest. Any industrial lease of lands may be executed upon such terms and conditions and for such monetary rental or other consideration as may be found adequate and approved by the board in orders or resolutions authorizing the same.

Miss. Code Ann. § 59-5-35.[1] Under this broad authority, the MSPA, acting jointly with the MDA,[2] may lease certain portions of the Port to a third party, with such lease providing the lessee exclusive use and possession of the leased area for a period not to exceed ninety-nine years.

In addition to its power to lease property, the MSPA has explicit statutory authority to contract with other parties to carry out its duties. Specifically, the Code provides that the:

> State Port Authority, in the performance of its duties, may . . . make all contracts . . . incidental to or necessary for the advancement, promotion, development, establishment, insurance, maintenance, repair, improvement and operation of any ports, harbors, rivers, channels and waterways . . . .

Miss. Code Ann. § 59-5-37; Tradigrain, Inc. v. Miss. State Port Auth., 701 F.2d 1131, 1133 (5th Cir. 1983) (citing Section 59-5-37 and finding the MSPA has the power to "enter into contracts necessary to its operation"). Accordingly, the MSPA is vested with broad authority to enter into a contract that is "incidental to or necessary for the . . . operation of . . . [the] [P]ort[ ]." Miss. Code. Ann. § 59-5-37.

Turning to your second question, case law in Mississippi provides that the State does not have the protection of sovereign immunity for claims of breach of an express contract.[3] See, e.g., Cig Contractors, Inc. v. Miss. State Bldg. Comm'n, 399 So. 2d 1352, 1355 (Miss. 1981) (finding that under a breach of contract claim, "the defense of sovereign immunity is not available"); Weible v. Univ. of S. Miss., 89 So. 3d 51, 63 (Miss. Ct. App. 2011) ("Here, it is undisputed that sovereign immunity does not relieve USM of its obligations under an express contract . . . ."). Our courts have expounded on this principle by stating:

> The general rule is that when the legislature authorizes the State's entry into a contract, the State necessarily waives its immunity from suit for a breach of contract. Where the state has lawfully entered into a business contract with an individual, the obligations and duties of the contract should be mutually binding and reciprocal. There is no mutuality or fairness where a state or county can enter into an advantageous contract and accept its benefits but refuse to perform its obligations.

Gulfside Casino P'ship v. Miss. State Port Auth. at Gulfport, 757 So. 2d 250, 256 (Miss. 2000) (quoting Cig Contractors, Inc., 399 So. 2d at 1355); Weible, 89 So. 3d at 63 (same).

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Kyle Williams
Kyle Williams
Special Assistant Attorney General

[1] Additionally, to the extent that the MSPA has not expressly been granted such authority, it may exercise all powers and authority granted to county port authorities or county development commissions under Sections 59-9-15 through 59-9-35. Miss. Code Ann. § 59-5-31.

[2] Section 59-5-11 similarly grants broad power to "lease . . . ports, harbors, waterways, channels, wharves, piers, docks, quays, elevators, tipples, compresses, bulk loading and unloading facilities, warehouses, floating dry docks, graving docks, marine railways, tugboats, ships, vessels, shipyards, shipbuilding facilities, machinery and equipment, dredges and any other facilities required and incidental to the construction, outfitting, drydocking or repair of ships or vessels, and water, air and rail terminals, and roadways and approaches thereto, and other structures and facilities needful for the convenient use of the same in the aid of commerce . . . ."

[3] However, a claim for breach of an implied contractual term is subject to and governed by the Mississippi Tort Claims Act ("MTCA"). Jones v. Miss. Inst. of Higher Learning, 264 So. 3d 9, 24 (Miss. Ct. App. 2018) ("Therefore, Jones is correct that the MTCA does not apply to any claim alleging a breach of the express terms of a contract; however, the MTCA does apply to a claim for breach of any implied term of any contract, including the implied covenant of good faith and fair dealing."); see also City of Jackson v. Estate of Stewart ex rel. Womack, 908 So. 2d 703, 711 (Miss. 2005) ("Miss. Code Ann. § 11-46-3 grants immunity to the state and its political subdivisions for 'breach of implied term or condition of any warranty or contract.'"). The Attorney General expresses no opinion as to factual circumstances creating either express or implied contractual obligations for purposes of the MTCA.