In BP Exploration v. Johnson, the plaintiff in a Deepwater Horizon case sued in Texas to enforce an alleged settlement agreement.  No. 12-20512 (Aug. 8, 2013, unpublished).  BP asked the MDL panel to consolidate the case with the other Deepwater Horizon matters in the Eastern District of Louisiana.  Before the panel could rule, however, the Texas judge asked for summary judgment briefing and granted summary judgment to the defense on the ground that no agreement had been created.  The Fifth Circuit vacated the judgment and remanded with instructions to transfer to the MDL case, noting the complexity of the Deepwater Horizon litigation, and more generally: “It is typical in such scenarios for the court before which the tort claims are pending to determine whether a binding settlement agreement has arisen, as that court is already familiar with the parties and the claims and the proceedings.”

As part of broader disputes about the bankruptcy of Pilgrim’s Pride, chicken growers alleged that its decision to shut down a large facility violated the Packers and Stockyards Act of 1921.  Relying on its earlier [9-7] en banc decision which found that a broader provision of the Act required proof of anticompetitive conduct, the Fifth Circuit found that section 192(e) of the Act imposes the same requirement.  Agerton v. Pilgrim’s Pride Corporation, No. 12-40085 (August 27, 2013) (citing Wheeler v. Pilgrim’s Pride Corporation, 591 F.3d 355 (5th Cir. 2009)).  The Court then reversed a $25 million judgment for the growers, reasoning: “In the instant case, PPC had overextended itself into the commodity chicken market, was producing more chicken than the market appeared to need, and was thereby driving the market price of chicken down at great cost to itself. Recognizing the damage inflicted by its own excess production, PPC wisely decided to stop flooding the market with unprofitable chicken.  . . . Far from being a nefarious goal, higher prices are the natural consequence of a reduction in supply.  If it is lawful for a business to independently control its own output, then it is also lawful for the business to hope for the natural consequences of its actions.”

Texas allows charitable bingo if the sponsoring organization does not use the proceeds for political advocacy; several charities challenged that restriction on First Amendment grounds.  Department of Texas, VFW v. Texas Lottery Commission, No. 11-50932 (August 21, 2013).  In a new opinion issued on panel rehearing, the Fifth Circuit rejected a standing challenge based on the interplay of the relevant law with other gambling laws (which the state argued made the lawsuit irrelevant), and then reversed an injunction against the law.  The Court saw the case as controlled by Rust v. Sullivan, 500 U.S. 173 (1991), noting: “The challenged provisions in this case do nothing to restrict speech outside the scope of the State’s bingo program. Charities are free to participate in the bingo program and engage in political advocacy; they simply must not use bingo proceeds to do so.”  For similar reasons, it distinguished Citizens United v. Federal Election Commission, 130 S.Ct. 876 (2010).  A dissent argued that Rust did not control and the law was invalid under the “unconstitutional conditions” doctrine.

Verdin v. Fannie Mae rejected several claims against a mortgage servicer.  No. 12-40895 (August 15, 2013, unpublished).  As to a negligent misrepresentation claim, the Fifth Circuit held: “[the servicer’s] only allegedly false representation—that [the borrower]  should submit a request for postponement and ‘not worry about the foreclosure’—relates to a promise to do something in the future.”  The claim also failed because “Texas requires pecuniary loss independent from the loan agreement to support a negligent-misrepresentation claim,” and alleged mental anguish did not satisfy that requirement. Finally, the Court rejected waiver and misrepresentation claims: “[Borrower] is unable to demonstrate that Wells Fargo made an absolute repudiation of an obligation because providing mixed signals of an intent to foreclose—i.e., suggesting that it would consider a postponement and not to worry about a foreclosure—does not rise to an absolute declaration of intent to abandon an obligation.”

A district court vacated a previously-granted class certification in a securities case in 2004.  The putative class refiled in Texas in 2009.  The district court found the action time-barred, concluding that any tolling effect under American Pipe & Construction Co v. Utah, 414 U.S. 538 (1974) ended with the order of vacatur.  Hall v. Variable Annuity Life, No. 12-20440 (August 15, 2013).  The Fifth Circuit affirmed, finding no meaningful distinction in this context between a vacatur order and a decision not to certify in the first instance.

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.

Sims v. Carrington Mortgage certified four questions to the Texas Supreme Court about home equity loans – whether a specified transaction was a “modification” or a “refinance” under Texas law, and what rules would apply to the transaction if characterized as a modification.  No. 12-10978 (August 14, 2013, unpublished).  Don Cruse’s SCOTX blog has more detail.

