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

Bridgelink Engineering LLC, managed by two individuals, entered into a loan agreement with two banks in August 2021. The loans, totaling $34 million, were initially guaranteed by several LLCs also managed by the same individuals. A few months later, the individuals personally guaranteed Bridgelink’s loan obligations, with a guaranty agreement containing an early-release clause. This clause allowed the individuals to be released from liability if specific conditions were met, including the borrower’s loan being in good standing and compliance with financial covenants for two consecutive quarters. After a default in July 2022, the banks and Bridgelink amended the agreement, but Bridgelink later failed to meet the conditions for waiver of default and remained in default into 2023. Neither Bridgelink nor its guarantors made payments on the loans.The banks sued Bridgelink, the individuals, and the LLCs for breach of contract in the United States District Court for the Northern District of Texas, asserting diversity jurisdiction. The individuals argued they had satisfied the guaranty’s early release conditions, and later challenged the court’s subject-matter jurisdiction, contending that one of the banks was a Texas citizen, which would destroy diversity.The United States Court of Appeals for the Fifth Circuit reviewed both the jurisdictional challenge and the merits. The appellate court held that complete diversity existed as the banks and all defendants were citizens of different states, confirming the district court’s jurisdiction. The court further held that the individuals had not satisfied the conditions for early release from their guaranty obligations because the borrower’s loan was in default and the required confirmations of compliance were not provided for two consecutive quarters. The appellate court affirmed the district court’s summary judgment holding the individuals liable as guarantors for the loans. View "Cadence Bank v. Johnson" on Justia Law

Computer Sciences Corporation (CSC), an American technology services provider, licensed two insurance software platforms, Vantage and CyberLife, to Transamerica, an insurance company. Tata Consultancy Services (TCS), a technology consulting firm, was later engaged by Transamerica as a third-party consultant to maintain CSC’s platforms. CSC and Transamerica signed a Third-Party Addendum allowing TCS access to CSC’s software “solely for the benefit” of Transamerica. During this period, TCS sought to develop its own insurance platform, BaNCS, and won a $2.6 billion contract to transition Transamerica’s business to BaNCS. Evidence arose that TCS used CSC’s confidential information, including source code and technical manuals, for its BaNCS development, prompting CSC to allege trade secret misappropriation when a CSC employee discovered TCS sharing proprietary materials internally.CSC sued TCS in the United States District Court for the Northern District of Texas under the Defend Trade Secrets Act (DTSA). After an eight-day trial with an advisory jury, the jury found in favor of CSC, recommending substantial damages. The district court found TCS liable, awarding CSC $56 million in compensatory damages (based on unjust enrichment), $112 million in exemplary damages, and imposing a permanent injunction barring TCS’s use of CSC’s trade secrets and BaNCS versions developed with misappropriated material.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s findings that TCS’s use was unauthorized under the relevant contracts and that TCS had the requisite mens rea, including willful and malicious misappropriation. The Fifth Circuit also affirmed the damages awards and the exemplary damages ratio. However, the court vacated the injunction in part, remanding for the district court to revise it: the injunction’s prohibition on TCS’s future use of BaNCS material developed post-misappropriation was found duplicative of the damages, and the definition of parties bound by the injunction was ordered to be clarified in line with Federal Rule of Civil Procedure 65(d)(2). View "Computer Sciences v. Tata Consultancy" on Justia Law

