In Amco Energy v. Capco Exploration (No. 11-20264, Jan. 30, 2012), the Court addressed two fundamental business tort issues.  The first involved a professional negligence claim about the evaluation of certain oil properties — the majority found that the professional’s contract did not extend to the matters complained of and thus created no professional duty, while the dissent “cannot fathom how one can conclude that there was no contract” for those matters.  Op. at 8, 10, 23.   The second found a contractual disclaimer of reliance that defeated a fraud claim, continuing the recent development of law on that issue in Italian Cowboy Partners, Ltd. v. Prudential Ins. Co., 341 S.W.3d 323, 333 (Tex. 2011) and LHC Nashua Partnership Ltd. v. PDNED Sagamore Nashua LLC, 659 F.3d 450, 460 (5th Cir. 2011).  Op. at 17.

The plaintiff in Arena v. Graybar Electric Company (No. 10-31096, Jan. 25, 2012) asserted a federal claim under the Miller Act (the statute for contractors’ claims on government projects) and related state law claims.  The Court found that failure to comply with a bonding requirement was fatal to the Miller Act claim, and thus to supplemental jurisdiction over the state claims.  The district court allowed an amendment to assert diversity jurisdiction, but the Court remanded for consideration of evidence submitted in response to that amendment that would defeat diversity if credited.   Echoing its recent decision in Enochs v. Lampasas County, 641 F.3d 155 (5th Cir. 2011), which voided a judgment on state law claims after dismisal of the federal claim, the Court reminded: “The court’s reasoning of judicial efficiency to resolve [plaintiff’s] state-law claims comes into play only when jurisdiction is proper.”  Op. at 9.

The employee handbook in Carey v. 24 Hour Fitness contained an arbitration provision and a “Change-in-Terms” clause giving the employer “the right to revise, delete, and add to the employee handbook.”  No. 10-20845 (Jan. 25, 2012).  The  Court affirmed a finding that the arbitration provision was illusory, and thus unforceable.  Op. at 4 (citing  Morrison v. Amway Corp., 517 F.3d 248, 257 (5th Cir. 2008)).  The Court contrasted In re Halliburton Co., 80 S.W.3d 566, 569-70 (Tex. 2002), in which a clause was enforced when the employer’s right to amend the arbitration provision was specifically limited as to present disputes,  and favorably cited Weekley Homes v. Rao, 336 S.W.3d 413, 415 (Tex. App.–Dallas 2011, pet. denied), in which a provision requiring notice of a handbook was not sufficient to make an arbitration provision non-illusory.

Bohnsack v. Varco presented a post-judgment appeal of successful claims for fraud and misappropriation of trade secrets about an oil drilling device called the “Pit Bull.”  No. 10-20741 (Jan. 23, 2012).  The Court ruled: (1) the evidence was sufficient to hold the defendant liable for statements of its outside counsel, to show that those statements were a “material factor” to the plaintiff, and to establish injury from lost profits (op. at 13-16); (2) the fraud damages awarded were benefit-of-the-bargain damages, not compensable under common-law fraud (op. at 16-20 (discussing Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001))); (3) fraudulent inducement failed because the defendant’s statements only induced negotiations, not entry into a contract (op. at 22); and (4) the damages were compensable as misappropriation of a trade secret, under the broad definition of “use” in Texas law, and in light of damages evidence sufficient to show “the value a reasonably prudent investor would pay for the trade secret.”  Op. at 25-26.

Two individuals, involved in a political struggle about a camera system for traffic lights, sought to intervene of right in a lawsuit between the City of Houston and the system’s contractor.  City of Houston v. American Traffic Solutions (No. 11-20068, Jan. 24, 2012).  The Court reviewed the general requirements of Fed. R. Civ. P. 24(a)(2) but observed that “[b]riefing does not reveal any cases directly on point” to this situation.  Op. at 4.  The Court reversed the district court’s denial of intervention, observing that “[a] court must be circumspect about allowing intervention of right by public-spirited citizens,” but finding that these individuals were exceptionally involved in the political background for the system, and that the City was not necessarily an adequate representative for them in light of the specific history of this system and litigation.  Op. at 4-5.