The sole issue for bench trial in Union Oil v. Buffalo Marine Services was the amount of damages causedby an oil spill.  No. 12-40848 (August 16, 2013, unpublished).  Both sides appealed.  The Fifth Circuit affirmed.  As to the methodology used by the district court, the Court said: “Contrary to Buffalo’s assertion, the ‘reasonable certainty’ with which Unocal was required to prove lost profits did not require it to identify lost opportunities from specific vessels that would have visited the terminal but for its closure following the spill. Considering figures from adjacent months was more than adequate.”  The Court found “no support in the actual numbers” for an argument about a seasonal spike in revenue during the relevant period.  Finally, the Court agreed that a claim determination from the National Pollution Fund Center was inadmissible as proof of damages under Fed. R. Evid. 408.

For the third time in 2013, the Fifth Circuit has reversed, at least in part, the dismissal of foreclosure-related claims under Rule 12 – this time in a published opinion.  Miller v. BAC Home Loans Servicing LP, No. 12-41273 (August 13, 2013).  The Court began by reminding that the Texas fair debt collection statute is broader than the federal one, and can encompass a servicer.  Here, the borrower stated a cognizable claim about the servicer misrepresenting its services (the status of a foreclosure), while failing to do so on several other misrepresentation claims based on other statutory provisions.  The Court rejected a DTPA claim because the allegations related to a loan modification — an entirely financial transaction that did not involve a “good” or “service” — and the plaintiffs thus lacked standing.  In so doing, the Court distinguished authority finding consumer status as to an original home loan transaction, where the goal can be called obtaining a house.  The Court also found that the defendant properly raised the Statute of Frauds as a defense as a Rule 12 ground in opposition to the plaintiff’s promissory estoppel claims.

The FTC sued debt negotiation companies, claiming that their ads deceptively promised substantial reductions in consumers’ credit card debt.  The district court concluded that “deception” under section 5 of the FTC Act should be evaluated on the basis of all information disclosed by the companies to consumers up to the point of purchase, and entered judgment for the defendants.  FTC v. Financial Freedom Processing Inc. No. 12-10520 (Aug. 12, 2013, unpublished). The Fifth Circuit thought that the district court’s analysis was “dubious,” noting authority in other circuits that holds “each advertisement must stand on its own merits.”  The FTC, however, elected to challenge the district court’s finding about deceptiveness at the point of purchase.  Here, “while the Companies’ radio ads and websites may be misleading–indeed, it is difficult to conclude that the websites are not deceptive–we are satisfied that substantial evidence supports the district court’s finding . . . .”

The defendant in American General Life v. Bryan owned a company (“IMG Inc.”) through which he routed commission checks that he received for selling life insurance.  No. 12-20435 (Aug. 14, 2013, unpublished).  An insurer rescinded a policy and then sought repayment of the commission.  The agent defended on the ground that the insurer’s agency relationship was actually with another company, “IMG Cap.”  The Fifth Circuit found that issues about the scope of the parties’ contracts were not appropriate for summary judgment, but the case was properly resolved by the doctrine of quasi-estoppel because the agent routinely used IMG Inc. for the handling of commissions and had not used IMG Cap.  Accordingly, it would be “unconscionable to allow [the agent] to hide behind the assignment . . . when his behavior over a multiple-year period was flagrantly inconsistent with the legal arguments he now urges us to adopt on appeal.”

The SEC settled an enforcement action except as to the issue of potential disgorgement. SEC v. Halek, No. 12-11045 (August 5, 2013).  Negotiations then broke down because the SEC did not accept the financial information provided by the defendants.  The district court then entered an order to disgorge over $20 million.  In affirming the district court, the Fifth Circuit: (1) found no abuse of discretion in reopening the case, noting that “[a]n administrative closure is more akin to a stay than a dismissal,” (2) reminded that “[d]istrict courts have ‘broad discretion in fashioning the equitable remedy of a disgorgement order,'” and (3) found no clear error in the court’s determinations about joint and several liablity, the reasonableness of the ordered amount as an approximation of the defendants’ unlawful gain, or its decision not to credit settlement payments against the ordered amount.

