The Swareks and the Derrs disputed the ownership of a large farm in Issaquena County, Mississippi (at 1400 residents, the least populous county in that state, but also the home of its largest captured alligator).  Their litigation unfolded as follows:

1. In 2005, Swareks sued Derrs in Issaquena County;
2. In March 2009, the Derrs sued Swareks in the — somewhat unlikely — venue of the German Regional Court in Düsseldorf, Germany (population 600,000, and capital of the state of North Rhine-Westphalia);
3. In November 2009, the Swareks voluntarily dismissed their claims in Mississippi;
4. In 2010, the Derrs lost in Germany when that court recognized the dismissal of the Mississippi claims; but then,
5. The Derrs ultimately won on appeal in Germany before the Higher Regional Court of Düsseldorf, obtaining judgment for $300,000 in costs.

The Derrs sought to domesticate the judgment in Mississippi, and the district court rejected their request, citing res judicata and characterizing the German action as an end run around the Mississippi state court.  On appeal, the Fifth Circuit affirmed with these three observations:

1. “Filing a mirror-image lawsuit in a foreign court while domestic litigation is pending is not sufficient, on its own, to preclude recognition of a foreign judgment, and the district court erred in denying comity on this ground.”
2. While dismissal for want of jurisdiction may not have preclusive effect, a voluntary dismissal does: “If the plaintiff chooses to extinguish his rights forever he is entitled to do so, and the defendant will reap the benefit of a res judicata bar to any attempt by the plaintiff
3. As to the German appellate holding: “The German Higher Regional Court’s decision to sidestep the comity determination and re-adjudicate claims that had already been settled in the Chancery Court violated the Mississippi public policy of res judicata and the Swareks’ right to permanently terminate their claims.  Comity must be a two-way street.”

A dissent characterized the interplay between the Mississippi and German holdings differently, and thus would affirm.

A little-known but powerful part of Fed. R. Civ. P. 41(b) provides: “[I]f the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.”   The Fifth Circuit affirmed a dismissal under this rule in Cabot Golf CL-PP 1, LLC v. Nixon Peabody, No. 13-40912 (July 7, 2014, unpublished).  It began by noting that, in this context, the distinction between Rule 12 and Rule 56 was immaterial, where “the material facts are undisputed, and we address a pure question of law.”  On the merits, Plaintiff had filed a state lawsuit, filed a federal lawsuit, dismissed the state action, and then dismissed the federal case with a unilateral notice.  Plaintiff argued that the 2-dismissal rule “should apply only to serial litigation (i.e., suits which are filed after the earlier suits were dismissed), not to parallel/tandem litigation as in this case (i.e., suits which were already pending when the earlier suits were dismisssed).”  The Court rejected that argument as unsupported by case law or the plain terms of the Rule.

In Tetra Technologies, Inc v. Continental Ins. Co., the district court ruled on several key issues in an insurance coverage dispute, declined to certify the rulings for immediate appeal under 28 U.S.C. § 1292(b) because it found no substantial ground for difference of opinion, and entered judgment on those matters pursuant to Fed. R. Civ. P. 54(b).  No. 13-30516 (June 10, 2014).  The Fifth Circuit found that judgment improper, and thus dismissed on jurisdictional grounds for lack of a final and appealable order. Rather than sounding the “death knell” of claims as required by Rule 54, the Court concluded that the rulings would allow “Tetra and Maritech to prevail completely nor not at all on their indemnification claim against Continental, depending on the resolution of certain ‘factual issues.'”  “Thus, what we are presented with here is a request by the district court for us to sign off mid-litigation on legal questions it considers non-contentions.  Since the inception of the federal judiciary, however, our role has been to review final decisions of trial courts, not to tinker with ongoing cases through piecemeal appeals . . . “

The district court held that under Texas law, a creditor may not garnish on a judgment, after entry of judgment but prior to the filing of an appeal.  The Fifth Circuit affirmed, relying upon Waples-Platter Grocer Co. v. Texas & Pacific Railway Co., 68 S.W. 265 (Tex. 1902) [a case from the court of Chief Justice Reuben Gaines and the governorship of Joseph Sayers, a period “notable for the number of disasters that the state faced” such as the Galveston Hurricane and the invasion of the boll weevil].  JGM Holdings LLC v. T-Mobile USA, Inc., No. 13-10678 (May 19, 2014, unpublished).  The Fifth Circuit rejected an argument that the later overruling of a holding in Waples about res judicata implicitly overruled this holding about garnishment.

