Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

Articles Posted in January, 2012
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In a bankruptcy adversary proceeding, Capco brought claims of fraud and various business torts against Ryder, Tana, TRT, and Tristone. The claims arose out of a transaction in which Capco purchased from Tana certain oil and gas reserves located in the Gulf of Mexico (the Properties). The bankruptcy court granted summary judgment in favor of Ryder, Tana, TRT, and Tristone and dismissed the claims. The court held that Capco failed to present evidence to demonstrate a genuine issue of material fact about whether Ryder was contracted to provide an independent reevaluation of the Properties and advice at the meeting regarding Capco's decision to close on the Properties. The court also held that because the purchase and sale agreement contained a clear intent to disclaim reliance, the lower courts correctly held that Capco was unable to claim fraudulent inducement based on the prior representations of Tana, TRT, and Tristone. Accordingly, the judgment was affirmed.

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Petitioner was found guilty of murder committed in the course of a kidnapping and robbery, and the state court sentenced him to death based on the jury's verdict on the two special issues at sentencing. At issue was whether the Texas Court of Criminal Appeals (CCA) unreasonably applied federal law as established in Atkins v. Virginia when it refused to allow petitioner to wholly replace full-scale IQ scores with a clinical assessment to establish his claim of mental retardation. Considering that the Supreme Court had delegated to the states the responsibility of developing appropriate ways to enforce the constitutional restriction against executing mentally retarded defendants, the court could not second-guess the CCA's decision. Therefore, the court denied petitioner's application for a certificate of appealability because the CCA's decision was not an unreasonable application of federal law.

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IFS and 17 affiliated organizations (collectively, Interamericas) were debtors in a series of Chapter 7 cases. This appeal arose from eight collective adversary proceedings, which a trustee of IFS brought against appellants for avoidance of fraudulent transfers under Chapter 5 of the Bankruptcy Code and Chapter 24 of the Texas Business and Commerce Code. Appellants appealed the district court's affirmance of the bankruptcy court judgment of over $3 million in favor of the trustee. The court held that control could be sufficient to show ownership of what was ultimately a fact-based inquiry that would vary according to the peculiar circumstances of each case. The court also held that the lower courts' findings of ownership were not clearly erroneous and, moreover, comported with precedent and the court's holding today where IFS exercised control over the accounts at issue such that it had de facto ownership over the accounts, as well as the funds contained. The court further held that the record supported the lower courts' findings of fraudulent transfer. Specifically, IFS faced pending lawsuits and mounting debts just as it liquidated nearly all Interamericas' assets and evidence that IFS operated as a fraudulent enterprise at the time of transfer supported this finding of fraudulent intent. Accordingly, the judgment was affirmed.

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Defendant was convicted of conspiracy to unlawfully transport illegal aliens, conspiracy to conceal or harbor illegal aliens, and two counts of harboring or concealing illegal aliens, 8 U.S.C. 1324(a)(1)(A)(ii), (iii), (v)(I), and (a)(1)(B)(I). The Fifth Circuit affirmed, upholding the district court's admission of expert testimony by federal law enforcement agents regarding usual locations of passengers in the vehicles used to transport illegal aliens; use of multiple bailouts in illegal alien trafficking; the role of guides; and relationships among drivers, guides, and recruiters. An agent's statement identifying a particular phone number as belonging to unindicted co-conspirator was hearsay, but not prejudicial.

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Plaintiffs-Appellants James and Sandra Lindquist sued the City of Pasadena alleging the City violated their state and federal constitutional rights by exercising "unbridled discretion" in connection with the denial of a zoning waiver. Plaintiffs operated a used-car dealership in Pasadena. In 2003, the Pasadena City Council enacted an ordinance adopting licensing standards for used-car dealers criminalizing the sale of used cars without a license and imposing a number of requirements that dealers must meet as a condition of receiving a license. Two of those requirements were the subject of this appeal: (1) new license locations are required to be a minimum of one-thousand feet from any existing license; and (2) no new licenses could be issued within 150 feet of a residential area. After the ordinance was passed, Plaintiffs considered purchasing two lots to expand their existing dealership. City officials told them that neither lot qualified for a license, but Plaintiffs purchased the lots anyway. Plaintiffs later learned that their competitors purchased a nearby lot, had applied for a license, and were denied for different reasons than those given to Plaintiffs. On appeal, the Fifth Circuit reversed the district court's ruling that Plaintiffs' equal protection claim failed to state a claim for relief. On remand, the district court granted summary judgment to the City after determining Plaintiffs failed to create a genuine issue of fact with respect to their equal protection claim. Upon review, the Fifth Circuit concluded that Plaintiffs could not show that the City Council acted irrationally when it denied their license appeal. Furthermore, the Court found that Plaintiffs failed to preserve their unbridled discretion claim for further review. As such, the Court affirmed the district court's grant of summary judgment in favor of the City.