An unsecured creditor contended that the gross negligence of a bankruptcy trustee allowed a key asset to escape the estate.  The court agreed and ordered payment from Liberty Mutual’s bond for the trustee.  The Fifth Circuit affirmed, finding: (1) the relevant limitations period was set by a 4-year federal statute rather than a 2-year state one, (2) the finding of gross negligence was not clearly erroneous, and (3) expert testimony was not necessary to establish gross negligence in this situation: “While the precise course of action the Trustee should have taken may be subject to reasonable debate, it requires no technical or expert knowledge to recognize that she affirmatively should have undertaken some form of action to acquire for the bankruptcy estate the assets to which it was entitled.”   Liberty Mutual v. United States, No. 12-10677 (revised August 20, 2013).

A borrower alleged that the servicer mishandled an insurance issue, setting in motion events that led to a wrongful foreclosure.  Gardocki v. JP Morgan Chase, No. 12-20733 (Aug. 8, 2013, unpublished).  Citing Twombly and Iqbal, and criticizing the lack of analysis by the district court, the Fifth Circuit held: “Were Gardocki to prove the facts alleged in his complaint, it is plausible the district court could find that JPMC breached the Mortgage contract by failing to endorse the reimbursement check in a timely manner, thereby causing Gardocki to fail to meet his monthly payment obligations. But for this failure, foreclosure would have been improper. It is equally plausible that Gardocki will fail to meet his burden to prove the above facts, and that JPMC might successfully move for summary judgment.”  Gardocki is the second of two opinions this year ruling for borrowers in Rule 12 situations about wrongful foreclosure claims.

The plaintiff in Morlock LLC v. Bank of New York sued to quiet title, claiming that it had not received notice of a foreclosure sale despite having an interest in the property.  No.12-20832 (August 5, 2013, unpublished).  The Fifth Circuit affirmed judgment on the pleadings for the bank, finding the plaintiff’s allegation of an ownership interest “conclusory,” and stating: “Morlock’s petition pleads the initial transaction between the original borrowers and the lender, but the petition does not even suggest how Morlock acquired an ownership interest in the property in the light of the fact that it was not an original borrower. Although Morlock eventually stated that its ownership interest was derived from a Trustee Deed dated August 5, 2011, no copy of that deed was attached to any of the filings, and the deed is not otherwise contained in the record.”

The Court released a revised opinion in Anadarko Petroleum v. Williams Alaska Petroleum, No. 12-20716 (August 6, 2013), which reversed and rendered for a contract plaintiff based largely on the parties’ course of performance.  The expanded opinion addresses an argument made on rehearing that the panel failed to find the contract ambiguous before examining evidence about course of performance.  The opinion notes that the relevant UCC provision in fact says the opposite, noting that “the course of actual performance by the parties is considered the best indication of what they intended the writing to mean” since that performance can “become an element of the meaning of the words used.”  Tex. Bus. & Comm. Code § 2.202 comment 2.

Acceptance Loan had a lien on a Mississippi office building, which was the principal asset of S. White Transportation (“SWT”) when it went into bankruptcy.  Acceptance Loan Co. v. S. White Transportation, No. 12-60648 (August 5, 2013).  Acceptance received notice of SWT’s bankruptcy several times.  After plan confirmation, Acceptance sought a declaration that its lien survived.  The Fifth Circuit held that “passive receipt of notice” did not constitute “participation” in the bankruptcy under In re Ahern Enterprises, 507 F.3d 817, 822 (5th Cir. 2007).  Therefore, the general rule applied that “a secured creditor with a loan secured by a lien on the assets of the debtor who becomes bankrupt before the loan is repaid may ignore the bankruptcy proceeding and look to the lien for satisfaction of the debt.”

A Louisiana mineral lease provided that the lessee would pay the lessor “one-eighth (1/8) of the market value at the mouth of the well of the gas so sold . . . .”  Cimarex Energy v. Chastant, No. 13-30049 (Aug. 2, 2013, unpublished).  The lessor claimed that the payment obligations extended to the benefits of a hedging program operated by the lessee/producer.  The Fifth Circuit agreed with the district court that it did not: “[T]he mineral lease between Cimarex and Chastant does not require Cimarex to pay royalties on amounts generated through its separate financial activities.  The Court distinguished a case about royalties on take-or-pay payments, noting: “Take-or-pay is, for these purposes, an alternative to actual production, or effectively a minimum production for purposes of rights under the lease.  Hedging transactions do not serve that purpose.  They are supplements to production, not substitutes.”

The Fifth Circuit has affirmed in all respects the high-profile corruption convictions associated with former Dallas City Councilman Don Hill: United States v. Reagan et al. (August 2, 2013).

