River Oaks, an apartment management business originally based entirely in Louisiana, expanded into Mississippi in 2011. It had a workers comp policy with Bridgefield Insurance, which provided “Other States” coverage for Mississippi if River Oaks notified Bridgefield of activity there. After an employee’s injury in Mississippi, Bridgefield denied coverage for failure to comply with this notice requirement. Bridgefield Casualty Ins. Co. v. River Oaks Management, Inc., No. 13-31077 (Oct. 27, 2014, unpublished).
Bridgefiled won the coverage dispute in district court, and the Fifth Circuit agreed that: (1) the provision was not ambiguous; (2) the provision was a condition precedent to coverage, so Bridgefield did not have to show prejudice from the lack of notice; and (3) for similar reasons, the provision did not implicate the Louisiana “anti-technical” statutes.
But, the Court found a material fact issue and reversed — agreeing with the district court that there was a factual dispute about whether an audit by Bridgefield put it on notice of the Mississippi activity (and accepted payments after that time), the Court disagreed with the district court’s conclusion that the dispute was not material: “An insurer may waive a provision that falls short of granting it the right to cancel the entire policy, such as the exclusion-of-coverage provision at issue here.”
The Fifth Circuit and the district court agreed that the plaintiffs/appellants in Mboho USA, Inc. v. Okon had served “abusively excessive, repetitious, and burdensome discovery requests.” No. 13-20449 (Oct. 10, 2014, unpublished). But, the Fifth Circuit found that the district court had acted too hastily in dismissing the case entirely, noting:
(1) the plaintiff, a foreign entity, was not foreclosed from suing in Texas simply because it is not registered to do business there;
(2) one of the appellants had legitimate documents from the Nigerian government authorizing him to bring suit in the US or Canada;
(3) an earlier dismissal in state court for lack of subject matter jurisdiction was not preclusive as to another court with jurisdiction; and
(4) as to one of the claims, plaintiffs were entitled to an opportunity to respond before it was dismissed sua sponte.
First case: Highland Capital sued Bank of America for the alleged breach of an oral contract to sell a $15.5 million loan. After the Fifth Circuit reversed the dismissal of this claim under Rule 12(b)(6), it affirmed summary judgment for the defendant in Highland Capital Management LP v. Bank of America, No. 13-11026 (July 3, 2014). Highland relied upon standard terminology promulgated by an industry association, while the Bank pointed to evidence showing that, in this specific transaction, the Bank was not familiar with that terminology and not want it to control. “Although industry custom is extrinsic evidence a factfinder can use to determine the parties’ intent to be bound, its value is substantially diminished where, as here, other evidence overwhelmingly shows that the persons involved in the dealings were unaware of those customs.” The Court also rejected an alternative theory that a prior transaction that involved the terminology continued to govern the parties’ relationship, noting: “Whether a prior contract had a binding effect on the procedures available for future contract-formation is a legal question.”
Second case: As with the previous case, WH Holdings LLC v. Ace American Ins. Co. was remanded for development of a factual record, this time for extrinsic evidence about a contract ambiguity. No. 13-30676 (June 26, 2014, unpublished). And as with the previous case, the Fifth Circuit affirmed a summary judgment, finding that seven pieces of extrinsic evidence were either not relevant to the specific contract issue, or “equally consistent with both” readings.
Adding to an April opinion about the proper scope of review for a Rule 12(b)(6) motion, the Fifth Circuit reminded that — In addition to the pleading itself — a court may consider “the documents attached to the complaint, the documents attached to the motion to dismiss which were referred to in the complaint and central to Plaintiffs’ claim, as well as taking judicial notice of matters of public record.” Mitchem v. Fannie Mae, No. 13-10904 (June 9, 2014, unpublished). Mitchem provides citations to published Fifth Circuit authority for each of these points.
The plaintiff in Jonibach Management Trust v. Wartburg Enterprises sued the defendant for breach of an oral contract; specifically, an agreement to exclusively market the plaintiff’s products in the US. No. 13-20308 (April 24, 2014). The defendant made three counterclaims, two of which were dismissed because they relied on an additional oral modification to the contract and could not satisfy the Statute of Frauds. The third survived before the Fifth Circuit, however, as it was essentially the mirror image of the plaintiff’s claim — contending that the plaintiff wrongfully supplied goods to other distributors. Among other reasons for that conclusion, the Court noted that the plaintiff’s “pleadings and testimony regarding the initial contract . . . constitute judicial admissions,” and reviewed the elements of such an admission.