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In 2005, during plaintiff's employment, defendant issued an employee handbook, including a provision that all employment-related disputes, whether initiated by an employee or by defendant, would be "resolved only by an arbitrator through final and binding arbitration," that disputes under the Fair Labor Standards Act were among those subject to the arbitration policy, that disputes cannot be brought as class actions or in representative capacities, and that the Federal Arbitration Act was its governing authority. Plaintiff signed a receipt that reiterated the arbitration policy. After his employment ended, plaintiff filed a class action, alleging violation of the FLSA by failing to adequately compensate him and other similarly-situated employees for overtime work. The district court denied a motion to stay proceedings and compel arbitration, finding that the provision was illusory because the employer retained the right to terminate or modify the provision at any time. The Fifth Circuit affirmed, noting that under the provision the company could make amendments almost instantaneously.

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Defendant (principal contractor) sub-contracted with Stevens for work on military personnel housing at the Army base at Fort Polk, Louisiana. Stevens retained plaintiff to perform re-roofing. Plaintiff completed satisfactory work at the instruction of defendant and Stevens, but was not paid in full. Plaintiff originally sued under the Miller Act, 40 U.S.C. 3133, which provides federal question jurisdiction Plaintiff conceded at trial that defendants failed to secure a bond as required under the Miller Act. The federal claim was dismissed. The district court entered judgment in favor of plaintiff on a Louisiana-law breach of contract claims and allowed plaintiff to amend to allege diversity that existed at the time of the original complaint. The court declined to consider defendants' newly submitted evidence concerning diversity. The Fifth Circuit vacated. The district court may not have had proper subject-matter jurisdiction from the instant plaintiff filed; it incorrectly held that it had discretion to exercise supplemental jurisdiction over the state claims, assuming that it had proper subject-matter jurisdiction under the Miller Act. The Miller Act claim was too attenuated to establish proper federal question jurisdiction and could not support supplemental jurisdiction.

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Defendant, a Mexican citizen, was removed from the U.S. in 1989, following convictions for grand theft auto, second degree burglary, amd receiving stolen property. About one month later, he illegally reentered. In 1990, he was convicted in Missouri of rape and armed criminal action and was sentenced to 18 years in prison. The Border Patrol was not notified of his 2008 release, and no removal order issued. In 2009 he was taken into custody and pleaded guilty to one count of illegal reentry, 8 U.S.C. 1326(a), (b)(2). The presentence report recommended enhancing his offense level by 16 levels based on his 1990 conviction. The district court found that, after serving his sentence, defendant unlawfully remained in the U.S., applied the 16-level enhancement and calculated a guidelines imprisonment range of 77 to 96 months, then sentenced him to 90 months. The Fifth Circuit vacated and remanded, holding that a defendant alleged to have unlawfully remained in the U.S. following a qualifying conviction under U.S.S.G. 2L1.2(b)(1)(A) is subject to the 2L1.2(b)(1)(A) enhancement only when a removal order is issued or reinstated after that conviction.

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This was an interlocutory appeal from the denial of a motion to intervene as of right brought by citizens of Houston in regard to litigation between the City and the contractor hired to run a red light camera system that generated millions of dollars annually to the City and the contractor. The court held, that under the totality of the circumstances, including the haste of the litigation, the City's pecuniary motives, the extended opposition to the charter amendment, the agreed order to leave the cameras in place, and the attempt to reinstate them before the suit had concluded, it was sufficient to conclude that the intervenors' interests "may be" inadequately represented. Accordingly, the district court's orders denying intervention and a new trial were reversed and the case remanded for further proceedings.

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Plaintiff sued defendant for fraud and for misappropriation of trade secrets over plaintiff's invention of the "Pit Bull," a machine intended to make the process of cleaning drilling fluids more efficient. Defendant appealed from a jury verdict awarding plaintiff compensatory damages and punitive damages for fraud and compensatory damages for misappropriation of trade secrets. Because plaintiff did not prove that he was entitled to damages on his fraud claim, the court rendered a take-nothing judgment on plaintiff's fraud claim, and reversed the jury's award of punitive damages. Because the verdict for misappropriation of trade secrets was supported by sufficient evidence, the court affirmed the jury's verdict on plaintiff's claim for misappropriation of trade secrets.