A remedy provision of the Anti-Kickback Statute provides: “The Federal Government in a civil action may recover from a person that knowingly engages in conduct prohibited by section [53] of this title a civil penalty equal to— (A) twice the amount of each kickback involved in the violation; and (B) not more than $[11,000] for each occurrence of prohibited conduct . . . .”  41 U.S.C. § 55(a)(1). In United States v. Kellogg Brown & Root, the Fifth Circuit found that the provision allows a suit against an employer for its employees’ acts.  No. 12-40447 (July 19, 2013).  The Court grounded its analysis in common-law agency principles, and distinguished an earlier case that imposed a “purpose to benefit [the] employer” requirement in a somewhat analogous situation under the False Claims Act, United States v. Ridglea State Bank, 357 F.2d 495 (5th Cir. 1966).

“Equitable mootness” is a prudential doctrine that balances a litigant’s interest in appellate review against the need for finality of a bankruptcy plan.  It has three elements: (i) whether a stay has been obtained, (ii) whether the plan has been ‘substantially consummated,’ and (iii) whether the relief requested would affect either the rights of parties not before the court or the success of the plan.”  Official Committee of Unsecured Creditors v. Moeller, Nos. 12-50718, 50805 (July 24, 2013).  The Fifth Circuit declined to apply the doctrine in this case, finding that Chase had at best shown only “speculative” harm to other parties.  Dicta in the opinion expresses skepticism that the doctrine can apply to an adversary proceeding.

A heavy, awkwardly-shaped boiler fell while being loaded onto a ship and sustained significant damage.  The issue in Pt. Jawamanis Rafinasi v. Coastal Cargo Co. was whether a limitation of liability in the Carriage of Goods at Sea Act, inapplicable by its terms to this accident on shore, was nevertheless incorporated in the parties’ contract.  No. 12-30668 (July 24, 2013, unpublished).   The Court found that the limitation applied because it was included in the shipper’s bill of lading, even though the purchaser of the boiler lacked actual knowledge of the bill’s terms.  “Case law in the Fifth Circuit demonstrates that an unissued bill of lading nevertheless binds the parties.”  (citing, inter alia, Luckenbach S.S. Co. v. American Mills Co., 24 F.2d 704, 705 (5th Cir. 1928)).

A preliminary injunction forbade the Department of Health and Human Services from “acting in accordance with the Notice of Termination . . . relative to [a nursing facility’s] Medicare and Medicaid Provider Agreement”.  After the injunction expired, HHS proceeded with termination.  Oaks of Mid City Resident Council v. Sebelius, No. 12-30860 (July 17, 2013).  The Fifth Circuit reversed a contempt finding against HHS, agreeing with the government’s position that the injunction was designed to pause the termination process but not forbid a later termination unrelated to the specified Notice.  The Court’s approach echoes that of another recent case vacating a contempt order against the federal government, Hornbeck Offshore Services v. Salazar, No. 11-30936 (Nov. 27, 2012, revised April 9, 2013).

A technical opinion about calculation of a Clean Water Act penalty for a wastewater spill offers two points of broader interest.  United States v. Citgo Petroleum, No. 11-31117 (July 17, 2013).  First (in the context of a remand for other reasons), as to whether the defendant’s acts amounted to gross negligence rather than simple negligence, the Fifth Circuit emphasized the importance of the defendant’s long delay in taking remedial action.  “In our view, though, almost winning a highly risky gamble with the environment does not much affect the egregiousness of having been gambling in the first place.”  Second, in reviewing a challenge to the amount of wastewater at issue under the “clear error” standard, the Court reminded: “The government’s argument on this issue is essentially that the court credited the wrong expert.  ‘Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.'”

In United States v. Transocean Deepwater Drilling, the Fifth Circuit reviewed the standards for a stay pending appeal.  No.13-20243 (July 23, 2013, unpublished).  The case involved an administrative subpoena related to the Macondo accident.  The Court first analyzed the interplay between the typical four-factor test (likely success on the merits, irreparable injury, injury to the nonmovant, and the public interest) and a variant from Ruiz v. Estelle, 650 F.2d 555 (5th Cir. Unit A June 1981), which required “a substantial case on the merits when a serious legal issue is involved,” noting that the Ruiz analysis applies only if the other three factors are “heavily tilted in the movant’s favor.”  Here, the Court found a failure to satisfy both tests: (1) it assumed that the movant had a “substantial case,” in large part because the district court expressly said so in denying it relief; but (2) found no irreparable injury from providing the requested documents; and (3) found a public interest in proceeding with their production, as there had already been a lengthy delay.

