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

Articles Posted in Contracts
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The case involves Kholkar Vishveshwar Ganpat, an Indian citizen, who contracted malaria while working as a crew member on a Liberian-flagged ship managed by Eastern Pacific Shipping Pte., Limited (EPS), a Singaporean company. Ganpat alleges that EPS failed to adequately provision the ship with antimalarial medication for its voyage to Gabon, a high-risk malaria area in Africa. Ganpat's illness resulted in gangrene, amputation of several toes, and a 76-day hospitalization. He filed a lawsuit against EPS in the United States, seeking relief under the Jones Act and the general maritime law of the United States. He also asserted a contractual claim for disability benefits.The district court initially deferred making a choice-of-law ruling. However, after discovery, the court ruled that the law of the United States (the Jones Act and general maritime law) governs Ganpat’s tort claims and claim for breach of the collective bargaining agreement. EPS appealed this decision.The United States Court of Appeals for the Fifth Circuit reversed the district court's decision. The appellate court disagreed with the district court's assessment of the Lauritzen-Rhoditis factors, which are used to determine whether maritime claims are governed by the law of the United States or the conflicting law of a foreign nation. The appellate court found that none of the factors that the Supreme Court has deemed significant to the choice-of-law determination in traditional maritime shipping cases involve the United States. The court concluded that Ganpat’s maritime tort and contract claims should be adjudicated under the substantive law of Liberia, the flag state of the ship on which Ganpat was working when he contracted malaria. The case was remanded for further proceedings consistent with this opinion. View "Ganpat v. Eastern Pacific Shipping" on Justia Law

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The case involves a dispute between BMC Software, Inc. (BMC) and International Business Machines Corporation (IBM) over a Master Licensing Agreement (MLA) and an Outsourcing Attachment. BMC, a software company, and IBM, an information technology company, directly compete in developing and selling mainframe software. However, IBM also provides necessary outsourcing services to BMC and its customers, including AT&T. In 2008, IBM and BMC entered into an MLA and an Outsourcing Attachment, which were amended in 2013 and 2015. The dispute centers around the 2015 amendment, particularly three provisions that govern IBM's use of BMC's software.The case was first heard in the United States District Court for the Southern District of Texas. The district court awarded summary judgment to IBM on the claim for breach of Section 1.1 of the 2015 amendment, but denied IBM's motion for summary judgment on BMC’s Section 5.1 breach-of-contract claim. The court concluded that Section 5.4 of the 2015 amendment unambiguously prevented IBM from “displacing” BMC products with IBM software. The court granted partial summary judgment to BMC because IBM “displaced BMC Customer Licenses with IBM products when it implemented Project Swallowtail at AT&T.” After a bench trial, the district court awarded BMC approximately $1.6 billion in damages.The case was then appealed to the United States Court of Appeals for the Fifth Circuit. The appellate court disagreed with the district court's interpretation of Section 5.4 of the 2015 amendment. The court held that “other valid business reasons” under Section 5.4 supported IBM’s service in effecting AT&T’s switchover, which partially included IBM software. The court concluded that IBM did not breach Section 5.4 by agreeing to provide IT services to perform this task. Therefore, the judgment of the district court was reversed. View "BMC Software v. IBM" on Justia Law

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This case revolves around a series of maritime accidents caused by the breakaway of a drillship, the DPDS1, owned by Paragon Asset Company, during Hurricane Harvey in Port Aransas, Texas. Paragon had hired two tugboats owned by Signet Maritime Corporation to keep the vessel moored to the dock during the storm. However, the DPDS1 broke from its moorings, collided with both Signet tugs, and ran aground in the Corpus Christi ship channel. It later refloated and collided with a research pier owned by the University of Texas.The district court found Paragon solely liable for the breakaway, applying maritime negligence law. It concluded that Paragon had unreasonably relied on inaccurate reports about the strength of its mooring system and failed to call for an evacuation when it was the prudent course of action. The court also found that Signet and Paragon were equally liable for the damages suffered by the University of Texas due to the failure of a third tug, supplied by Signet, to prevent the vessel's collision with the pier.Paragon appealed, arguing that the court should have applied a "towage law" standard of duty to Signet's services and contested the district court's rejection of a force majeure defense. Paragon also disputed the court's determination regarding which contract between the parties governed Signet's services.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. It found no error in the application of maritime negligence law, rejected Paragon's force majeure defense, and agreed with the lower court's determination that Signet's Tariff governed the services provided during Hurricane Harvey. View "Paragon Asset v. American Steamship" on Justia Law

