When to Conditionally Cross-Appeal

The “ART entities” sued the “Clapper entities” for fraud about a real estate transaction, and they countersued for breach of fiduciary duty.  A jury found against both sides.  The Clapper entities appealed; the Fifth Circuit reversed on a legal issue and remanded for new proceedings on liability and damages. The ART entities then sought to raise the fraud claim again; the district court found it barred by the mandate rule, and on appeal from the second trial, the Fifth Circuit affirmed.  ART Midwest Inc. v. Clapper, No. 11-11140 (Feb. 3, 2014).  It reasoned: “We hold that the ART entities’ decision not to cross-appeal the jury’s fraud findings in the first district court proceeding prevented them from raising the same rejected fraud claims in the second district court proceeding. Even though they prevailed on many of their claims in the first district court proceeding, the consensus of circuit authority supports that the ART entities could have filed a ‘protective’ or ‘conditional’ cross-appeal of the adverse fraud finding.”   The Court otherwise affirmed, reversing as to one issue relating to “double-counting” of damages in light of the parties’ correspondence.

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