In Escamilla v. M2 Technology, the individual owner of a business sued to enforce the “M2” trademark owned by his business.  No. 12-41183 (July 16, 2013, unpublished).  The Fifth Circuit affirmed the dismissal of the claim for failure to join a necessary party, as the individual did not join his company as a party plaintiff, thus exposing the defendant to potential repetitive future litigation.  (This decision appears to have been rooted in avoiding the cost of having counsel appear for the company.)  The Court rejected the individual’s argument that a future suit would be barred by claim preclusion, noting the clear separation in Delaware corporate law between a business entity and its shareholders.

An insurance company complained that its counsel allowed entry of a consent judgment in a Louisiana case that wrongly imposed $400,000 in liability on it that another insurer should have covered. The company, based in South Carolina, sued for legal malpractice in Texas, the location of the third-party administrator who had overseen the counsel. Companion Property & Casualty v. Palermo, No. 12-11255 (July 17, 2013).  The Fifth Circuit found that the firm’s relationship with the TPA was not enough to establish general jurisdiction, and also found no basis for personal jurisdiction in Texas over the Louisiana-based firm.  The counsel was in Louisiana, the alleged malpractice occurred in Louisiana, and the insured was in South Carolina: “Although [the firm’s] contacts with [the TPA] are factually related – and perhaps integral – to the substance of [Plaintiff’s] claim, the alleged malpractice does not arise from a breach of some duty owed to [the TPA].”

The plaintiff in Asadi v. G.E. Energy (USA), LLC was terminated after making an internal report of a potential securities law violation.  No. 12-20522 (July 17, 2013).  The Fifth Circuit affirmed the Rule 12 dismissal of his whistleblower claim based on Dodd-Frank: “Based on our examination of the plain language and structure of the whistleblower-protection provision, we conclude that the whistleblower protection provision unambiguously requires individuals to provide information relating to a violation of the securities laws to the SEC to qualify for protection . . . . (emphasis in original)”  The Court acknowledged a more expansive SEC regulation on the point, but found it was not entitled to Chevron deference given the clarity of the statute.

Deep Marine Technology provided construction support vessels to BHP, an offshore drilling company.  A BHP contractor sued for injuries arising from an “offshore personnel basket transfer” between a Deep Marine vessel and a BHP platform.  There was no dispute that the parties’ Master Services Agreement required BHP to defend and indemnify Deep Marine from this claim.  The issue in Duval v. Northern Assurance Co. was whether BHP had to defend and indemnify Deep Marine’s insurers, who were joined to the litigation under Louisiana’s Direct Action Statute.  No. 12-31102 (July 5, 2013).  The Fifth Circuit noted that indemnity provisions are strictly construed and that: “The parties could have included the Contractor’s insurers within the definition of ‘Contractor Group,’ as parties in other cases have done . . . . ” (citation omitted).  Based on that conclusion, the Court rejected several theories about how the insurers could benefit from the indemnity provision, and affirmed summary judgment against them.

The plaintiff in Butler v. Taser International sought to amend a negligence suit to add a new fraud claim, after the deadline for motions to amend pleadings.  No. 12-11026 (July 10, 2013, unpublished).  In affirming the denial of leave to amend, the Fifth Circuit noted: “In his first amended complaint, Officer Butler pled a litany of facts that could have supported claims for fraudulent inducement and failure to warn. He alleged that TI had made false representations, and that TI’s warnings regarding the dangers of a Taser shock were inadequate.”  In other words, a point that weighs against a finding of prejudice — that the matters raised by the new pleading were already in issue — also weighed against a finding of good cause and justified denial of leave, especially after the deadline.

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.

The borrower in Martin-Janson v. JP Morgan Chase alleged waiver and promissory estoppel claims arising from a foreclosure — claims which the Fifth Circuit has not encouraged in 2013 opinions.  Here, however, after reviewing the plaintiff’s five allegations about the specific statements made, the Court reasoned: “Based on the foregoing factual allegations, Martin-Janson asserts that she seeks discovery to reveal either the draft loan modification agreement that JPMorgan allegedly prepared, or the terms of her promised modification based on the lender’s standard formulae. In these ways, Martin-Janson argues, she would be able to prove that JPMorgan ‘promise[d] to sign a written agreement which itself complies with the statute of frauds,’  Viewing Martin-Janson’s factual allegations, and the reasonable inferences to be drawn therefrom, in the light most favorable to her, we conclude that she has pled a plausible promissory estoppel claim that potentially avoids JPMorgan’s statute of frauds defense.”  (citations omitted).  Accordingly, the Court reversed a Rule 12 dismisal of the promissory estoppel claim, while affirming as to waiver. No. 12-50380 (July 15, 2013, unpublished). 

