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

Articles Posted in Contracts
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D2 filed suit for breach of contract, quantum meruit, violations of the Texas prompt pay statute, and to foreclose on a statutory and constitutional lien. Thompson, in turn, alleged that D2 breached the excavation contract between the parties. The district court held in D2's favor on all claims and ordered Thompson to pay for unpaid work and for "excess" excavating work, as well as interest and attorneys' fees.The Fifth Circuit held that the district court did not clearly err by finding that management of the site was so deficient that D2 had to regrade the same areas as many as six times and was unable to complete its work in other parts of the site, justifying D2's cessation of work. Therefore, the court affirmed the district court's judgment for the $81,068 in unpaid work and the related prompt payment statute and lien remedies for that breach of contract. However, the court held that neither breach of contract nor quantum meruit allows D2 to recover for "excavation of unanticipated excess soil." Thus, the court reversed the district court's judgment of $257,588.53 for the "excavation of unanticipated excess soil" and rendered judgment for Thompson on those breach of contract and quantum meruit claims. The court remanded for modification of the judgment. View "D2 Excavating, Inc. v. Thompson Thrift Construction, Inc." on Justia Law

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The Fifth Circuit affirmed the dismissal, for failure to state a claim, of UIG's complaint alleging claims for fraud and detrimental reliance. UIG obtained a loan from Pedestal Bank and Wolters Kluwer provided written certification that the property subject to the loan was not in a flood hazard area. When the loan came up for renewal, the bank informed UIG that the property was in a special flood hazard area and required flood insurance. Because the company was unable to afford flood insurance, the bank foreclosed on the property.After determining that it had jurisdiction over the appeal, the court held that the district court did not err in ruling that UIG failed to state a claim for fraud. In this case, the only relevant fact that UIG has alleged beyond what little it alleges "on information and belief" is that Wolters Kluwer provided "written certification that the property subject to the loan was not in a flood hazard area that required insurance under FEMA regulations pursuant to the Flood Disaster Protection Act of 1973." The court held that this fact alone can ground nothing more than speculation as to the cause of the error. Likewise, UIG's claim of detrimental reliance failed. View "Umbrella Investment Group, LLC v. Wolters Kluwer Financial Services, Inc." on Justia Law

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After Buyers purchased two care facilities from Sellers, Buyers filed suit alleging that Sellers made fraudulent or, at best, negligent misrepresentations in the parties' sale agreements. Buyers also brought claims against Sellers' representatives in their individual capacities.The Fifth Circuit affirmed the district court's dismissal of Buyers' claims with prejudice for failure to state a claim. The court held that the district court properly dismissed Buyers' non-fraud claims for negligent misrepresentation and breach of contractual representations and warranties because these claims were subject to arbitration. In regard to the remaining claims, the court held that Buyers have not adequately pleaded a misrepresentation with respect to both facilities and thus they failed to meet the particularity requirements of Federal Rule of Civil Procedure 9(b). Therefore, because there was no misrepresentation, there was no fraud. View "Colonial Oaks Assisted Living Lafayette, LLC v. Hannie Development, Inc." on Justia Law

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JDC sought a preliminary injunction against its former employee for breach of a non-compete agreement. The district court denied the motion for a preliminary injunction in all its parts and with no concessions.The Fifth Circuit held that the district court, after acknowledging the agreement to be overbroad, erred in declining to adjudicate reformation of the agreement. In this case, the district court should have considered reformation of the agreement in the process of deciding the preliminary injunction motion. Accordingly, the court vacated and remanded to the district court to allow relevant evidence and argument from the parties concerning reformation. Furthermore, the court noted that the district court should then decide what reformation, if any, would be reasonable under Texas law, and proceed to adjudicate the preliminary injunction motion in the light of its findings on reformation. View "Calhoun v. Jack Doheny Companies, Inc." on Justia Law

