A borrower claimed that a mortgage servicer was unjustly enriched when it obtained an expensive “force-placed” insurance policy on the property.  Baxter v. PNC Bank, No. 12-51181 (Sept. 26, 2013, unpublished).  The Fifth Circuit reminded that a remedy based on restitution or unjust enrichment is not ordinarily available when an express contract deals with the same subject matter.  Here, the deed not only allowed the purchase of force-placed insurance, but warned that the ” “cost of the [forced-placed] insurance might significantly exceed the cost of insurance that [Baxter] could have obtained.”

Plaintiffs sued for defamation, based on critical comments about their role in the Chinese drywall MDL that ended up on the “Above the Law” website.  Herman v. Cataphora, Inc., No.12-30966 (Sept. 17, 2013).  The Fifth Circuit agreed with the district court that Louisiana had no jurisdiction over the defendants because that state was not the “focal point” of the statements, citing Calder v. Jones, 465 U.S. 783 (1984) and Clemens v. McNamee, 615 F.3d 374 (5th Cir. 2010).  It took issue, however, with the district court granting the motion to dismiss and then ordering a transfer.  It noted that a district court has authority to transfer (under 28 U.S.C. § 1406(a)) if it determines that it lacks personal jurisdiction, and therefore vacated the dismissal order and remanded with instructions to order transfer.

The Fifth Circuit affirmed the dismissal of several mortgage-related claims by a borrower against JP Morgan, based on the reasoning of the Court’s opinions in the area in 2013. Hudson v. JP Morgan Chase Bank NA, No. 13-50407 (Sept. 23, 2013, unpublished).  After the district court ruled, the Bank of New York (who had been sued but not served) entered an appearance in the case, and asked the Fifth Circuit to dismiss the claims against it as well.  Finding that BONY was not a party at the time of the district court’s dismissal ruling, the Court dismissed that request for lack of jurisdiction.

Happy birthday today to 600camp.com.  The year had many great stories — courageous monks, generations of chickens, an itinerant ice-shaving machine and the travels of the M/V OCEAN SHANGHAI (presently on the high seas and out of range). Thanks to all readers and the author’s colleagues at Lynn Tillotson Pinker & Cox.  Please celebrate with some authentic shrimp remoulade from Galatoire’s in New Orleans.

The unpublished opinion of Wiley v. Deutsche Bank National Trust Co. affirms the Rule 12 dismissal of borrwers’ wrongful foreclosure claims, summarizing the 2013 cases from the Fifth Circuit about the “split-the-note” argument against the validity of a MERS assignment. No. 12-51039 (Sept. 16, 2013, unpublished).  The opinion reminds that while some borrowers’ claims have survived appellate scrutiny in 2013, a pleading that appears to rehash discredited arguments will not satisfy Twombly and Iqbal.  Other unpublished opinions to the same effect are Kramer v. Fannie Mae, No. 12-51171 (Sept. 19, 2013, unpublished), and Epstein v. U.S. Bank NA, No. 13-50047 (Sept. 25, 2013, unpublished).

The insured estimated loss from a hailstorm at a shopping center at close to $1 million; the insurer estimated $17,000.  TMM Investments v. Ohio Casualty Insurance, No. 12-40635 (Sept. 17, 2013).  The insurer invoked its contractual right for an appraisal, which came in around $50,000.  The insured sued, alleging that the appraisal improperly excluded damages to the HVAC system and that the panel exceeded its authority by considering causation issues.  Applying State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), the Fifth Circuit agreed on the HVAC issue, but did not see that as a reason to invalidate the entire award, and reasoned that the appraisers were within their authority when they “merely distinguished damage caused by pre-existing conditions from damage caused by the storm . . . .”

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.

This blog’s author is happy to have won third place in this year’s Twitter Brief contest, sponsored by the State Bar of Texas Appellate Section.  The entry was:

“Plaintiff slipped on #macaronisalad.  Too bad for her but #equalinference.   #reverseandrender  #cityofkeller”

Two employees entered a series of unauthorized loan transactions on behalf of their employer and took the proceeds.  BJ Services v. Great American Insurance Co., No. 12-20527 (Sept. 6, 2013, unpublished).  The employer’s carrier denied coverage, arguing that the losses did not “directly” result from employee dishonesty, in part because the company never actually got the money.  The district court agreed but the Fifth Circuit reversed, noting that the employees had “apparent” authority to enter the transactions, even if they did not have “actual” authority, and thus created binding contracts on behalf of their employer that made the losses “direct” within the meaning of the policy.

As part of a complicated battle about arbitrability and arbitrator selection, a district court ruled: “Plaintiff’s claims are dismissed for resolution by arbitration.”  Later, the district court rejected a challenge to the arbitrator selection process.  Adam Technologies Int’l v. Sutherland Global Services, No. 12-10760 (Sept. 5, 2013).  The panel divided over how to apply Kokkonen v. Guardian Life, 511 U.S. 375 (1994), which held that a court lacked ancillary jurisdiction to hear a dispute about the enforcement of a settlement provision in a dismissed action.  The majority reasoned: “The judgment dismissing [plaintiff’s] initial lawsuit operated, in all practical effect, as the functional equivalent of an order compelling arbitration between these parties.  We conclude that ancillary jurisdiction existed to allow the district court later to evaluate whether the dismissal that allowed the dispute to be taken to arbitration was being thwarted.”  The dissent did not read the district court’s ruling as retaining jurisdiction.    

