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

Imperium, a non-diverse defendant, should not have been dismissed with prejudice in this insurance coverage dispute. The Fifth Circuit vacated the district court's dismissal and remanded for dismissal without prejudice. In this case, the district court did not abuse its discretion in reviewing the notice of removal for improper joinder; the district court did not abuse its discretion in deciding to pierce the pleadings and conduct a summary inquiry in order to analyze the relevance and meaning of the insurance policy; and the district court was correct to hold that Imperium was improperly joined where there was no plausible state cause of action against the joined defendant. The court concluded that when a district court determines that a nondiverse party has been improperly joined to defeat diversity, that party must be dismissed without prejudice. View "Ticer v. Imperium Insurance Co." on Justia Law

Texas and Wyoming both regulate the use of indemnity agreements in their oilfields. Wyoming, concerned that indemnification disincentivizes safety, forbids oilfield indemnity agreements. Wyo. Stat. 30-1-131. Texas, concerned that large oil companies will use their leverage to demand indemnity from independent operators, also disfavors the agreements but does not ban them; it allows indemnification in limited situations including when the indemnity is mutual and backed by insurance. Tex. Civ. Prac. & Rem. 127.003, 127.005.Cannon, a Wyoming oil-and-gas exploration company, and Texas-based KLX entered into a “Master Equipment Rental Agreement,” providing that Texas law governs the agreement and that the parties must “protect, defend, [and] indemnify” each other against losses involving injuries sustained by the other’s employees, regardless of who is at fault “to the maximum extent permitted by applicable law.” Most of the work performed under the contract occurred in Wyoming with none in Texas. Indemnity was sought for a Wyoming lawsuit filed by a Wyoming resident injured in a Wyoming oilfield operated by a Wyoming business.The Fifth Circuit held that Wyoming law prevails and that the indemnity provision in the Agreement is unenforceable. Wyoming has a more significant relationship to the parties and a materially greater interest in applying its policy; its anti-indemnity policy is “fundamental.” View "Cannon Oil & Gas Well Services, Inc. v. KLX Energy Services, L.L.C." on Justia Law

Dean filed a Chapter 7 voluntary petition. The trustee for the estate did not have sufficient unencumbered funds to retain counsel to pursue claims for the estate. Reticulum, a creditor, agreed to fund the trustee’s litigation in exchange for a share of any of litigation proceeds. The bankruptcy court approved the agreement. The district court affirmed. Dean appealed, contending that the agreement undermined the statutory ranking system for distribution of the estate’s property by allowing Reticulum to move ahead of other creditors.The Fifth Circuit dismissed the appeal for lack of standing. Bankruptcy standing may be addressed even when it was not raised below. The court employed the “person aggrieved” test, a “more exacting standard than traditional constitutional standing.” The appellant must show that he is “directly, adversely, and financially impacted by” the exact order being appealed as opposed to the proceedings more generally. In a Chapter 7 bankruptcy, the debtor-out-of-possession typically has no concrete interest in how the bankruptcy court divides up the estate. A debtor may retain bankruptcy standing by showing that defeat of the order on appeal would affect his bankruptcy discharge. The approval of the litigation funding agreement did not affect whether Dean’s debts will be discharged. View "Dean v. Seidel" on Justia Law

The Fifth Circuit affirmed the district court's refusal to vacate a second default judgment against the Elephant Group. The court concluded that the district court had jurisdiction over the Elephant Group, and that the Elephant Group failed to present a meritorious defense, as opposed to mere legal conclusions.In this case, Tango Marine, a Grecian corporation, filed suit in district court against the Elephant Group, two Nigerian businesses, seeking maritime attachment and garnishment pursuant to Federal Rule of Civil Procedure Supplemental Rule B. Tango Marine subsequently sought entry of default, which the clerk entered. When no motion for default judgment appeared before the district court, the district court ordered Tango Marine to file its motion for default judgment or explain its failure. Tango Marine then filed its motion for default judgment and the Elephant Group participated in the suit by filing a motion for extension of time and to have the default set aside. With the initial default set aside, the Elephant Group filed a motion to dismiss under Federal Rule of Civil Procedure 12(b). In response, Tango Marine filed an amended complaint and a response opposing the motion to dismiss. The Elephant Group responded only to this response to the motion to dismiss and never filed an answer to the amended complaint. Tango Marine ultimately asked the clerk for a second entry of default due to the Elephant Group's failure to answer the amended complaint, which the clerk granted. View "Tango Marine, S.A. v. Elephant Group, Ltd." on Justia Law