Sanchez Energy Corporation, a gas producer, underwent Chapter 11 bankruptcy in 2019 due to significant debt, with its reorganization plan confirmed in April 2020. The company, later renamed Mesquite Energy, Inc., owned valuable fossil fuel reserves in the Comanche Field, Texas, and had several high-cost contracts for gathering, processing, transporting, and marketing natural gas and natural gas liquids. Carnero G&P, L.L.C., a midstream services provider, had a contract with Sanchez to serve as a backup provider. After Sanchez’s reorganization, Mesquite entered into new agreements with other parties to lower its midstream costs, which Carnero claimed breached its surviving contract.Following the bankruptcy, Carnero filed a state court lawsuit against Mesquite and other parties, asserting state law claims based on the new agreements. The suit was removed to the United States Bankruptcy Court for the Southern District of Texas, which denied Carnero’s request to remand and ultimately dismissed the case on the pleadings, finding it had “related-to” jurisdiction under 28 U.S.C. § 1334. The bankruptcy court reasoned that the dispute pertained to the implementation of the reorganization plan and that Carnero was barred from challenging the new agreements due to its failure to object during the bankruptcy proceedings. The United States District Court for the Southern District of Texas affirmed the bankruptcy court’s decision.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the jurisdictional question de novo. The Fifth Circuit held that the bankruptcy court lacked post-confirmation “related-to” jurisdiction over Carnero’s state law contract claims, as the dispute did not pertain to the implementation or execution of the reorganization plan. The court found that the new agreements were not executory contracts under the plan and that Carnero was not barred from pursuing its claims. The Fifth Circuit reversed the lower courts’ judgments and remanded the case with instructions to remand to state court. View "Carnero G&P v. SN EF Maverick" on Justia Law

Carol Rose, a prominent figure in the American Quarter Horse industry, entered into a series of agreements with Lori and Philip Aaron in 2013. The Aarons agreed to purchase a group of Rose’s horses at an auction, lease her Gainesville Ranch with an option to buy, and employ her as a consultant. The relationship quickly soured after the auction, with both sides accusing each other of breaches. Rose locked the Aarons out of the ranch and asserted a stable keeper’s lien for charges exceeding those related to the care of the Aarons’ horses. The Aarons paid the demanded sum and removed their horses. Litigation ensued, including claims by Jay McLaughlin, Rose’s former trainer, for damages related to the value of two fillies.The bankruptcy filings by Rose and her company led to the removal of the ongoing state-court litigation to the United States Bankruptcy Court. After trial, the bankruptcy court ruled in favor of the Aarons on their breach of contract and Texas Theft Liability Act (TTLA) claims, awarding damages and attorneys’ fees, and in favor of McLaughlin on his claim. The United States District Court for the Eastern District of Texas reversed the bankruptcy court’s rulings on the Aarons’ claims and McLaughlin’s claim, vacating the damages and fee awards.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s reversal of the damages award for the Aarons’ breach of contract claim, holding that the Aarons failed to prove damages under any recognized Texas law measure. The Fifth Circuit reversed the district court’s judgment on the TTLA claim, holding that Rose’s threat to retain the Aarons’ horses for more than the lawful amount could constitute coercion under the TTLA, and remanded for further fact finding on intent and causation. The court also reversed and remanded the judgment regarding McLaughlin’s claim, finding his damages testimony legally insufficient. The court left the issue of attorneys’ fees for further proceedings. View "Rose v. Equis Equine" on Justia Law

A black man was hired as the first black city manager of a Texas city and led several major development initiatives. His tenure became contentious, especially after two new city council members, who opposed his policies, were elected. The conflict allegedly took on a racial character, and the city manager reported race-based discrimination. Eventually, the city council voted to part ways with him “without cause,” entering into a separation agreement that included a severance payment and a non-disparagement clause. After his departure, some council members publicly criticized him and later persuaded the council to rescind the separation agreement, citing a legal opinion that it was invalid. The city demanded the return of the severance payment, prompting the former city manager to sue, alleging racial discrimination under 42 U.S.C. § 1981 and breach of contract under Texas law.The United States District Court for the Western District of Texas granted summary judgment to the plaintiff on the validity of the separation agreement and denied the city’s motions for judgment as a matter of law. The case proceeded to trial, where a jury found for the plaintiff on both claims, awarding substantial damages. The district court entered judgment accordingly, later suggesting remittitur due to statutory limits on damages for breach of contract, which the plaintiff accepted.The United States Court of Appeals for the Fifth Circuit reviewed the case. It held that the plaintiff failed to establish municipal liability for racial discrimination under § 1981 and § 1983 because he could not show that a majority of the city council acted with discriminatory intent, nor could he use the “cat’s paw” theory to impute animus under Monell. However, the court affirmed the district court’s judgment that the separation agreement was valid and enforceable, and that the city breached the contract by attempting to rescind it. The court reversed the judgment on the civil rights claim, affirmed the breach of contract ruling, and remanded for consideration of attorney’s fees. View "Jones v. City of Hutto" on Justia Law