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GFS Industries, a Texas limited liability corporation, entered into an agreement with Avion Funding to receive $190,000 in exchange for $299,800 of GFS’s future receivables. GFS stated it had not filed, nor did it anticipate filing, any Chapter 11 bankruptcy petition. However, two weeks after signing the agreement, GFS petitioned for voluntary Chapter 11 bankruptcy in the Western District of Texas and elected to proceed under Subchapter V, a 2019 addition to the Bankruptcy Code designed to streamline the Chapter 11 reorganization process for certain small business debtors. Avion filed an adversary complaint in GFS’s bankruptcy, claiming GFS obtained Avion’s financing by misrepresenting whether it anticipated filing for bankruptcy. Avion sought a declaration that GFS’s debt to Avion was therefore nondischargeable.The bankruptcy court agreed with GFS, ruling that in the Subchapter V context, only individuals, not corporations, can be subject to § 523(a) dischargeability actions. The court followed the reasoning of four bankruptcy courts and declined to follow the Fourth Circuit’s recent decision in Cantwell-Cleary Co. v. Cleary Packaging, LLC (In re Cleary Packaging, LLC), which held that the Subchapter V discharge exceptions apply to both individual and corporate debtors. The bankruptcy court ruled GFS’s debt to Avion was dischargeable and dismissed Avion’s complaint. Avion timely appealed to the district court.The United States Court of Appeals for the Fifth Circuit disagreed with the bankruptcy court's interpretation of the interplay between § 523(a) and § 1192(2). The court found that § 1192 governs discharging debts of a “debtor,” which the Code defines as encompassing both individual and corporate debtors. The court also noted that other Code provisions explicitly limit discharges to “individual” debtors, whereas § 1192 provides dischargeability simply for “the debtor.” The court concluded that 11 U.S.C. § 1192(2) subjects both corporate and individual Subchapter V debtors to the categories of debt discharge exceptions listed in § 523(a). Therefore, the court reversed the judgment of the bankruptcy court and remanded for further proceedings. View "Avion Funding v. GFS Industries" on Justia Law

Posted in: Bankruptcy, Contracts
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This case involves a dispute between Sheet Pile, LLC and Plymouth Tube Company. The conflict arose from an exclusivity agreement, in which Plymouth agreed to manufacture certain products only for PilePro, Sheet Pile's predecessor. Approximately a decade later, Sheet Pile accused Plymouth of breaching this agreement by selling those products to other companies, and they sued for fraud and breach of contract. The district court granted summary judgment in favor of Plymouth.Sheet Pile then appealed. The Court of Appeals for the Fifth Circuit reviewed the summary judgment de novo and affirmed the lower court's decision. For the breach-of-contract claim, the court concluded that the claim was time-barred under Texas law, which has a four-year statute of limitations for such claims. The court also held that the discovery rule, which could have deferred the accrual of the cause of action, did not apply.Regarding the fraud claim, the court concluded that Sheet Pile failed to demonstrate a genuine dispute of material fact that Plymouth's representations were false when made. The court noted that there was no evidence that Plymouth sold the exclusive products to third parties in 2014 or 2015, and that Plymouth had expressly warned PilePro that it might begin selling to third parties if PilePro didn't hold up its end of the agreement. Therefore, the court affirmed summary judgment for Plymouth. View "Sheet Pile v. Plymouth Tube" on Justia Law

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Marvin Jackson attended a World Wrestling Entertainment (WWE) event and alleges that a pyrotechnics blast caused him to lose most of his hearing in his left ear. The tickets were purchased as a surprise gift by his nephew, Ashton Mott, on SeatGeek.com. All ticket purchases required agreement to various terms and conditions, including an arbitration agreement, and stated that entry to the event would constitute acceptance of these terms. Jackson sued WWE in Texas state court for negligence, but WWE moved the case to federal court and requested arbitration per the ticket agreement. The district court granted WWE’s motion, stating that Mott acted as Jackson's agent and that Jackson was therefore bound by the terms of the ticket, including the arbitration agreement.Jackson appealed the decision, arguing that Mott did not have the authority to act on his behalf and therefore the arbitration agreement should not be enforceable against him. The United States Court of Appeals for the Fifth Circuit disagreed with Jackson's argument. The court held that although Mott purchased the tickets without Jackson's knowledge or control, he acted as Jackson’s agent when he presented the ticket on Jackson's behalf for admittance to the event. The ticket's terms and conditions were clear that use of the ticket would constitute acceptance of the arbitration agreement. Therefore, the court affirmed the district court's decision to compel arbitration, as the arbitration agreement is enforceable against Jackson. View "Jackson v. World Wrestling" on Justia Law