The Fifth Circuit released a revised opinion on July 12, 2013 in Boudreaux v. Transocean Deepwater, No. 12-30041.  The holding is the same as its original opinion from March 2013, finding that a Jones Act employer who establishes a defense to ongoing “maintenance and cure” liability because of a seaman’s dishonesty does not have a restitution claim for benefits already paid.  In the new opinion, the dissenting judge now separately concurs, while the majority revises its historic analysis somewhat and notes the effect of the parties’ “bracketed settlement” on the way the issue was presented to the Court.

The contract between Anadarko (oil producer) and Williams Alaska (refinery operator) had monthly invoicing, which they customarily “trued up” the following month to reflect the findings of an independent third party about the quality of oil transported.  After their contract terminated, FERC discovered an error in how the quality of oil was determined. The issue in Anadarko Petroleum v. Williams Alaska Petroleum was whether the compensation for that error — an almost $9 million credit to Williams Alaska by the third party — was in turn owing to Anadarko.  No. 12-20716 (July 10, 2013).  In addition to other holdings unique to the parties’ contract, the Fifth Circuit reminded that under the Texas UCC: “Although the terms of a written agreement may not be contradicted by contemporaneous or antecedent evidence, terms may be explained by course of dealing or course of performance.”  Here, the parties “consistently made [true-up] adjustments,” supporting a reading that favored Anadarko, and the Court reversed and rendered judgment for Anadarko for the $9 million credit amount.

2013 has seen a steady stream of unpublished opinions favoring mortgage servicers, followed by a published opinion affirming a MERS assignment, and now a second published opinion rejecting arguments about the alleged “robosigning” of assignment documents.  In Reinagel v. Deutsche Bank, a suit arising out of foreclosure on a Texas home equity loan, the Fifth Circuit held: (1) borrowers could challenge the validity of assignments to the servicer, since they were not asserting affirmative rights under those instruments; (2) alleged technical defects in the signature on the relevant assignment created rights only for the servicer and lender, not the borrower; (3) the assignment did not have to be recorded, mooting challenges to defects in the acknowledgement; and (4) a violation of the relevant PSA related to the transfer of the note did not create rights for the borrower.  The opinion concluded with two important caveats: it was not deciding whether the Texas Supreme Court would adopt the “note-follows-the-mortgage” concept, and it reminded: “We do not condone ‘robo-signing’ more broadly and remind that bank employees or contractors who commit forgery or prepare false affidavits subject themselves and their supervisors to civil and criminal liability.”  735 F.3d 220 (5th Cir. 2013).

Among several other holdings in Clayton v. ConocoPhillips Co., the Fifth Circuit agreed that state law claims about benefits due under a severance plan were preempted by ERISA, when “an ongoing administrative program” is necessary because of discretion in the plan about eligibility, and when the plan is not fairly characterized as “a one-time, lump-sum payment triggered by a single event.” No. 12-20102 (July 3, 2013).

“The court subordinated the equities of a particular situation to the overmastering need for certainty in the transactions of commercial life.”  Benjamin Cardozo, The Growth of the Law 111 (1924).  In Medco Energi US, LLC v. Sea Robin Pipeline Co., the plaintiff — a natural gas producer — argued that the defendant pipeline company had misrepresented how long it would take to make repairs after Hurricane Ike.  No. 12-30791 (July 2, 2013).  The Fifth Circuit found this claim preempted by federal law under the “filed rate” doctrine, under which a rate filed with FERC is conclusive “[e]ven if a rate is misrepresented to a customer and the customer relies on that rate . . . .”  (citing AT&T v. Central Office Telephone, 524 U.S. 214 (1988).  Otherwise, “[b]ecause [plaintiff] only paid for interruptible service subject to these provisions, allowing recovery for damages incurred when it could not use [defendant’s] pipeline would conflict with the interruptible rate and the provisions of the [filed] tariff.”