Several development groups entered into a public improvement contract with a Texas city, purchasing over 60 acres of land, much of it in a flood zone. The developers received a variance from the city, exempting them from obtaining a federal floodplain permit (CLOMR), and invested significant funds in developing the property, including constructing a bridge. In 2018, the parties executed updated agreements, including a Master Development Agreement (MDA), which required certain conditions to be met within five years or the contract would automatically terminate, ending the city’s reimbursement obligations. As the deadline approached, the city informed the developers that they would now need to obtain the previously waived CLOMR, citing a later-enacted ordinance. Unable to comply in time, the developers sought an extension, which the city council denied, resulting in termination of the MDA.The developers sued in Texas state court, alleging the city’s actions constituted an unconstitutional taking under federal and state law, and also brought claims for breach of contract and violations of the Texas Vested Rights Statute. The city removed the case to the United States District Court for the Northern District of Texas and moved to dismiss. The district court dismissed the federal takings and declaratory judgment claims, finding the developers had not sufficiently alleged that the city acted in its sovereign rather than commercial capacity, and remanded the remaining state-law claims to state court.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed. The court held that the developers’ allegations arose from a contractual dispute, not a sovereign act by the city, and thus did not state a plausible takings claim under the Fifth Amendment. The court also found no abuse of discretion in the district court’s decision to dismiss the declaratory judgment claim, as the core issues would be resolved in the remanded state court action. View "Mesquite Asset Recovery Grp v. City of Mesquite" on Justia Law

WorldVue Connect, LLC, a company specializing in in-room entertainment and technology for hotels, purchased the domestic assets of Hospitality WiFi, LLC from Jason Szuch for $9,450,000 in 2022. Szuch retained interests in international affiliates and received a minority stake in a new entity, WorldVue Global, LLC. The transaction included the transfer of goodwill, trade secrets, and a valuable technical support team. In 2024, after the business relationship soured, WorldVue bought out Szuch’s minority interest and entered into a settlement agreement with Szuch and his companies, as well as a separation agreement with a key employee, Shan Griffin. These agreements, governed by Texas law, contained non-compete, non-solicitation, and confidentiality provisions effective for one year.Following the agreements, evidence emerged that the Szuch Parties recruited WorldVue’s employees and independent contractors, including those providing remote support to clients in the contractually defined “Restricted Area.” WorldVue filed suit in Texas state court for breach of contract and tortious interference, seeking injunctive relief. The state court issued a temporary restraining order, and after removal to the United States District Court for the Southern District of Texas, the TRO was extended. The district court found that the Szuch Parties breached the agreements by soliciting WorldVue’s workers and using confidential information, and granted a preliminary injunction prohibiting further solicitation and use of confidential information.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the preliminary injunction for abuse of discretion. The court affirmed the injunction, holding that the non-solicitation provision applied to workers performing services in the Restricted Area, regardless of their physical location, and that customer service agents were covered as independent contractors. The court modified the injunction to clarify that “confidential information” does not include Szuch’s personal knowledge of worker identities acquired prior to the asset sale. View "WorldVue Connect v. Szuch" on Justia Law

