BP’s continuing efforts to reduce the scope of its Deepwater Horizon settlement program again produced three separate opinions from a panel in In re Deepwater Horizon (several cause numbers, March 3, 2014). Judge Southwick found that the plan’s requirement of a “certification on the document that the claimant was injured by the Deepwater Horizon disaster” resolved any lingering jurisdictional issues. Judge Dennis concurred in a shorter opinion. Judge Clement dissented, arguing: “This agreement, as implemented, is using the powers of the federal courts to enforce obligations unrelated to actual cases or controversies.”
The Fifth Circuit reversed a summary judgment on a construction subcontractor’s promissory estoppel claim in MetroplexCore, LLC v. Parsons Transportation, No. 12-20466 (Feb. 28, 2014). The Court noted the specificity of the statements made to it by representatives of the general contractor, the parties’ relationship on an earlier phase of the project, and specific communications describing reliance. The Court relied heavily on the analysis of a similar claim in Fretz Construction Co. v. Southern National Bank of Houston, 626 S.W.2d 478 (Tex. 1981).
Duoline Technologies v. Polymer Instrumentation presents an unusual appellate review of a discovery order, arising from an ancillary proceeding to enforce a subpoena for a Pennsylvania case. No. 13-50532 (March 5, 2014, unpublished). Plaintiff Duoline sought to depose Joseph Schwalbach, a former employee, about the business dealings between his new company and Defendant Polymer. Among other rulings, the district court limited the document requests and deposition scope to events during Schwalbach’s employment by Duroline. The Fifth Circuit noted that some evidence supported the plaintiff’s theory of a connection between the businesses, and that logically, plaintiff’s theory relied upon events after Schwalbach left his job at Duoline. The Court did not find an explanatory affidavit from Schwalbach to be dispositive.
Several Louisiana parishes sought damages under a state statute for damages arising from the Deepwater Horizon incident. In re Deepwater Horizon, No. 12-30012 (Feb. 24, 2014). Condensing a much more nuanced opinion — the Fifth Circuit held that the claims were preempted by the Clean Water Act under International Paper v. Oulette, 479 U.S. 481 (1987), because the pollution arose from a source outside Louisiana. The Court rejected arguments that the Oil Pollution Act of 1990 (prompted by the Valdez disaster) changed that analysis, and concluded that the Supreme Court ruled consistently with this result in Arkansas v. Oklahoma, 503 U.S. 91 (1992).
Rowland Trucking’s insurance policy required that it maintain a fence around the entirety of its property. The fence had gaps on the south and west side. Thieves entered on the east side and stole $350,000 in videogame consoles. The Fifth Circuit affirmed judgment for the insured under the Texas Anti-Technicality Statute, which provides: “Unless the breach or violation contributed to cause the destruction of the property, a breach or violation by the insured of a warranty, condition, or provision of a fire insurance policy or contract of insurance on personal property, or of an application for the policy or contract: (1) does not render the policy or contract void; and (2) is not a defense to a suit for loss.” W.W. Rowland Trucking Co. v. Max America Insurance, No. 13-20341 (Feb. 24, 2014, unpublished). The Court sidestepped an argument that the statute did not reach liability policies, finding that the policy here was a property policy notwithstanding its occasional use of the word “liability.”
Plaintiff Jongh sued “State Farm Lloyds” and Johnson, a local insurance adjuster, relating to the handling of her property insurance claim for storm damage. Jongh v. State Farm Lloyds, No. 13-20174 (Feb. 20, 2014, unpublished). State Farm answered and removed, arguing that (1) Johnson was improperly joined to destroy diversity; (2) Jongh had improperly named Lloyds, a separate entity; and (3) State Farm and Jongh were diverse. The trial court ruled for the defendants after a 1-day bench trial. The Fifth Circuit agreed with Plaintiff — who appears to have raised subject matter jurisdiction for the first time on appeal — that “State Farm never became a party in this action. Jongh did not name State Farm as a defendant in her original petition; although it asserted in its answer and notice of removal that Jongh incorrectly named Lloyds as a defendant, State Farm did not move to intervene or otherwise request that the district court substitute it as the proper party in interest.” The Court noted that Plaintiff, the “master of her complaint,” consistently asserted that her claim was against Lloyds and not State Farm. The judgment was vacated and the case remanded.
In Star-Tex Resources, LLC v. Granite State Ins. Co., the parties disputed whether an “auto exclusion” barred coverage in a personal injury case. No. 13-50469 (Jan. 8, 2014, unpublished) The Fifth Circuit concluded that it was not possible to determine coverage form the plaintiff’s pleading: “The complaint contains only one, brief sentence describing the facts of the accident. Importantly, it contains no description of how Esquivel caused the collision.” Therefore, it was appropriate to consider extrinsic evidence (beyond the “eight corners” of the pleading and policy) that the insured was driving a car at the time of the accident, as it was relevant to coverage and by itself did not go to liability, citing Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523 (2004).
In Grimes v. BNSF Railway, the district court applied collateral estoppel to a Federal Railway Safety Act (“FRSA”) suit, based on a fact finding made by a type of arbitral panel called a Public Law Board (“PLB”) after an investigation and hearing by railroad personnel. No. 13-60382 (Feb. 17, 2014). The Fifth Circuit reversed, noting: (1) the hearing was conducted by the railroad; (2) the plaintiff was represented by the union rather than an attorney; (3) the termination decision was made by a railroad employee, not by “an impartial fact finder such as a judge or jury”; (4) the rules of evidence did not appear to have controlled in the arbitral proceedings; and (5) “most crucially,” the PLB’s affirmance was based solely on the record developed at the hearing administered by the railroad. The Court noted authority that rejects res judicata in this context, but also noted that “estoppel may apply in federal-court litigation to facts found in arbitral proceedings as long as the court considers the ‘federal interests warranting protection.’”
After recent opinions finding that credibility determinations led to fact issues in cases about whether a barge hit a bridge and a prison fight, the Fifth Circuit again so held in Vaughan v. Carlock Nissan of Tupelo, No. 12-60568 (Feb. 4, 2014, unpublished). Vaughan alleged that a car dealership unlawfully terminated her after she reported several irregularities there to Nissan. The Fifth Circuit affirmed summary judgment for the dealership as to Mississippi’s “illegal act” exception to at-will employment, but reversed as to her tortious interference claim against the supervisor who terminated her. That claim requires proof of bad faith, which Vaughan sought to establish by showing that she was not fired until making a complaint that specifically named the supervisor. The supervisor admitted that, at the time of termination, he knew Vaughan had complained to Nissan but said “he did not know the contents of the complaint.” The Fifth Circuit found that credibility issues about his claimed justifications for the firing, coupled with the ambiguity of his statement that Vaughn had “no right to report these things to Nissan,” and the timing of the termination, created a fact issue that made summary judgment unwarranted.