In reviewing a motion to dismiss under Rule 12(b)(6), the district court “must limit itself to the contents of the pleadings, attachments thereto,” and “may also consider documents attached to either a motion to dismiss or an opposition to that motion when the documents are referred to in the pleadings and are central to a plaintiff’s claims.” Brand Coupon Network LLC v. Catalina Marketing Corp., No. 13-30756 (April 8, 2014). Here, without converting the Rule 12 motion into a summary judgment motion, the district court considered an affidavit “signed . . . a day before [plaintiff] filed its opposition to Defendants’ motion to dismiss, and weeks after the filing of the petition.” Accordingly, the Fifth Circuit reversed a dismissal under Rule 12 on limitations grounds.
Compare Sigaran v. U.S. Bank, N.A., No. 13–20367 (April 30, 2014, unpublished): “The district court, however, did not rely on those documents in making its ruling. The additional documents were relevant to the merits of the Sigarans’ claims under the Texas Constitution, but the district court did not reach the merits of those claims and instead dismissed them as barred under the statute of limitations. The mere presence of those documents in the record, absent any indication that the district court relied on them, does not convert the motion to dismiss into a motion for summary judgment.”
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).
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.
A barge moored at a facility operated by Lafarge came loose during Hurricane Katrina and caused extensive damage. The district court granted summary judgment to Lafarge, finding that the plaintiff’s damage theory was not scientifically credible in light of the observed weather conditions at the time. St. Bernard Parish v. Lafarge North America, Inc., No. 13-30030 (Dec. 19, 2013, unpublished). The Fifth Circuit agreed that “[t]here is a great deal of testimony supporting Lafarge’s position, to be sure, and little to support the Parish’s, but we are mindful of the summary judgment standard.” It reversed, however, noting eyewitness testimony that was not consistent with the defendant’s expert analysis. The Court distinguished and limited Ralston Purina v. Hobson, 554 F.2d 725 (5th Cir. 1977), which involved an unusual theory about the behavior of starving chickens, on the ground that its plaintiff could not prove the facts that his theory required.
Borrowers alleged that their lender knowingly accepted an inaccurate fair market value of their home, for purposes of a home equity loan, in violation of the Texas Constitution. Gonzalez v. U.S. Bank, N.A., No. 13-10342 (Nov. 29, 2013, unpublished). The lender won summary judgment and the Fifth Circuit affirmed. The borrowers first pointed to a tax appraisal, which the Court rejected because “under Texas law, tax valuations are legally insufficient evidence of fair-market value.” Second, the borrowers pointed to one of their affidavits, which the Court also rejected as “conclusory and unsubstantial” and insufficient to prove notice to the lender. The Court briefly reviewed other summary judgment cases involving similar “self-serving” affidavits.
In an unpublished opinion that happened to come out the same day as the slightly-revised “robosigning” opinion of Reinagel v. Deutsche Bank, the Fifth Circuit briefly reviewed the requirements for a summary judgment affidavit in a note case. RBC Real Estate Finance, Inc. v. Partners Land Development, Ltd., No. 12-20692 (Oct. 30, 2013, unpublished). As to foundation, the affidavit purported to be based on personal knowledge, and said that “[a]s an account manager at RBC[, the witness] is responsible for monitoring and collecting the . . . Notes.” “Therefore, [he] is competent to testify on the amounts due . . . .” As to sufficiency, the Court quoted Texas intermediate appellate case law: “A lender need not file detailed proof reflecting the calculations reflecting the balance due on a note; an affidavit by a bank employee which sets forth the total balance due on a note is sufficient to sustain an award of summary judgment.”
Devon Enterprises was not re-approved as a charter bus operator for the Arlington schools after the 2010 bid process. Devon Enterprises v. Arlington ISD, No. 13-10028 (Oct. 8, 2013, unpublished). Devon argued that it was rejected solely because of its bankruptcy filing in violation of federal law; in response, the district cited safety issues and insurance problems. An email by the superintendent said “[Alliance] was the company that [AISD] did not award a bid to for charter bus services because they are currently in bankruptcy.” Calling this email “some, albeit weak, evidence” that the filing was the sole reason for the decision, the Fifth Circuit reversed a summary judgment for the school district.