This case stems from plaintiffs' claim of rights under a 1933 agreement between Standard Oil of California and the Kingdom of Saudi Arabia and a 1949 agreement between the purported ancestors of plaintiffs and the Arabian American Oil Company. Plaintiffs seek to enforce an arbitral award against defendant, Saudi Arabian Oil Company (Saudi Aramco), which they were awarded by an Egyptian arbitration panel.After determining that plaintiffs' motion for reconsideration tolled the period for filing a notice of appeal, consistent with Federal Rule of Civil Procedure 83(a)(2), the Fifth Circuit vacated the district court's judgment and remanded with instructions for the district court to dismiss the case based on lack of jurisdiction. The court concluded that Saudi Arabian Oil Company is an instrumentality of a foreign state and is therefore immune from suit under the Foreign Sovereign Immunities Act of 1976 (FSIA). The court stated that the arbitral proceedings give every appearance of having been a sham, and there exists no agreement among these parties to arbitrate this dispute, or anything else for that matter. The court decided that, instead of denying the petition for enforcement, the case is more properly dismissed for lack of jurisdiction, given that Saudi Aramco qualifies as a foreign state for purposes of the FSIA. View "Al-Qarqani v. Saudi Arabian Oil Co." on Justia Law

On January 19, 2019, Bonvillian's vessel allided with a crew boat docked on the Mississippi River. On the crew boat, Pellegrin sustained personal injuries. On August 23, 2019, Pellegrin sued Bonvillian in Louisiana state court. On December 16, 2019, Bonvillian filed a verified limitation complaint. The Limitation of Liability Act of 1851 allows vessel owners to limit their vessel’s tort liability to the value of the vessel plus pending freight, 46 U.S.C. 30501–30512, requiring vessel owners to “bring a civil action in a district court of the United States . . . within 6 months after a claimant gives the owner written notice of a claim.”The district court dismissed, citing the Fifth Circuit “Eckstein” rule that “a party alleging a limitation petition was not timely filed challenges the district court’s subject matter jurisdiction over that petition.” The district court concluded that the Fifth Circuit’s Eckstein rule remained controlling (despite Bonvillian’s contention that the Supreme Court implicitly overruled Eckstein in 2015), and that it lacked subject matter jurisdiction. The Fifth Circuit reversed, overturning the Eckstein rule based on intervening Supreme Court decisions. The 46 U.S.C. 30511(a) time limitation is a mere claim-processing rule which has no bearing on a district court’s subject matter jurisdiction. View "Bonvillian Marine Service, Inc. v. Pellegrin" on Justia Law