The plaintiff in Kocurek v. CUNA Mutual Insurance sued for fraud about the sale of an insurance policy in 2005 on her husband’s life.  (No. 10-51042, Jan. 24, 2012).  The defendant persuaded the district court to dismiss on the pleadings, arguing that she lacked standing because she was not a beneficiary of the 2005 policy, and that the policy had a “one policy only” clause that barred claims under an earlier policy.  The Court disagreed and reversed, characterizing the plaintiff’s claims as relating to the “practice of selling multiple policies to the same individual,” op. at 4-5, and finding the “one policy only” provision potentially ambiguous and thus not a proper basis for dismissal on the pleadings.  Op. at 5.   The Court affirmed dismissal of a DTPA claim, as the plaintiff was not the “consumer” who brought the policy.  Op. at 5-6.

In a complicated case about jurisdiction over a challenge to administrative action, the Court addressed the general effect of presumptions under the Federal Rules of Evidence and Rule 301 in particular.  City of Arlington v. FCC (No. 10-60039, Jan. 23, 2012).  The Court reminded that under the “bursting-bubble” approach of Rule 301, “the only effect of a presumption is to shift the burden of producing evidence with regard to the presumed fact.”  Op. at 42.  Accordingly, “once a party introduces rebuttal evidence sufficient to support a finding contrary to the presumted fact, the presumption evaporates,” and “[t]he burden of persuasion with respect to the ultimate question at issue remains with the party on whom it originally rested.”  Id. 

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.

The case of Time Warner Cable v. Hudson, (No. 01-5113) Jan. 13, 2012, presented a constitutional challenge to a Texas statute regulating cable TV providers, on the grounds that it unfairly discriminated against a group of them.   The Court discusses the plaintiffs’ standing at some length, holding that “[d]iscriminatory treatment at the hands of government” was a cognizable injury.  Op. at 5-8.

Texas Medical Providers v. Lakey, No. 11-50814 (Jan. 10, 2012), is a high-profile constitutional challenge to Texas laws requiring a physician who performs an abortion to show a sonogram to the woman.  The Fifth Circuit reversed a preliminary injunction against enforcement of the statute, finding that the plaintiffs failed to demonstrate a substantial likelihood of success on their First Amendment and vagueness challenges.  While most of the thorough opinion reviews the highly specific constitutional principles in this area, its treatment of the “likelihood of success” factor for a preliminary injunction is also of general interest to civil litigators.

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)   

In Jones v. Wells Fargo Bank, the Court affirmed liability for conversion when a bank “reaccepted [a check] into an account other than that of the named payee, without the proper endorsement.”  No. 11-10320 (Jan. 9, 2012).   The opinion provides detailed discussion of basic topics in the law of checks: who has the rights of a “holder” under UCC Article 3 (op. at 4-6), proper safeguards for check endorsements (op. at 8-10), and accountholder responsibilities for review of a bank statement.  (Op. at 11-13)  The opinion concludes with review of the “in pari delicto” defense, a significant issue in some corporate governance cases, and notes how the defense can apply differently to receivers as compared to bankruptcy trustees.  (Op. at 13-18)

In a dispute about termination of a Volvo truck franchise, Volvo sued the dealership under section 4 of the Federal Arbitration Act to compel arbitration.  Volvo Trucks v. Crescent Ford Truck Sales, No. 09-30782 (Jan. 5, 2012).  Both businesses were Delaware corporations.  The district court found federal question jurisdiction because some relief requested involved interpretation of a federal statute.  The Fifth Circuit applied the “look-through” approach of the Supreme Court in Vaden v. Discover Bank, 556 U.S. 49 (2009), under which a court first “assume[s] the absence of the arbitration agreement” to determine if federal jurisdiction would exist without it.  Under Vaden, the Court found that the substantive issues in dispute were governed by state law.  Op. at 6-9.  It also found that the federal issue on which declaratory relief was requested did not create jurisdiction because it “arises only as a defense or in anticipation of a defense.”  Op. at 12.

The Fifth Circuit and its courthouse are linked to life in the downtown of New Orleans – note that the clerk’s office will close at 4:00 on January 9 because of the BCS championship game at the Superdome that evening.