A case about Medicare reimbursement for a “mobile stander” wheelchair became moot on appeal when the state agency found it was not medically necessary.  The Fifth Circuit dismissed the case and also vacated the district court opinion and judgment, noting legal errors in the opinion and discrepancy between the opinion and judgment.  In light of all the circumstances, the Court concluded that vacatur was in “the public interest.”  Koenning v. Janek, 12-41187 (Aug. 20, 2013, unpublished).

The Fifth Circuit addressed several important business litigation topics in May-August of 2013:

1.       Borrowers survive.  Mortgage servicers still won many cases, including a published opinion rejecting claims of “robosigning.”   Three times, however, the Fifth Circuit reversed Rule 12 dismissal of borrowers’ pleadings.

2       Personal jurisdiction.  The Fifth Circuit applied for the first time  a 2011 Supreme Court opinion about the “stream of commerce,” finding jurisdiction over a foreign manufacturer, but noting that the opinion may affect older Circuit cases suggesting that a general intent to sell in the US could create jurisdiction in a specific state.

3.       Extrinsic evidence.  The proper handling of extrinsic evidence is a recurring challenge in contract litigation.  A recent case reminds of the importance of evidence about course of performance, even for an unambiguous contrac

4.       Venue.  The Court granted mandamus to compel an intra-district transfer from East Texas’s Marshall Division to its Tyler Division.

5.       Jury deference.  In Wellogix, Inc. v. Accenture, LLP, the Court affirmed a $44 million jury verdict, reminding: “Had we sat in the jury box, we may have decided otherwise.”  Three other published opinions substantially affirm jury awards.

BONUS: Where is the M/V OCEAN SHANGHAI?  An admiralty appeal was recently found moot, in part because the “ship had sailed” from the Fifth Circuit.  Modern technology lets blog readers follow the SHANGHAI to non-Fifth Circuit locations around the globe.

Persons upset about posts on the Mississippi blog “slabbed.org” sued for defamation in Nova Scotia (some of the content related to a lodge owned there by a Mississippi resident).  After obtaining a default judgment, they sought to domesticate it in Mississippi; the defendant removed and resisted domestication under the SPEECH Act, 28 U.S.C. § 4102.  Trout Point Lodge v. Handshoe, No. 13-60002 (Sept. 5, 2013).  That law, enacted in 2010, intends to prevent “libel tourism” by plaintiffs who obtain judgments in jurisdictions with less protection of speech than the First Amendment. The Court concluded that the plaintiffs failed to meet its burden under the Act to prove either (1) that Canadian law (which allocates the burden to prove falsity differently than American law) offers as much free speech protection as Mississippi, or (2) a Mississippi court reviewing the allegations of the pleading would have found liability for defamation.  The Court found some of the pleading’s allegations conclusory and that others involved language that “[t]hough offensive . . . are not actionable . . . .”

In a high-profile “data breach” case, the district court dismissed several banks’ claims against a credit card processor after hackers entered its system and stole confidential information.  Lone Star National Bank v. Heartland Payment Systems, No. 12-20648 (Sept. 3, 2013).  The banks did not have a contract with the processor.  They sought money damages for the cost of replacing compromised credit cards and reimbursing customers for wrongful charges.  Applying New Jersey law, the Fifth Circuit found that the economic loss rule did not bar a negligence claim on these facts at the Rule 12 stage.  These banks were an “identifiable class,” Heartland’s liability would not be “boundless” but run only to the banks, and the banks would otherwise have no remedy.  The Court also noted that it was not clear whether the risk could have been allocated by contract.  The Court declined to affirm dismissal on several other grounds such as choice-of-law and collateral estoppel, “as they are better addressed by the district court in the first instance.”

Plaintiff asserted personal jurisdiction under Calder v. Jones, 465 U.S. 783 (1984), alleging that a receiver’s purported misconduct would forseeably damage investors in Texas. Bustos v. Lennon, No. 12-50765 (August 16, 2013, unpublished).  The Fifth Circuit affirmed dismissal, finding that the alleged misconduct was not intentionally aimed at Texas, and that jurisdiction did not comport with “fair play and substantial justice” given the status of related litigation in another state.

The plaintiffs in Young v. United States alleged that the Interior Department negligently prepared two studies which led to flooding along Interstate 12 in Louisiana, bringing federal litigation in 2008 when the last major flood was in 1983.  No. 13-30094 (August 21, 2013).  Plaintiff argued that the “continuing tort” doctrine saved the claim from limitations because the improperly-designed highway remained in place. The Fifth Circuit affirmed dismissal, noting two controlling Louisiana Supreme Court cases.  The first, Hogg v. Chevron, involved leaking underground gasoline storage tanks and “rejected the plaintiffs’ contention that the failure to contain or remediate the leakage constituted a continuing wrong, suspending the commencement of the running of prescription . . . [explaining] that ‘the breach of a duty to right an initial wrong simply cannot be a continuing wrong that suspends the running of prescription, as that is the purpose of every lawsuit and the obligation of every tortfeasor.'” 45 So.3d 991 (La. 2010).  Similarly, the second held: “[T]he actual digging of the canal was the operating cause of the injury[, and t]he continued presence of the canal and the consequent diversion of water from the ox-bow [were] simply the continuing ill effects arising from a single tortious act.”  Crump v. Sabine River Authority, 737 So.2d 720 (La. 1999).