After completing her Chapter 13 plan, Juliana Jett owed roughly $35,000 on her mortgage, with $0 past due. Her Experian credit report, however, erroneously showed it as discharged with a $0 balance, which Jett alleged caused her to be denied refinancing. She complained to Experian four times, who in turn sent an “automatic credit dispute verification form” to American Home Mortgage Servicing each time. She sued under the Fair Credit Reporting Act, alleging that “[i]n each instance, American Home tried to correct the information but returned a blank [Consumer Information Indicator] field so Experian did not process the updates.” The Fifth Circuit reversed a summary judgment for the servicer as to Jett’s negligence claim, noting that this evidence allowed an inference that “American Home knew that Jett’s information was being reported inaccurately and attempted to correct it.” The adequacy of the servicer’s procedures was an issue to be resolved at trial. Jett v. American Home Mortgage Servicing, Inc., No. 14-10771 (June 10, 2015, unpublished).
Only in New Orleans. During Mardi Gras, a form of folk art takes discarded beads and twists them into a dog shape, also known as a “bead dog.” A seller of king cakes obtained a trademark for its mascot based on that image (below left), and sued a jewelrymaker who sold necklaces and earrings that also drew upon that image (below right).
The Fifth Circuit affirmed summary judgment for the jewelrymaker, reasoning:
1. The bakery’s “Mardi Gras Bead Dog” mark was descriptive of its products;
2. The mark was not inherently distinctive, and thus may be protected only if it had acquired secondary meaning;
3. Under the applicable seven-factor test, the bakery failed to establish that the mark had acquired secondary meaning; and .
4. While a dog itself cannot be copyrighted, its distinctive collar could potentially be, but on this record the Court concluded that no reasonable juror could find the collars to be “substantially similar in protectable expression.”
Other related state law claims were also dismissed. Nola Spice Designs, LLC v. Haydel Enterprises, Inc., No. 13-30918 (April 8, 2015).
An insurer settled with its insured; the settlement “did not contain an admission of liability under the Policy and both parties dispute whether the Policy covered the four claims at issue.” Accordingly, the insured had no claim under the Texas Prompt Payment Act for an alleged breach of the settlement. Tremago, L.P. v. Euler-Hermes American Credit Indemnity Co., No. 13-41179 (Feb. 25, 2015, unpublished). The Court also found that a trio of statements such as “[Plainitff] has not alleged, let alone proffered any evidence of any act on [Defendant’s] part that fairly can be characterized as ‘so extreme’ that it would cause ‘injury independent of the policy claim’ was sufficient to place the plaintiff on notice that its extra-contractual claims were within the scope of the defendant’s summary judgment motion.
The issue in Lowman v. Jerry Whitaker Timber Contractors, LLC was whether certain timber companies had vicarious liability for allegedly unlawful logging activities, in DeSoto Parish, Louisiana, in violation of that state’s timber cutting statute. Evidence showed that the loggers sold timber to the mills and in return received a “scale ticket” — a sort of commercial paper that can be bought and sold and allows small loggers immediate access to sale proceeds — which featured a description of the wood. Plaintiffs offered an affidavit from a state investigator who described the defendants’ “prior schemes involving the theft of timber and the falsifying of scale tickets,” and opined that he saw “‘the same pattern’ of activity” here. The Fifth Circuit affirmed summary judgment for the defendants, finding that the evidence showed no connection between the tickets he reviewed and the timber at issue, much less any “right of control or supervision” by the defendants over the loggers. No. 14-30787 (Feb. 10, 2015, unpublished).
I hope you enjoy this article on “Fact Issues in the Fifth Circuit,” which I published earlier this month in the State Bar Litigation Section’s periodical, “News for the Bar.”
The parties to a contract about the construction of a barge disputed whether an amendment required price adjustments based on the price of steel. Blessey Marine Services, Inc. v. Jeffboat, LLC, No. 13-30731 (Nov. 10, 2014, unpublished). In a pretrial summary judgment ruling, the district court rejected the plaintiff’s argument that the contract was unambiguous, and held a jury trial to hear extrinsic evidence and resolve the ambiguity. On appeal, the Fifth Circuit held:
1. Because the plaintiff did not renew the ambiguity argument in a Rule 50 motion (although it did raise the point in a motion in limine and in opposition to the other side’s motion), the Court could not consider it on appeal; and
2. “By adducing some of the same extrinsic evidence at trial that it had sought to exclude in its motion in limine, [Plaintiff] waived its right to challenge the district court’s admission of that evidence.” (citing Fed. R. Evid. 103(b) and Ohler v. United States, 529 U.S. 753, 755 (2000) [“[A] party introducing evidence cannot complain on appeal that the evidence was erroneously admitted.”])
Consistent with a 2014 line of cases that reversed summary judgments on credibility issues, the Fifth Circuit reversed a summary judgment for the insurer in a bad faith case in Santacruz v. Allstate Texas Lloyds, No. 13-10786 (Nov. 13, 2014, unpublished). The insured alleged inadequate investigation into her claim of covered wind damage to her home, and the Court found fact issues on two matters.
First, as to liability for bad faith, the Court noted: “The extent of Allstate’s inquiry into the claim consisted of its adjuster taking photographs of the damaged home. Significantly, Allstate did not attempt to talk to the contractor, who submitted an affidavit in this case describing what he observed concerning the roof and attributing the cause to wind damage. Nor is there any evidence showing that Allstate obtained weather reports or inquired with neighbors to see if they suffered similar damage, which would tend to show the damage was caused by wind rather than normal wear and tear.”
Second, as to damages, the Court said: “Santacruz claimed three types of damages: (1) the replacement of the roof, supported by an invoice from Pedraza providing that Santacruz paid him $3,900 to repair the roof; (2) a list of damaged personal and household items compiled by Santacruz and his family with an estimate of the value of all the belongings; and (3) repair work needed for the damaged interior of the home, supported by an estimate from a contractor listing the repairs to be done. Further, Pedraza submitted an affidavit testifying to the necessity of repairing the roof, and Santacruz submitted photographs showing the extensive damage to the home’s interior to support his claim that repairs were necessary.”
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.