Yes, we have no drywall

drywallA dispute about the scope a “Chinese drywall” settlement illustrates the operation of complex class settlements.  Defendants settled with a broadly-defined group of claimants about defective drywall, but limited to claims involving “Affected Property.”  Defendants sought to enjoin a case by a class member who alleged that his condominium – which did not have Chinese drywall – had lost value because of its association with a neighboring property that did have defective Chinese drywall (also called or a “stigma” claim).  The district court denied the request and the Fifth Circuit affirmed.  Mangiarelli v. Sixty-Fifth and One, LLC, No. 14-31355 (Oct. 2, 2015, unpublished).  The Court distinguished between the situation when “individuals [are] ‘class members’ under a settlement agreement, yet [are] barred from recovery under the terms of that agreement” from this situation, where the plaintiff “was never entitled to a benefit under the . . . agreements in exchange for releasing his stigma claims.”

Eviction and Rooker-Feldman

Knoles v. Wells Fargo presented a rare encounter between an eviction and the Rooker-Feldman doctrine.  No. 12-40369 (Feb. 19, 2013, unpublished).  The borrower lost a forcible entry & detainer (eviction) matter at trial in JP court and on appeal.  The borrower then sued for damages, Wells removed, and the borrower unsuccessfully tried to get a TRO about possession from the federal district court.  The district court denied relief based on the Rooker-Feldman doctrine about federal review of final state court judgments.  The Fifth Circuit found that it had jurisdiction over the interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1), even though the appeal was nominally from a TRO, because the relief at issue was “more in the nature of a temporary injunction in fact, though not in name.”  The court deflected an argument about mootness to hold that the order sought a federal injunction against a final state court judgment in violation of the Anti-Injunction Act.

Anti-suit injunction reversed

The unpublished case of Gibbs v. Lufkin Industries reviews the basics of anti-suit injunctions.  No. 11-50524 (Sept. 7, 2012).  The district court dismissed some of plaintiffs’ claims (including the federal ones), remanded the remaining state claims, and enjoined pursuit of those claims during appeal of the dismissal ruling.  The Fifth Circuit reversed, noting that the second court ordinarily determines the preclusive effect of a prior court’s judgment, and that simultaneous in personam proceedings do not by themselves require an anti-suit injunction.  Id. at 6.  The Court distinguished Brookshire Bros. v. Dayco Products, 2009 WL 8518382 (5th Cir. Jan. 23, 2009) as arising from the erroneous remand of the same proceeding.

Reversal on coverage and anti-suit injunctions

In GuideOne Specialty Mutual Ins. Co. v. Missionary Church, a coverage case arising from a car accident by church workers on a lunch break, the Court reversed on the duty to defend, disagreeing with the district court’s decision to consider evidence about the state tort litigation as inconsistent with Texas’s “eight corners” rule.  No. 11-10894 (July 17, 2012), op. at 9-12.  Under that rule, the pleadings about the driver’s status and activities could potentially trigger coverage, creating a duty  to defend.  Id. at 13.  The Court declined to apply a “very narrow’ exception that could apply if a coverage issue did not “overlap with the merits of or engage the truth” of the facts of the case.  Id. at 14 (citing GuideOne Elite v. Fielder Road Baptist Church 197 S.W.3d 305 (Tex. 2006)).  The Court ended by reversing an injunction against state proceedings about the accident, citing general cases about the scope of declaratory judgment actions and noting that the “relitigation exception” to the Anti-Injunction Act did not apply.  Id. at 15-16.