Justia Contracts Opinion SummariesArticles Posted in U.S. Court of Appeals for the Fifth Circuit
Texas Capital Bank N.A. v. Dallas Roadster, Ltd.
Dallas Roadster, the borrower, sought damages and TCB, the lender, sought attorneys' fees after receiving full payment on loans through the borrower’s bankruptcy proceedings. The parties argue that the other breached the loan agreements. The district court issued take-nothing judgments on the borrower’s and lender’s claims. The court concluded that the claims of Dallas Roadster CEO, Bahman Hafezamini, of tortious interference with an existing contract and with prospective business relations, abuse of process, malicious prosecution, and malicious criminal prosecution, fail on the merits. The court need not reach the question of whether Hafezamini's release is valid in light of Zachry Construction Corp. v. Port of Houston Authority. In regard to Dallas Roadster's appeal, the court concluded that the district court did not err in entering a take-nothing judgment on Dallas Roadster’s breach of contract claim where the district court did not clearly err in finding that Dallas Roadster committed multiple material breaches. In regard to TCB's appeal, the court concluded that Zachry does not apply, under these circumstances, to the loan provisions in this case, and TCB can recover its attorneys’ fees according to the terms of the loan agreements. The court also concluded that the district court erred by denying TCB any recovery of its attorneys' fees by using its inherent power to sanction TCB because the district court failed to provide TCB with adequate due process. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Texas Capital Bank N.A. v. Dallas Roadster, Ltd." on Justia Law
In Re: Deepwater Horizon
This appeal stems from a loan that Woodbridge Baric gave Jarrod Burrle. Woodbridge Baric and Burrle agreed that Burrle would not be required to repay the loan if his economic loss claims in connection with the Deepwater Horizon oil spill fail unless he had misrepresented his claim to Woodbridge Baric, in which case Burrle agreed to indemnify Woodbridge Baric and hold it harmless. The settlement program eventually paid over $50,000 on one of Burrle’s claims, and Burrle’s attorneys paid Woodbridge Baric $20,000 of those funds in partial repayment of the loan. Louis Freeh was then appointed as special master and subsequently determined that Burrle’s claim was fraudulent and moved the court to order Burrle and others, including Woodbridge Baric, to make restitution for the funds paid in connection with that claim. The district court granted the motion as to Woodbridge Baric. The court reversed, concluding that, because Woodbridge Baric’s claim for the repayment of the loan was not purely contingent upon the success of Burrle’s claims for compensation, the failure of this contingency did not extinguish Woodbridge Baric’s claim and does not prevent Woodbridge Baric from asserting its valid interest in defense of its right to retain the funds as a bona fide payee. View "In Re: Deepwater Horizon" on Justia Law
WBCMT 2007 C33 Office 9720 v. NNN Realty Advisors
WBCMT challenges the district court's adverse judgment in a breach of contract suit to recover on a guaranty of financing for a commercial project. The district court held that the term “Borrower” in the guaranty refers collectively to all of the numerous borrowing entities, not to each of them individually. The court concluded that the only reasonable, textually supportable interpretation of “Borrower” is that it refers to the collective entities or to each individual borrowing entity, as the context may require. “Borrower” is unambiguous as a matter of law in the Guaranty. Therefore, NNN Realty’s interpretation of “Borrower” as limited to all borrowing entities collectively creates various absurdities throughout the Guaranty—so much so that the interpretation cannot be considered a reasonable alternative interpretation of “Borrower.” Accordingly, the court reversed and rendered judgment for WBCMT. View "WBCMT 2007 C33 Office 9720 v. NNN Realty Advisors" on Justia Law
Luv N’ Care, Ltd. v. Groupo Rimar
Luv N’ Care, Ltd. (“LNC”) brought this breach of contract action against its former distributor, Groupo Rimar, a.k.a. Suavinex, S.A. (“Suavinex”), for selling two products that allegedly copied LNC’s product designs in violation of the parties’ 2012 Termination Agreement and Mutual Release. LNC sought damages as well as an injunction prohibiting Suavinex from selling the offending products. Suavinex raised counterclaims seeking a declaratory judgment that it did not breach the contract and that LNC was not entitled to an injunction. It moved for partial summary judgment on those claims. The district court granted Suavinex’s motion, finding that Suavinex did not breach the Termination Agreement because it did not apply to product designs that were already in the public domain, such as the two products at issue. The Fifth Circuit concluded that the plain language of the Termination Agreement contained no such limitation. Accordingly, the Court reversed. View "Luv N' Care, Ltd. v. Groupo Rimar" on Justia Law
AIG Specialty Ins. Co. v. Tesoro Corp.
