The appellants in Texas Medical Providers v. Lakey sought $60,000 in attorneys fees after successful defense of civil rights claims about new abortion laws.  No. 12-50291 (Feb. 26, 2013, unpublished).  The Fifth Circuit rejected a request based on 42 U.S.C. § 1988, noting: “Lack of merit does not equate to frivolity . . . .”  The Court also rejected a request based on inherent power, which relied upon statements by plaintiff’s counsel that they dismissed several challenges because the initial Fifth Circuit panel had declared all future appeals in the case would be heard by the same panel.  It stated: “The short answer to this charge is that if courts treated as a willful abuse of process every self-serving statement of counsel at the expense of a judge or judges, there would be no end to sanctions motions.”

In First American Title v. Continental Casualty, the Court analyzed a “claims-made-and-reported” policy under the Louisiana direct action statute, which allows an injured third party to directly sue the responsible party’s insurer.  No. 12-30336 (Feb. 28, 2013).   Notice was not given to the insurer during the required period.  The Court concluded that unlike an occurrence policy, where a notice requirement is intended to protect the insurer and a failure to give notice will not bar a direct action, proper notice under this policy was a condition precedent to coverage and thus barred the direct action.  A concurrence agreed with the result but advocated a narrower ground for decision.

Con-Drive contracted to provide an offshore diving system to ARV Offshore, did not perform, and was found liable for millions of dollars that it cost ARV to arrange a substitute system for an oil-drilling project.   ARV Offshore Co. v. Con-Dive LLC, No. 12-20098 (Feb. 22, 2013, unpublished).  A key damage issue was whether ARV was reimbursed by its customer for a substantial amount of the costs for the substitute.  The Fifth Circuit affirmed the judgment, noting a potential waiver issue because Con-Dive had not adequately pleaded offset as a defense, and found that the relevant testimony from an ARV representative was “non-specific and did not establish a basis for the district court to recompute the damage amount.”  The opinion is fact-specific but this observation has broader applicability in commercial damages litigation.

The insured in Mid-Continent Casualty v. Eland Energy recovered a multi-million dollar verdict against its insurer, alleging that the insurer’s efforts to unilaterally settle a claim for environmental damage after Hurricanes Katrina and Rita undermined the defense of an ongoing class action about similar claims.  No. 11-10649 (Feb. 22, 2013).   The district court granted JNOV and the Fifth Circuit affirmed.  Recognizing that “[the insured] is understandably upset,” the court rejected a common-law duty of good faith under Texas law in the handling of third-party insurance claims, dismissing as dicta or distinguishing several cases cited by the insured.   Potential claims under Louisiana law failed for  choice-of-law reasons since the claim was handled in Texas. Claims based on the Texas Insurance Code failed to establish a causal link between the alleged misconduct and the ultimate settlement terms of the class action.

Hisaw & Associates General Contractors (“HIGAC”) defaulted on contracts, requiring Liberty Mutual to pay on a surety bond.  Liberty Mutual v. Hisaw & Associates, No. 11-11012 (Feb. 20, 2013, unpublished).  After it paid, Liberty Mutual sought recovery from HIGAC’s principals; the question for appeal was whether certain transactions involving them violated a covenant about a minimum asset requirement.  The Fifth Circuit affirmed the district court’s conclusion that several payments to third parties by HAGC were not “received by” the principals under the contract, and that loan repayments by HAGC to its principals were not “as a result of . . . loans [to the principals].”  The Court then reversed in favor of the principals on whether a salary payment was a “distribution.”  The Court noted that Liberty Mutual could use more precise contract language, and faulted a senior Liberty Mutual counsel for changing testimony on a relevant issue during a deposition.

A Louisiana statute requires a well operator to provide landowners “a sworn, detailed, [and] itemized statement” about drilling costs.  Brannon Properties v. Chesapeake Operating, No. 12-30306 (Feb. 21, 2013, unpublished).  The Fifth Circuit reversed a summary judgment for the operator, finding that the district court correctly concluded that its report lacked enough detail under the unambiguous language of the statute, and that the analysis should have ended there.  Id. at 5 (“The statute clearly connects the costs reported to the benefits received in exchange.  . . . [I]t must tell the unleased mineral owner what it is getting for its money.”).  The Court faulted the district court for proceeding to analysis of the statute’s purpose after reaching a conclusion that its terms were unambiguous, and also for finding an incorrect purpose inconsistent with those terms. Id. at 6-7.