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This case is focused on a business dispute regarding the formation and ownership of a limited liability company. The plaintiff contends that he had an agreement with the defendant to have equal ownership in the business. However, the company was allegedly improperly formed with the defendant as the sole owner. The plaintiff alleges that this resulted in a breach of contract. The district court ruled in favor of the defendant, citing the statute of limitations and the statute of frauds as grounds for dismissal.The dispute originated from the formation of Helping Hands Capital, LLC, a Texas-based company that provided pre-settlement medical advancement loans. The plaintiff claimed that he was supposed to be an equal owner in the business, but the defendant was the only one listed as the managing member in the company's formation documents. The plaintiff claimed that after a third partner transferred his interests back to the company, the defendant told him that they were now 50/50 partners. However, in 2018, the defendant clarified that the plaintiff only had an "economic benefit" in the company and did not have "legal ownership". The plaintiff claimed that this was when he was excluded from the business, leading to his breach of contract claim.The United States Court of Appeals for the Fifth Circuit affirmed the lower court's decision. The appeals court only addressed the applicability of the statute of frauds, which requires certain contracts to be in writing. The court held that the agreement fell within the statute of frauds because the agreement's performance required more than a year, and the evidence does not unequivocally support the existence of a profit-sharing contract. View "Chase v. Hodge" on Justia Law

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In this case, the United States Court of Appeals for the Fifth Circuit ruled on a contractual dispute between Catalyst Strategic Advisors, LLC (Catalyst), a consulting firm, and Three Diamond Capital SBC, LLC, formerly known as Contractors Building Supply Company, LLC (CBS). The dispute arose when CBS refused to pay Catalyst a commission for a sale that occurred within 18 months after CBS terminated its contract with Catalyst. The court held that under the terms of the contract, Catalyst was entitled to a commission for any transaction completed within eighteen months after the termination of the contract. CBS argued that under Texas's procuring cause doctrine, Catalyst was not entitled to a commission because it did not procure the sale. However, the court held that the procuring cause doctrine was displaced by the terms of the contract. The court affirmed the district court's rulings and remanded the case to the district court for consideration of an award of appellate attorney's fees to Catalyst. View "Catalyst Strategic Advisors, L.L.C. v. Three Diamond Capital SBC, L.L.C." on Justia Law

Posted in: Contracts
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In a dispute between Tara Shaw and Tara Shaw Designs, Ltd. (collectively, "Shaw") and Restoration Hardware ("RH"), the United States Court of Appeals for the Fifth Circuit upheld the district court's dismissal of Shaw's claims. Shaw, a furniture designer, had entered into a contract with RH for the sale and licensing of certain furniture designs. However, Shaw alleged that RH breached an oral agreement by using Shaw's artisans to produce items not part of their licensing agreement without seeking Shaw's permission and providing additional compensation.Shaw brought claims of breach of contract, detrimental reliance, and unjust enrichment against RH. However, the district court dismissed these claims and denied Shaw's motions to reconsider and amend the complaint. On appeal, the Court of Appeals affirmed these decisions.Regarding the breach of contract claim, the court stated that the alleged oral agreement was unenforceable because it left key terms for future negotiation, making it an "agreement to agree" which is not enforceable under Louisiana law.The court dismissed Shaw's detrimental reliance claim since Shaw failed to provide any evidence of damages or detriment due to their reliance on RH's alleged promise. The only detriment Shaw suffered was an opportunity to negotiate compensation in the future, which the court deemed insufficient for a detrimental reliance claim.The court also dismissed Shaw's unjust enrichment claim. While Shaw argued that the dismissal of their other claims demonstrated a lack of alternative remedies, the court found that Shaw failed to provide evidence of detriment necessary to support an unjust enrichment claim.Lastly, Shaw's motion to further amend the complaint was denied. The court found that Shaw failed to show good cause for amendment and that proposed amendments were futile. View "Shaw v. Restoration Hardware" on Justia Law

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This case involves a dispute between American Precision Ammunition, L.L.C. (APA) and the City of Mineral Wells in Texas. APA and the City entered into a Tax Abatement Agreement ("Agreement") where the City promised to gift APA $150,000 and provide APA ten years of tax abatements. However, the City terminated the Agreement, claiming that the $150,000 gift was illegal under the Texas Constitution. APA sued the City for breach of contract, violation of the Texas Open Meetings Act (TOMA), and denial of federal due process and due course of law under the Texas Constitution. The district court dismissed all claims, and APA appealed.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. It held that the Agreement was illegal and unenforceable under Texas law because the City's contractual obligation to "gift" APA $150,000 constitutes a gratuitous payment of public money. The court also dismissed APA's TOMA claim as moot because there was no "agreement" to reinstate given that the Agreement was unenforceable. Furthermore, the court found that APA's due process claims failed because the promise for the $150,000 gift was void and did not constitute a contract, and therefore, APA had no protected property interest in the gift. Even assuming that APA had a property interest in the tax abatements, the court held that APA's due process and due course of law claims still fail because Texas law affords APA sufficient opportunity to pursue that claim in state court. View "American Precision v. Mineral Wells" on Justia Law