When Ultramar sold the Golden Eagle Refinery to Tesoro Refining, the purchase and sale agreement specified that Ultramar was to assign the Tosco indemnities, and to either secure an endorsement to the Chartis policy adding the new company as an additional insured or assign the Chartis policy directly. This litigation concerns the transfer of the Chartis policy from Ultamar. In this appeal, Tesoro Refining challenged the district court's grant of summary judgment for Chartis. The court agreed with the district court that Tesoro Refining cannot assert third-party judgment on the breach of contract claim premised upon a third-party beneficiary argument where the instant policy's language does not evince any intent to benefit a third party. The court also concluded that the Tesoro Parties were unable to point to any basis for concluding that the injury in this case—the alleged mistake over which entity was covered—is “inherently undiscoverable.” The court explained that Texas cases since 1996 have determined the discovery rule does not apply to delay the accrual of the cause of action in such situations. Therefore, the Tesoro Parties’ reformation claim is time-barred. The court affirmed the judgment. View "AIG Specialty Ins. Co. v. Tesoro Corp." on Justia Law
United States v. Mire
Defendant, a convicted fraudster, is subject to a $10 million restitution order. Harbor America, which had contracted with defendant and his fraudulently run businesses, is subject to a writ of garnishment for that debt. However, Harbor America asserts that it no longer holds defendant's property as it has terminated the contracts under which it owed him regular payments. Harbor America alleges it was entitled to terminate the contracts based on defendant's fraud and did so by obtaining a judgment in a Texas state court declaring its right to terminate. The court held that the state court ruling is not binding because the government was not allowed to participate in the proceeding; considering the question of termination in the first instance, Harbor America has lawfully terminated one of the contracts but may or may not have been entitled to terminate the other; and thus the court remanded for further fact finding. View "United States v. Mire" on Justia Law
Hays v. HCA Holdings, Inc.
Plaintiff, who suffers from epilepsy, was fired from his cardiology practice after a series of stress-related seizures. Plaintiff filed suit against HCA, alleging claims arising out of his alleged wrongful termination. The district court ordered arbitration of his claims based on equitable estoppel. In this case, the viability of plaintiff's claim depends on reference to the Physician Employment Agreement. The court concluded that, as the district court correctly recognized, an at-will employment relationship may exist even if the parties have entered into an employment contract, such as the Agreement. The court concluded that HCA’s liability depends on the Agreement and the district court did not abuse its discretion in applying direct benefits estoppel to Hays’s tortious interference claim. In making an Erie guess, the court held that the Texas Supreme Court would recognize intertwined claims estoppel and that plaintiff's remaining claims are subject to arbitration under that theory. Accordingly, the court affirmed the judgment. View "Hays v. HCA Holdings, Inc." on Justia Law
Hoffman v. Martinez
After plaintiff sold a Mark Rothko painting to David Martinez through L&M Arts, she filed suit alleging that she was fraudulently induced into selling the painting with assurances of secrecy and that the eventual public re-sale of the painting constituted a breach of a confidentiality provision in her agreement with the original buyer. The court concluded that plaintiff failed to show that a genuine dispute of material fact exists regarding each element of Texas fraudulent inducement; L&M was entitled to judgment as a matter of law on plaintiff's breach-of-contract claim where the confidentiality clause did not require secrecy as to the fact of the 2007 sale, and the jury therefore did not hear evidence from which it could reasonably have found that L&M breached the Agreement; and even if a reasonable jury could have found that L&M breached the agreement, L&M would nevertheless be entitled to judgment as a matter of law because the jury’s damages award rested on a legally non-viable measure of damages. The court affirmed the district court’s grant of summary judgment for L&M on plaintiff's fraudulent inducement claim; affirmed the district court's judgment as a matter of law for the Martinez defendants on plaintiff's breach-of-contract claim; reversed the denial of judgment as a matter of law for L&M on plaintiff's breach-of-contract claim; and affirmed the denial of plaintiff's motion for attorney's fees under Texas Civil Practice & Remedies Code 38.001(8). The court remanded for further proceedings. View "Hoffman v. Martinez" on Justia Law
Ibe v. Jones
Appellants purchased tickets to Super Bowl XLV and were either displaced from their seats, relocated, or had an obstructed view of the field. The majority of the affected ticketholders settled with the NFL. However, appellants in this instance elected to file suit, alleging various claims relating to breach of contract and fraud. Most of appellants’ claims were dismissed before trial, and class certification was denied. Seven individual appellants went to trial against the NFL and prevailed on breach of contract, but not on fraudulent inducement claims. The court concluded that, because appellants have presented no authority supporting that a third-party vendor with limited responsibility is also responsible for the performance of the express ticket terms, appellants’ argument that the Cowboys are liable for their tort claims fails; an inference of fraudulent inducement is untenable; and the economic loss rule bars appellants' claims. The court also concluded that the contract claims failed where the unambiguous term of the contract entitling ticketholders to “a spectator seat for the game” was not breached by an obstructed view of the video board. Furthermore, the fraudulent inducement claims failed because appellants were not fraudulently induced to buy Super Bowl tickets thinking they would see the game on the video board. As to class certification, the court concluded that the district court did not abuse its discretion in refusing to certify the Displaced Class, the Relocated Class, and the Obstructed-View Class. Finally, the court concluded that the district court did not abuse its discretion in declining to give appellants' proposed jury instruction. Accordingly, the court affirmed the judgment. View "Ibe v. Jones" on Justia Law
HDRE Bus. Partners Ltd. Grp. v. RARE Hosp. Int’l
This attorneys’ fees dispute arises out of an underlying lease dispute between HDRE and RARE. HDRE appealed the district court's award of attorneys’ fees for RARE under an attorneys’ fees provision in a lease agreement between the parties that was subsequently novated by another agreement. The court held that the novation of the Lease extinguished the parties’ rights under that agreement to prevailing-party attorneys’ fees and that the district court consequently abused its discretion in awarding fees to RARE. The court disagreed with the district court’s conclusion that several provisions of the Lease evince the parties’ intent for the attorneys’ fees provision to survive a future novation. Accordingly, the court reversed the district court's judgment. View "HDRE Bus. Partners Ltd. Grp. v. RARE Hosp. Int'l" on Justia Law