In Vinewood Capital LLC v. Dar Al-Maal Al-Islami Trust, “[t]he only evidence offered by Vinewood in support of the alleged oral contract between Vinewood and DMI for DMI to invest $100 million in real estate [was] Conrad’s deposition testimony and affidavit.” No. 12-11103 (Oct. 8, 2013, unpublished). The Fifth Circuit reminded: “[A] party’s uncorroborated self-serving testimony cannot prevent summary judgment, particularly if the overwhelming documentary evidence supports the opposite scenario.” (citing Vais Arms, Inc. v. Vais, 383 F.3d 287, 294 (5th Cir. 2004)).Therefore, “[a]s the district court concluded, Conrad’s self-serving testimony is belied by the parties’ contemporaneous written communications and written agreements and is therefore insufficient to create an issue of fact.”
While nominally about a limited issue of workers compensation law, Austin v. Kroger Texas LP analyzes basic issues of an “Erie guess,” Texas premises liability law, and the types of negligence claims available in Texas. No. 12-10772 (Sept. 27, 2013). Austin, a Kroger employee, slipped while cleaning an oily liquid with a mop. Contrary to store policy, a product called “Spill Magic” was not available to him that day. After a thorough discussion of the interplay between the common law of premises liability and the Texas workers compensation statutes (Kroger being a non-subscriber), the Fifth Circuit reversed a summary judgment for Kroger that was based on Austin’s subjective awareness of the spill. “Section 406.033(a) of the Texas Labor Code takes the employee’s own negligence off of the table for a non-subscriber like Kroger . . . ” The Court went on to find fact issues about Kroger’s negligence in not having Spill Magic available, and about Kroger’s knowledge of the spill. The Court affirmed dismissal of the gross negligence claim, and in the remand, asked the district court to consider the specific type of negligence claim that Austin asserted under Texas law.
Davis, a Louisiana prisoner, was attacked and injured by another inmate, Anderson. Davis sued under 42 U.S.C. § 1983, alleging that several prison officials and guards were “deliberately indifferent” to a “substantial risk of serious harm” to his safety. Davis v. LeBlanc, No. 12-30756 (Sept. 12, 2013, unpublished). Similar cases are filed frequently, summary judgment for the defense is common, and affirmance is near-universal under the demanding legal standards for such claims. Here, Davis offered a sworn declaration from another inmate who spoke to a guard defendant shortly before the attack, and was told by that guard that Anderson was going to “‘whip that [expletive] Davis in the cell next to him’ and ‘that [expletive] needs a good [expletive] whipping and it is worth the paperwork for him to get it.'” Summary judgment for that guard was reversed and the case was remanded for further proceedings. Whatever happens to Davis’s claims, this opinion provides a clear — if graphic — example of how to create a fact issue, and reminds that the Fifth Circuit does in fact review the record in the many prisoner cases presented to it.
The plaintiffs in AFLAC v. Biles sued in state court, alleging that AFLAC paid death benefits to the wrong person, and that the signature on the policy application was forged. No. 12-60235 (April 30, 2013). AFLAC moved to compel arbitration in the state court case and simultaneously filed a new federal action to compel arbitration. The state court judge denied AFLAC’s motion without prejudice to refiling after discovery on the issue of the signatures’ validity. In the meantime, the federal court granted AFLAC’s summary judgment motion and compelled arbitration after hearing expert testimony from both sides on the forgery issue. The Fifth Circuit affirmed, finding that Colorado River abstention in favor of the state case was not required, and that the order compelling arbitration was allowed by the Anti-Injunction Act because it was “necessary to protect or effectuate [the federal] order compelling arbitration.” The Court also found no abuse of discretion in the denial of the respondents’ FRCP 56(e) motion, since it sought testimony that would only be relevant if the witness admitted outright to forgery.