In Nevada Partners Fund LLC v. United States, the Fifth Circuit affirmed the district court’s approval of several IRS rulings about investment arrangements.  No. 10-60559 (June 24, 2013).  The thorough opinion details a “straddle trade” investment, which in theory can generate profit, but here “as designed and carried out, [the trades] simply could not produce a profit; they were calculated and managed to produce offsetting gains and losses.”  Various penalties based on the partnerships’ negligence and lack of care were also affirmed.

Bain Cotton Co. v. Chesnutt Cotton Co. involved a challenge to an arbitration award based on the arbitrators’ denial of discovery.  No. 12-1138 (June 24, 2013, unpublished).  In affirming the district court’s rejection of the challenge, the Fifth Circuit stated: “This appeal presents a quintessential example of a principal distinction between arbitration and litigation, especially in the scope of review. Had this discovery dispute arisen in and been ruled on by the district court, it is not unlikely that the denial of Bain’s pleas would have led to reversal; however, under the ‘strong federal policy favoring arbitration, judicial review of an arbitration award is extremely narrow.’”

The Fifth Circuit took the atypical step of writing a short opinion about why it granted a petition for review of a remand order under CAFA in Opelousas General Trust Authority v. Multiplan, Inc., No. 13-90027 (June 28, 2013).  CAFA jurisdiction has a “local controversy” exception, an element of which is that the putative class seeks “significant relief” from an in-state defendant.  In that context, the Court said: “We have yet to fully explore the meaning of ‘significant relief” in this context. Defendants argue that we should grant them leave to appeal so that we may determine ‘whether a defendant which is not a going concern and which will not satisfy any judgment against it can be a defendant from whom “significant relief is sought” . . . .’ We GRANT their petition so that we may consider the question.”

In Cutler v. Stephen F. Austin State University, the defendant sought interlocutory review of an order requiring it to appear for a deposition under Fed. R. Civ. P. 30(b)(6).  No. 12-41393.  The Fifth Circuit found the appeal moot because the depositions had already taken place.  The defendant argued that the appeal was not moot because the depositions may be used at an upcoming trial.  The Court responded: “This court does not have jurisdiction to issue advisory opinions regarding decisions of the district court that have not been made at a trial that has not been held.”

James v. State Farm involved the appeal of summary judgment for the insurer in a bad faith case brought under Mississippi law, in which State Farm “tendered the policy limit on its uninsured motor vehicle coverage to [Appellant] nearly thirty months after [she] was injured in a car accident.”  No. 11-60458 (June 21, 2013).  The majority opinion reversed in part, working through the delay and finding that State Farm lacked a justification for delay during certain portions of the thirty-month period.  The dissent took a different approach, stating: “The district court’s more holistic approach of evaluating whether State Farm’s actions throughout the course of its investigation rose to the level of an independent tort is more in line with precedent.”

In Temple v. McCall, the Fifth Circuit confronted a series of property conveyances with ambiguous language about whether mineral rights were included.  No. 12-30661 (June 20, 2013).  The Court affirmed, approving the weight given by the district court to expert testimony about “customary interpretation” of similar deed language in Louisiana.  The Court discussed the proper weight that Erie gives to an intermediate state appellate opinion, but ultimately found the relevant Louisiana case distinguishable on its facts.  (The proper role of extrinsic evidence in contract cases is a recurring issue in the Court’s diversity cases, although the express finding of ambiguity in this dispute simplifed the analysis on that point.)

In its first published opinion of 2013 about the merits of a wrongful foreclosure claim, the Fifth Circuit rejected the plaintiff’s “show-me-the-note” and “split-the-note” arguments.  Martins v. BAC Home Loans Servicing LP, 722 F.3d 249 (5th Cir. 2013).  In footnote 2, the Court noted that much of the relevant law is federal because of diversity between the borrower and the foreclosing entity.  As to the first theory, the court cited authority that allowed an authenticated photocopy to prove a note, and said: “We find no contrary Texas authority requiring production of the ‘original’ note.”  As to the second, acknowledging some contrary authority, the Court reviewed the relevant statute and held: “The ‘split-the-note’ theory is . . .  inapplicable under Texas law where the foreclosing party is a mortgage servicer and the mortgage has been properly assigned.  The party to foreclose need not possess the note itself.”  An unpublished opinion, originally released a day before Martins, was revised to closely follow its analysis and result.  Casterline v. OneWest Bank, No. 13-50067 (revised July 5, 2013, unpublished).