“Picking up where we left off in Germano v. Taishan Gypsum Company, Ltd., 742 F.3d 576 (5th Cir. 2014),” the Fifth Circuit affirmed personal jurisdiction in three other suits involving default judgments arising from the “Chinese Drywall” MDL litigation.  In re: Chinese-Manufactured Drywall Products Liability Litig., No. 12-31213 (May 20, 2014).  Again, the Court found jurisdiction for the same basic reasons related to the “stream of commerce.” Applying Florida and also Louisiana law, this opinion also features a detailed discussion of when an agency relationship can give rise to jurisdiction, applying the recent Supreme Court case of Daimler AG v. Bauman, 134 S. Ct. 746 (2014).

In Haase v. Countrywide Home Loans, Inc., the district court dismissed the plaintiff’s RESPA claim, declined to exercise supplemental jurisdiction over the remaining state law claims, and remanded them to state court.  No. 12-20806 (April 9, 2014).  Appellees argued that “because this judgment remanded the remaining state claims to the state court without addressing their respective merits, it is not a final disposition of all claims in the case, and therefore not appealable under 28 U.S.C. § 1291.”  The Fifth Circuit disagreed, concluding that “as a practical matter, remands end federal litigation and leave the district court with nothing else to do.”  (applying Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996)).

A law firm appealed the disposition of its fee application.  The district court affirmed the bankruptcy court in part, vacated in part, and remanded for the firm to make another fee request that provided more necessary information.  Okin Adams & Kilmer v. Hill, No. 13-20035 (March 24, 2014).  The firm appealed to the Fifth Circuit, which concluded it had no appellate jurisdiction because the order was not final: “Given that the bankruptcy court must perform additional fact-finding and exercise discretion when determining an appropriate attorney’s fee award, the district court’s order requires the bankruptcy court to perform judicial functions upon remand.”  A detailed dissent concluded that, while the district court’s order required “more than a mechanical entry of judgment,” “it also involves only mechanical and computational tasks that are ‘unlikely to affect the issue that the disappointed party wants to raise on appeal.'”  Accordingly, it warned that “refusing to hear this appeal undermines the long-recognized, salutary purpose of allowing appeals in discrete issues well before a final order in bankruptcy.”

The Chinese defendant in Germano v. Taishan Gypsum Co., part of the “Chinese Drywall” MDL proceeding, sought to set aside a default judgment for lack of personal jurisdiction.  742 F.3d 576 (5th Cir. 2014).  Applying Fourth Circuit law, which the Court characterized as taking a “more conservative” approach to recent Supreme Court decisions than the Fifth (see Ainsworth v. Moffett Engineering, 716 F.3d 174 (5th Cir. 2013).  The Court found jurisdiction under that Circuit’s “stream-of-commerce plus” test, noting that the defendant sold directly into Virginia, made markings on its product specific to the Virginia customer, modified the design specifically for that customer, and had a plan to expand sales by leveraging the relationship with the customer.  The Court also found a lack of excusable neglect, noting that service was proper under the Hague Convention and that the defendant delayed seeking legal counsel for many months.  

Scott v. Carpanzano affirmed two default judgments and vacated a third, applying the basic federal standard: “whether the defendant willfully defaulted, whether a meritorious defense is presented, and whether setting aside the default judgment would prejudice the plaintiff.”  No. 13-10096 (Jan. 24, 2014, unpublished).  Footnote 3 notes that the standards under Rule 60(b)(1) and Rule 55 may diverge after a 2007 stylistic revision to Rule 55,  but concludes they have not yet and did not on the facts of this case.

Waltner v. Aurora Loan Services LLC welcomes the New Year with three bread-and-butter issues in business litigation.  No. 12-50929 (Dec. 31, 2013, unpublished).  First, a party’s failure to answer on time does not require the “drastic remedy” of a default judgment, especially when a plaintiff shows no prejudice from the failure to timely answer.  The granting of a default judgment is a discretionary ruling by the district court.  Second, damages for lost use of property are not reliance damages that can be recovered with a promissory estoppel claim.  Rather, they are consequential losses — a form of expectation damages.  Finally, while Fed. R. Civ. P. 26(g)(2) says that a court “must strike” unsigned discovery responses “unless a signature is promptly supplied” after the error is identified, the district court has discretion in determining what is “prompt” and in what weight to give the lack of prejudice to the opposing party.