A steady flow of mortgage servicing cases in 2013 continued with Smith v. JPMorgan Chase (March 22, 2013, unpublished). In affirming summary judgment for the lender on several issues, the Court made two holdings of note. First, an incomplete RESPA response, provided less than sixty days before suit was filed, could not support a contract or negligent misrepresentation claim when it caused no damage. Second, the statement: “Defendants’ agents made harassing phone calls 8-10 times per day. I quit answering our phone, but the constant ringing caused us to have to unplug our home phone and to only use our cell phones” did not raise a fact issue on a claim of unreasonable collection efforts, when “Defendants’ detailed call records, on the other hand, indicated that calls were not answered, phone numbers were disconnected, and messages were left, but, on days when there were multiple calls, only two calls were made.”
A company leased a railcar, and undertook to return it “cleaned of commodities,” which was defined to mean (among other things) “safe for human entry.” Sampson v. GATX Corporation, No. 12-30406 (March 19, 2013, unpublished). The district court concluded that this provision was only part of the contract devoted to allocation of the cost of cleaning. The Fifth Circuit disagreed, and found that the plaintiff had raised a fact issue about whether this contractual duty could give rise to tort liability to someone injured in the car, pursuant to section 324A of the Second Restatement of Torts.
A series of clerical errors led an insurer to overpay a $710,000 settlement by $510,000. National Casualty v. Kiva Construction, No. 12-20217 (Nov. 12, 2012). The insurer sued for breach of contract and “money had and received”; the insured counterclaimed for bad faith in the initial handling of the settlement. The Fifth Circuit affirmed the district court’s summary judgment for the insurer. The Court’s straightforward, unpublished opinion offers two cautionary notes — first, while the settlement agreement did not specify a time for payment of the full amount, a Lousiana statute did so specify (although the insurer complied), and second, the Twombly standards are not in play when the district court obviously considered evidence outside of the pleadings and said in its order that the counterclaims failed “based on the undisputed facts.”
The question in Haggard v. Bank of the Ozarks was whether a guarantor’s liability was limited under Texas law to the last $500,000 due on the note of the principal obligor. (No 11-10154, Jan. 19, 2012). Comparing language in the guaranty which limited liability “to the last to be repaid $500,000, of the principal balance of the loan,” with other terms that excused the creditor bank from first trying to collect from the principal, the Court found the guaranty ambiguous and reversed a summary judgment for the bank. Op. at 7, 8. (citing, as to the limitation language, NH Properties v. Mittleider, 267 F. App’x 375 (5th Cir. 2008)). The Court reminded that a “guaranty agreement is construed strictly in favor of the guarantor,” so “[i]f the guaranty is ambiguous, then the court must apply the ‘construction which is most favorable to the guarantor.'” Op. at 8.
In Davis-Lynch, Inc. v. Moreno, a company sued two individuals (among others) alleging RICO violations. (No. 10-20859, Jan. 10, 2012) The individuals asserted the Fifth Amendment in their answers, and then withdrew those assertions after the plaintiff filed a summary judgment motion. The Court allowed one of those withdrawals, stating: “[A] party may withdraw its invocation of the Fifth Amendment privilege, even at a late stage in the process, when circumstances indicate that there is no intent to abuse the process or gain an unfair advantage.” (Op. at 11) It affirmed the denial of the other, noting that it was done at the “eleventh-hour” before the close of discovery. (Op. at 12) On the merits, the Court reversed a summary judgment for the plaintiff, finding deficiencies with the plaintiff’s allegations and proof of racketeering injury and activity. (Op. at 13-20) The Court cautioned against entry of “[a]n order that essentially amounts to a default judgment” in the summary judgment context. (Op. at 21)
Thompson v. Zurich American Insurance, No. 10-51013 (Dec. 2, 2011) presented a common law “bad faith” action under Texas law about handling of a workers compensation claim (Insurance Code rights being limited after Texas Mutual v. Ruttiger, No. 08-0751 (Tex. Aug. 26, 2011)). After reminding that Rule 56 asks “whether a rational trier of fact could find for the non-moving party,” op. at 4, the Court reviewed Texas case law on several issues in light of Ruttiger, and found that on the facts presented, none of the following showed bad faith: (1) conflict between expert reports; (2) lack of personal treatment of the plaintiff by the expert; (3) the expert’s record of primarily working for insurance companies; (4) the expert’s analysis of “aggravation”; or (5) the insurer’s conduct after the initial review. Op. at 5-13. The footnotes in the opinion summarize the present state of Texas law on several “bad faith” claims-handling issues.