In Morlock LLC v. JP Morgan Chase, the plaintiff disputed Chase’s ability to foreclose.  No. 12-20623 (June 4, 2013, unpublished).   Its first claim was a suit to quiet title, as to which the Fifth Circuit found that the plaintiff’s challenge to a MERS assignment did not impugn the original Deed of Trust and thus did not present a title question.  Its second claim was for wrongful foreclosure, which can require the party seeking foreclosure to establish its standing.  Here, the Court found that the MERS assignment was facially valid and the plaintiff’s arguments about the signatory’s authority were not substantiated.

The salesman’s compensation guidelines in Kellerman v. Avaya, Inc. said on the first page:  “Avaya Inc. has the right to amend, change, or cancel the sales compensation policies solely at its discretion and without prior notice, except in countries where it is a violation of applicable law.”  Later provisions had more detail about the types of decisions reserved to Avaya.  The salesman claimed that the company had manipulated its revenue recognition to reduce his compensation, but the Fifth Circuit affirmed a summary judgment for the company: “where an employer exercises rights reserved in the contract[,] there can be no breach of contract.” (citing Nichols v. Enterasys Networks, 495 F.3d 185, 186-87 (5th Cir. 2007) (reviewing similar compensation arrangement)).

The parties arbitrated whether certain offshore oil dealings violated RICO.  Grynberg v. BP, PLC, No. 12-20291 (June 7, 2013, unpublished).  The arbitrator found that the claimant did not establish damage and dismissed that claim, noting that he lacked authority to determine whether any criminal violation of RICO occurred. The Fifth Circuit affirmed the dismissal of a subsequent RICO lawsuit on the grounds of res judicata, finding that the arbitrator’s ruling was on the merits and not jurisdictional.

“Mandamus petitions from the Marshall Division are no strangers to the federal courts of appeals.”  In re Radmax, Ltd., No. 13-40462 (June 18, 2013).  In Radmax, the Fifth Circuit found a clear abuse of discretion in declining to transfer a case from the Marshall Division of the Eastern District of Texas to the Tyler Division.  It found that the district court incorrectly applied the eight relevant 1404(a) factors, giving undue weight to potential delay and not enough weight to witness inconvenience, and quoting Moore’s Federal Practice for the principle that “‘the traditional deference given to plaintiff’s choice of forum . . . is less’ for intra-district transfers.”  Accordingly the Court granted mandamus pursuant to In re Volkswagen, 545 F.3d 304 (5th Cir. 2008) (en banc).  A pointed dissent agreed that the 1404(a) factors favored transfer but saw no clear abuse of discretion, noting that there was no clear Fifth Circuit authority on several of the points at issue in the context of intra-district transfers.  “The majority persuasively fills those doctrinal gaps with citations to Moore’s Federal Practice; that treatise may prove convincing, but it is not binding law.”

On June 18, two separate panels — one addressing a chemical spill, the other a vessel crash into an oil well — reached the same conclusion in published opinions:  when an insured fails to give notice within the agreed-upon period, as required by a “negotiated buyback” endorsement to a policy, the insurer does not have to show prejudice to void coverage.   Settoon Towing LLC v. St. Paul Surplus Lines Ins. Co., No. 11-31030; Starr Indemnity & Liability Co. v. SGS Petroleum Service Corp., No. 12-20545.  The notice provision was seen as part of the basic bargain struck about coverage.  Both opinions — especially Starr, arising under Texas law — recognized the continuing viability of Matador Petroleum v. St. Paul Surplus Lines Ins. Co., 174 F.3d 653 (5th Cir. 1989), in this situation, notwithstanding later Texas Supreme Court cases requiring prejudice in other contexts arising from the main body of a policy.  Settoon went on to address other issues under Louisiana insurance law, including whether the Civil Code concept of “impossibility,” which focuses on a failure to perform an obligation, applies to a failure to perform a condition precedent such as giving notice.

After a jury trial, the plaintiff won judgment of $336,000 for breach of a joint venture to bid a contract with the Air Force about upgrades to the storied Paveway laser-guided bomb program.  X Technologies v. Marvin Test Systems, No. 12-50230 (June 11, 2013).  On the issue of causation, the Fifth Circuit quickly dismissed two challenges to a key witness’s qualifications since he was not testifying as an expert, and also dismissed the effect of a claimed impeachment in light of the full record developed at trial.  The Court went on to affirm a directed verdict on a claimed defense of prior breach, finding that the agreement only imposed a one-way bar on multiple bids for the contract, and to affirm the judgment of breach, noting multiple uses of “team” in the record to describe the parties’ relationship.