After Hurricane Laura damaged an offshore platform owned by Genesis Energy, Genesis contracted with Danos, LLC to perform repairs. To support the project, Genesis also chartered a vessel from a third party to house and transport the repair crew and equipment. During the course of repairs, a Danos employee was injured while being transferred from the platform to the vessel and subsequently sued Danos, Genesis, and the vessel owner. Genesis filed a crossclaim against Danos, seeking defense and indemnification under a 2008 Master Services Agreement, arguing that the contract required Danos to indemnify Genesis for such claims.The United States District Court for the Southern District of Texas reviewed cross-motions for summary judgment from Genesis and Danos. The district court determined that the contract between Genesis and Danos was not a “maritime contract” under the Outer Continental Shelf Lands Act (OCSLA) and relevant Fifth Circuit precedent, specifically In re Larry Doiron, Inc. As a result, Louisiana law applied, which rendered the indemnification provision unenforceable. The district court granted summary judgment in favor of Danos, denied Genesis’s motion, and dismissed Genesis’s crossclaim with prejudice. The court’s order was designated as a final judgment under Federal Rule of Civil Procedure 54(b), and Genesis appealed.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s grant of summary judgment de novo. The Fifth Circuit held that the contract was not a maritime contract because the parties did not expect the vessel to play a substantial role in the completion of the repair work; its functions were limited to transportation, housing, and ancillary support, which are insufficient under the applicable legal standard. The Fifth Circuit affirmed the district court’s judgment, holding that Louisiana law applied and the indemnification provision was unenforceable. View "Genesis Energy v. Danos" on Justia Law

Plaintiffs initiated a lawsuit against eleven defendants, alleging a scheme involving breach of employment agreements, misappropriation of funds, embezzlement, and fraud. The suit was originally filed in the Circuit Court of Harrison County, Mississippi. Defendants removed the case to the United States District Court for the Southern District of Mississippi, citing diversity jurisdiction. Plaintiffs sought to remand the case to state court, relying on a provision in three defendants’ contracts that specified venue in Harrison County, Mississippi, and included language about consent to personal jurisdiction and venue solely within those forums, along with a waiver of objections to those forums.The United States District Court for the Southern District of Mississippi interpreted the contractual provision as a waiver of the defendants’ right to remove the case to federal court. The district court reasoned that the provision gave the first-filing party the sole right to choose the court, and that by waiving objections to venue and personal jurisdiction, the defendants had also waived their removal rights. Consequently, the district court remanded the case to state court.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s interpretation of the contractual waiver de novo, applying Mississippi law. The Fifth Circuit held that the contract provision did not constitute a clear and unequivocal waiver of the defendants’ right to remove the case to federal court. The court found that the language regarding venue and jurisdiction could reasonably refer to geographic location and did not explicitly or implicitly waive removal rights, especially since the contract contemplated litigation in both state and federal courts in Harrison County. The Fifth Circuit reversed the district court’s remand order. View "Gulf Coast Pharmaceuticals Plus, L.L.C. v. RFT Consulting" on Justia Law

Fieldwood Energy LLC, an oil and gas company, contracted with Island Operating Company, Inc. (IOC) through a Master Services Contract (MSC) to provide workers for oil and gas production services on offshore platforms in the Gulf of Mexico. The MSC defined the work as “Lease Operators,” and a subsequent work order requested “A Operators” to perform tasks such as compliance testing and equipment checks on the platforms. The contract required Fieldwood to provide marine transportation for workers and equipment, which it did by hiring Offshore Oil Services, Inc. (OOSI) to transport IOC employees, including Tyrone Felix, to the platforms. Felix was injured while disembarking from OOSI’s vessel, the M/V Anna M, and subsequently made a claim against OOSI.OOSI filed a complaint for exoneration or limitation of liability in the United States District Court for the Eastern District of Louisiana. OOSI also sought indemnification from IOC under the MSC’s indemnity provision. IOC moved for summary judgment, arguing that Louisiana law, specifically the Louisiana Oilfield Anti-Indemnity Act (LOAIA), rendered the indemnity provision unenforceable. The district court agreed, finding that the MSC was not a maritime contract because vessels were not expected to play a substantial role in the contract’s performance, and thus Louisiana law applied. The court granted summary judgment for IOC on indemnity and insurance coverage, and later on defense costs after OOSI settled with Felix.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment de novo. The Fifth Circuit held that the MSC was not a maritime contract because neither its terms nor the parties’ expectations contemplated that vessels would play a substantial role in the contract’s completion. As a result, Louisiana law applied, and the LOAIA barred enforcement of the indemnity provision. The Fifth Circuit affirmed the district court’s summary judgment in favor of IOC. View "Offshore Oil Services, Inc. v. Island Operating Co." on Justia Law