The defendant in Innovation First Int’l v. Zuru Inc. removed a trade secret case about a toy robotic fish and then obtained dismissal on forum non conveniens grounds.  No. 12-10511 (Feb. 19, 2013, unpublished).  The Fifth Circuit found no abuse of discretion in the district court’s conclusions that the design and production of the fish took place in China and that the bulk of witnesses and evidence were in China, and affirmed based on the analogous case of Dickson Marine v. Panalpina, Inc., 179 F.3d 331 (5th Cir. 1999).  A revised opinion slightly changed the Court’s analysis of the deference due to the plaintiff’s choice of forum.

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.

The judgment debtors in Seven Arts Pictures v. Jonesfilm were found in civil contempt for failure to answer postjudgment discovery and other issues about enforcement of a judgment.  No. 11-31124 (Feb. 18, 2013, unpublished).  The Fifth Circuit affirmed, finding that the district court had general personal jurisdiction over the debtors, that the debtors had waived arguments about the orders by not timely and properly objecting below, and that the district court did not abuse its discretion in awarding $21 thousand in attorneys fees.  While the holdings on jurisdiction, waiver, and attorneys fees draw heavily from the specific facts of the case, the legal framework used is of broad applicability.  Footnote 7 acknowledges the unusual procedural posture of the jurisdiction issue, which had not been raised until after the notice of appeal was filed.

The case of Tekelec, Inc. v. Verint Systems, Inc. presented a contract dispute, sufficiently intricate that the Court attached a four-color chart to its opinion to illustrate the facts.  No. 11-40418 (Feb. 13, 2013).  In affirming summary judgment for the plaintiff on largely case-specific grounds, the Court reached two principal holdings: (1) an assignee has a right to enforce a payment obligation even if the contract documents do not create an express enforcement right, and (2) the contract payments were not “royalties or other patent damages” within the specific context of these parties’ dealings, or as the terms “royalty” and “reasonable royalty” are generally understood.  The first holding draws upon the general principle in Texas law that a contract construction leading to an exclusive remedy is disfavored unless that intent is clearly stated; an issue arising in contract litigation generally when potential equitable remedies are evaluated.

The borrowers in Priester v. JP Morgan Chase alleged two violations of the Texas Constitution about their home equity loan — not receiving notice of their rights 12 days before closing, and closing the loan in their home rather than the offices of a lender, attorney, or title company.  708 F.3d 667 (5th Cir. 2013).  A cure letter was not answered and they sued for forfeiture of interest and principal under the state constitution. The Fifth Circuit affirmed the dismissal of the claim under the Texas 4-year “residual” limitations period, finding that was the prevailing view of courts that had examined the issue, and disagreeing with a district court that had found no limitations period.  That court reasoned that a noncompliant home equity loan was void, but the Fifth Circuit concluded that the cure provision in the Constitution instead made it voidable. Tolling doctrines did not apply since it was readily apparent where the closing occurred.  The Court also affirmed the denial of a motion for leave to amend to add new claims and non-diverse parties, reviewing the factors for both aspects of such a motion.

In long-running litigation and arbitration about alleged environmental contamination in Ecuador, Chevron obtained discovery from U.S. courts several times under 28 U.S.C. § 1782 on the basis that a “foreign or international tribunal” was involved.  Republic of Ecuador v. Connor, No. 12-20122 (Feb. 13, 2013).  Chevron then successfully resisted a § 1782 application on the ground that the arbitration was not an “international tribunal.”   The Fifth Circuit applied judicial estoppel and reversed, asking: “Why shouldn’t sauce for Chevron’s goose be sauce for the Ecuador gander as well?  The Court dismissed a jurisdictional issue by characterizing § 1782 as a grant of administrative authority.  It then rejected Chevron’s arguments that judicial estoppel could not apply to legal issues and that reliance by earlier courts on Chevron’s position had not been shown.  The opinion reminds that: “Because judicial estoppel is an equitable doctrine, courts may apply it flexibly to achieve substantial justice.”  (quoting Reed v. City of Arlington, 650 F.3d 571 (5th Cir. 2011) (en banc), and citing New Hampshire v. Maine, 532 U.S. 752 (2001)).  (The “goose-and-gander” saying traces to an early collection of English proverbs.)

If you can’t make it to New Orleans for Fat Tuesday, 600camp suggests you try Emeril Lagasse’s excellent gumbo recipe.