Plaintiff voluntarily dismissed a Texas suit under Rule 41, refiled in New York, and then voluntarily dismissed that action as well.  Because the second dismissal was with prejudice under the Federal Rules, Plaintiff sought relief under Rule 60(b) to allow reinstatement of the original case.  Yesh Music v. Lakewood Church, No. 12-20520 (August 14, 2013). Defendant argued that a voluntary dismissal is not a “final proceeding” for Rule 60 purposes.  The Fifth Circuit affirmed the grant of 60(b) relief.  The Court acknowledged Harvey Specialty & Supply, Inc. v. Anson Flowline Equipment, Inc., 434 F.3d 320 (5th Cir. 2005), which found no preclusive effect for a Rule 41 voluntary dismissal, but concluded that one was still a “final . . . proceeding” within Rule 60 because of its practical effect.  The Court noted that the weight of authority from other Circuits agreed with this conclusion.

The issue in FDIC v. SLE, Inc. was whether a party could assert rights under a prior judgment in favor of the FDIC, where evidence established that it was the FDIC’s successor-in-interest and assignee, but the party did not substitute in as plaintiff in the case under Fed. R. Civ. P. 25.  No. 12-30539 (July 2, 2013, unpublished).  The Fifth Circuit affirmed the denial of Rule 60(b)(4) relief, noting that the plain language of Rule 25(c) and (a)(3) is permissive, not mandatory, and distinguishing two cases on the issue.

In Fontenot v. Watson Pharmaceuticals, a long-running products liability and medical malpractice case about a transdermal pain patch, plaintiffs sought to add nondiverse health care providers to the case after removal.  No. 12-30711 (June 10, 2013).  The district court remanded pursuant to 28 U.S.C. § 1447(e).  The Fifth Circuit dismissed for lack of appellate jurisdiction, concluding that a remand for lack of subject jurisdiction was unreviewable under Thermtron just like a jurisdictional remand under 1447(c), and noting that all other circuits facing the issue reached the same conclusion.  The Court also found that the joinder ruling that led to the jurisdictional issue was unreviewable as a collateral order.

A dispute about guaranty obligations related to the purchase of a blimp was removed to federal court.  The district court granted a motion to compel arbitration, stayed the case, and administratively closed it.  McCardell v. Regent Private Capital LLC, No. 12-31089 (June 7, 2013, unpublished).  The Fifth Circuit reminded that administrative closure does not create a final judgment, and thus dismissed for lack of appellate jurisdiction over the interlocutory appeal.

Lowry Development LLC v. Groves & Assocs. Insurance involved a real estate developer who sued its insurer about coverage for wind damage, and alternatively, its insurance agent for negligence.  No. 11-60670 (Aug. 3, 2012).  The district court granted summary judgment for the developer against the insurer (thereby mooting the claim against the agent), which the Fifth Circuit reversed.  Id. at 3.   The developer then sought to reinstate its claim against the agent.  The Court found that the agent’s dismissal was “based on an earlier judgment that has been reversed or vacated” and thus came within Fed. R. Civ. P. 60(b)(5).  The agent argued that the insurer should have taken a protective appeal at the time of the original dismissal, but the Court, “[a]cknowledging that [plaintiff’s Rule 60(b) motion looks like the protective appeal it failed to file,” found no abuse of discretion in the district court’s decision to grant the motion.  Id. at 10.

In Stoffels v. SBC Communications, the Court addressed issues about whether a “retiree concession” program involving long-distance discounts should be regulated as a retirement plan under ERISA.  No. 11-50148 (April 16, 2012).  In the court below, a district judge held a trial and made fact findings, after which he recused himself.  The second judge vacated those findings in light of a new and related Fifth Circuit opinion, Boos v. AT&T, 643 F.2d 127 (5th Cir. 2011).   The Court found that Fed. R. Civ. P. 54 gave the judge authority to do so, that the “law of the case” doctrine did not constrain his authority, and that this case was not materiall different on the merits from Boos.  Op. at 8-9.

The Court released a revised opinion in Barber v. Shinseki, in which the appellant sought review of a magistrate’s electronic order dismissing his case.  The Court first observed that the appellant did not appear to have consented to final disposition of his case by a magistrate as opposed to the district judge.  Op. at 3-4.  The Court went on to note that “[t]he electronic order entered by the magistrate judge . . . does not appear on any document–electronic or otherwise–other than as merely a separate entry on the docket sheet,” and thus did not comply with the requirement of Fed. R. Civ. P. 58 that “every judgment shall be set forth on a separate document.”  Op. at 4.  The Court noted that certain exceptions to Rule 58 were not applicable.  Op. at 4 n.2.  (The opinion was revised to “remove language indicating that all judgments must be set forth on paper documents” and to note that an appropriate document “may be electronic.”  Op. at 1.