BillCutterz granted KGS a license to sell BillCutterz’s services and intellectual property. The parties agreed to arbitrate their disputes; BillCutterz was entitled to royalties and commissions based on KGS’s revenue. The Agreement automatically renews for successive five-year periods until terminated “for cause.” In 2017, a dispute arose. An arbitrator ordered KGS to pay BillCutterz all unpaid commissions and royalties through December 31, 2017, and from January 1, 2018 “for the duration of the License Agreement.” BillCutterz sought confirmation of the award. KGS moved to vacate the award. The district court confirmed the award. KGS filed numerous unsuccessful motions and an unsuccessful appeal but paid the retrospective relief and at least part of the prospective relief. The parties continue to disagree about whether the award’s order entitles BillCutterz to ongoing compensation and whether KGS incurred (and perhaps diverted) revenue after December 6, 2018.KGS sought relief from the judgment, arguing that it fully satisfied all obligations through December 6, 2018, that it ceased operating on that date, and had terminated the License Agreement. KGS sought “protection” from post-judgment discovery. BillCutterz suspected that KGS was still earning revenue under another trade name. The district court refused KGS relief and granted BillCutterz’s motion to compel discovery. The Fifth Circuit dismissed an appeal for lack of jurisdiction. Pending discovery and adjudication based on such discovery of whether KGS has fully satisfied the arbitration award, there is no final judgment to consider. View "Gross v. Keen Group Solutions, L.L.C." on Justia Law

A class of Louisiana medical providers sued Louisiana Preferred Provider Organizations (PPOs) in Louisiana state court, alleging that the PPOs violated the Louisiana PPO Act by discounting their bills without prior notice. After receiving class certification, the Class settled with all of the Louisiana defendants except Med-Comp; CorVel (Homeland’s insured) assigned to the Class its claims against Homeland. The assignment did not initially include the bad faith claim CorVel was pursuing against Homeland in Delaware. The Delaware Supreme Court ultimately held that the claim was time-barred. CorVel then assigned all of its claims against Homeland to the Class. The Class amended its complaint against MedComp in Louisiana state court to assert the bad faith claim against Homeland.The litigation then consisted of the Class's state law PPO Act claims against one non-diverse defendant (Med-Comp) and a state law bad faith claim as an assignee against one diverse defendant (Homeland). Homeland removed the case to federal court. The district court remanded the PPO Act claims against Med-Comp to state court and dismissed the bad faith claims as barred by the Delaware judgment.The Fifth Circuit reversed in part. The district court lacked jurisdiction because a non-diverse defendant remained from the original lawsuit. Med-Comp was not improperly joined because the Class has a possibility of recovery against Med-Comp (a non-diverse defendant) on the PPO Act claims. The court remanded with instructions to remand the entire case to state court. View "Williams v. Homeland Insurance Co. of New York" on Justia Law

Merely running a website that is accessible in all 50 states, but that does not specifically target the forum state, is not enough to create the "minimum contacts" necessary to establish personal jurisdiction in the forum state under International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The defendant must take the additional step of targeting the forum state in a manner that reflects "purposeful availment" of the opportunity to do business in that state.Plaintiffs filed suit alleging that Eastrock committed copyright and trade dress infringement by displaying copies of their products on its website. The court affirmed the district court's dismissal of the complaint based on lack of personal jurisdiction, concluding that there is no evidence to support the conclusion that Eastrock's website specifically targets Louisiana. View "Admar International, Inc. v. Eastrock, LLC" on Justia Law

Carver, a corrections officer at the Stiles Unit of the Texas Department of Criminal Justice (TDCJ), sued three of her former coworkers under 42 U.S.C. 1983, alleging they had sexually assaulted her at the Stiles Unit. The complaint specified that Carver was suing these defendants in their official capacities. Carver also brought section 1983 claims against TDCJ and the Stiles Unit. The court dismissed TDCJ on sovereign-immunity grounds and also dismissed Carver’s claims against the Stiles Unit. None of the individual defendants responded to their summonses or defended the suit in any way. The clerk entered a default. The court ordered the individual defendants to “show cause” why a default judgment should not be granted.Without giving Carver notice or an opportunity to respond, the court subsequently dismissed her claims against the individual defendants with prejudice. The court reasoned that, because Carver had sued the three in their official capacities for money damages, the suits were prima facie barred by sovereign immunity. The Fifth Circuit reversed. Both the Federal Rules of Civil Procedure and Fifth Circuit precedents preclude the dismissal of the complaint sua sponte and with prejudice. The Rules give plaintiffs a variety of ways to fix a defective complaint. View "Carver v. Atwood" on Justia Law