A manufacturer of ship propulsion systems contracted with a ship operator, who in turn contracted with a shipbuilder.  The manufacturer and the operator had a sales contract (with an arbitration clause), and the operator and the shipbuilder had a separate contract.  VT Halter Marine v. Wartsila North America, No. 12-60051 (Feb. 8, 2013, unpublished).  The component manufacturer and shipbuilder had dealings as part of the overall relationship but did not have a direct contract.  The shipbuilder sued the manufacturer for supplying allegedly defective parts.  Its breach of warranty claim, derivative of the operator’s rights, was conceded to be arbitrable.  The tortious interference claim, however, could only be arbitrated under an estoppel theory since the shipbuilder was not a party to the manufacturer-shipbuilder contract.  The district court’s order was not clear about the basis for ordering arbitration of that claim, and the Fifth Circuit remanded for resolution of whether estoppel applied.  The Court reminded that while orders compelling arbitration are usually reviewed de novo, an order compelling a third party to arbitrate under an estoppel theory is reviewed for abuse of discretion (citing Noble Drilling v. Certex USA, 620 F.3d 469, 472 n.4 (5th Cir. 2010)).

The insurers in Pride Transportation v. Continental Casualty faced a claim arising from a truck accident that left the victim a paraplegic, with evidence that the driver falsified her logs to make deliveries on time, and with plaintiff’s counsel who had won personal injury verdicts in the same county for amounts in excess of policy limits.  No. 11-10892 (Feb. 6, 2013, unpublished).  Under these circumstances, the Fifth Circuit agreed with the district court that the insurers did not incur Stowers liability under Texas law for accepting (rather then rejecting, the classic Stowers fact pattern) a settlement offer at policy limits and then withdrawing from the defense of the insured trucking company.  The Court did not address potential issues arising from the specific release in this settlement (it only named the driver, and excluded the company) except to note that potential indemnity claims between them would fall within the “insured-v.-insured” exclusion.

The insured in Kerr v. State Farm filed a claim about a stolen fishing boat, but declined to give an examination under oath (EUO).  No. 12-30332 (Feb. 5, 2013, unpublished).  State Farm claimed that refusal was a material breach that prevented recovery on the policy.  The insured said that State Farm was not prejudiced.  The Fifth Circuit affirmed summary judgment for State Farm, citing “affidavits from members of [State Farm’s] Special Investigative Unit stating that an EUO is an important tool in the claim investigation process and that by refusing an EUO, Kerr impeded State Farm’s ability to gather information about the claim.”  The Court declined to address an argument by State Farm that prejudice need not be shown when an EUO is refused in a first-party case.

An apartment developer sought recovery on a title insurance policy after unfortunate zoning stopped the project.  Levy Gardens Partners v. Commonwealth Land Title Insurance, No. 12-30010 (Jan. 31, 2013).  The Fifth Circuit affirmed the finding of coverage, concluding, among other matters, that: (1) state court rulings about zoning laws deserved deference by federal courts in later coverage litigation; (2) the state court preliminary injunction litigation about zoning had become a sufficiently “final decree” to trigger coverage; (3) delay in giving notice did not cause prejudice; and (4) the policy did not require the developer to invoke a “conditional use process.”  The Court also found, however, that the policy “unambiguously restricts liability to the difference in the value of the title with and without the zoning encumbrance,” thus limiting the insured’s recovery to roughly $650,000 rather than several million in development expenses.  In rejecting the insured’s arguments about the policy, the Court also found no prejudicial violation of Fed. R. Civ. P. 8(c) about the pleading of defensive matters.

A group of chicken farmers supplied poultry to Pilgrim’s Pride.  After the company terminated its contracts and entered bankruptcy, the farmers sued for damages under a promissory estoppel theory, alleging that its oral promises of a long-term relationship induced them to invest in chicken houses.  Clinton Growers v. Pilgrim’s Pride, No. 12-10063 (Jan. 31, 2013) at 2.  The Court affirmed summary judgment for Pilgrim’s Pride, finding that the plain language of the contract specified a contract duration (“flock-to-flock,” roughly 4-9 weeks), and foreclosed an estoppel claim about that topic.  Id. at 7.  Similarly, contract provisions about the farmers’ compensation and maintenance obligations foreclosed other attempts to recast the subject of the estoppel claim.  Id. at 8.   The Court distinguished a prior Arkansas case about a commitment by Tyson Foods to supply hogs to a hog grower, both on legal grounds and on the strength of the evidence about the alleged misrepresentations by Tyson.  Id. at 8-10.  The Texas Law Book covered the opinion shortly after its release.