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Six Dimensions filed suit against a former employee and a competitor, Perficient, alleging claims for breach of contracts, unfair competition, and misappropriation of trade secrets.The Fifth Circuit reversed the part of the judgment holding that the employee breached an employment contract and owed damages to Six Dimensions. The court held that the district court abused its discretion in denying the employee an opportunity to extend the arguments she had already made about the 2014 Agreement and have them apply to the 2015 Agreement. However, the court held that the district court did not reversibly err in interpreting California law and concluding that California's strict antipathy towards restraint of trade of any kind in California Business and Professions Code section 16600 voids the nonsolicitation provision here. The court also found no error in the district court's refusal to apply California's Unfair Competition Law, and held that the district court did not abuse its discretion in refusing to find the jury's verdict contrary to the weight of the great evidence as to the misappropriation claim. Therefore, the court otherwise affirmed the district court's judgment. View "Six Dimensions, Inc. v. Perficient, Inc." on Justia Law

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After Acadian entered into two contracts with QT to perform lab testing, Acadian filed suit alleging that QT breached both agreements. The jury ultimately awarded Acadian damages for QT's breach of both agreements and both parties appealed.In regard to QT's contentions, the court held that the district court properly granted summary judgment on QT's liability for breaching the agreements and the district court did not err by excluding evidence about Acadian's business dealings. The court also held that Acadian's request for the entry of judgment of a higher damages figure is meritless. The court explained that the Federal Rules of Civil Procedure provide several ways for a federal litigant to seek a different damages figure than that which the jury awards, and Acadian chose exactly none of them. Therefore, by failing to file any motions in the district court, Acadian forfeited its ability to seek appellate review of the jury verdict. View "Acadian Diagnostic Laboratories, LLC v. Quality Toxicology, LLC" on Justia Law

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After Dow was found liable for breaching a contract it entered with Gulf, Dow appealed the district court's failure to enter judgment on the issue of contract ambiguity and the district court's denial of Dow's motion for judgment as a matter of law on damages.The Fifth Circuit held that the district court should have granted Dow's motion for partial summary judgment on the issue of ambiguity because the contract was not ambiguous. However, the district court's error in denying Dow's motion for partial summary judgment and the district court's jury instruction on ambiguity was harmless. The court did not address whether there was evidence of a contract breach because the court instead resolved the appeal on the basis that Gulf failed to support its claim of lost profits by any probative evidence. Accordingly, the court reversed the district court's denial of Dow's motion for judgment as a matter of law on damages and rendered judgment in favor of Dow. View "Gulf Engineering Co., LLC v. The Dow Chemical Co." on Justia Law

Posted in: Contracts
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This insurance coverage case concerns flood damage from Hurricane Harvey to two office buildings owned by Pan Am and insured by Lexington.The Fifth Circuit affirmed the district court's grant of summary judgment in favor of Lexington. The court held that the unequivocal language of the "Windstorm" deductible, which covered flood damage, controls. Therefore, Pan Am may not recover because its buildings were damaged solely by flooding. Furthermore, even if the generic $100,000 "Flood" deductible were to also apply, the 5% TIV-based deductible would prevail under the policy's anti-stacking clause. View "Pan Am Equities, Inc. v. Lexington Insurance Co." on Justia Law

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The Fifth Circuit affirmed the district court's preliminary injunction enforcing a non-competition agreement between defendant and her former employer Realogy. The court held that the district court did not abuse its discretion and its decision satisfied the requirements of Federal Rule of Civil Procedure 52. In this case, the district court properly concluded that Realogy had a substantial likelihood of success regarding the enforceability of its non-competition agreement with defendant under Texas law. The court lifted the stay previously imposed and remanded this matter, instructing the district court to conduct a trial on the permanent injunction as soon as possible and, when rendering its judgment, to reweigh the equities with respect to the term of the injunction in light of the time that has passed during the pendency of this appeal. View "Realogy Holdings Corp. v. Jongebloed" on Justia Law

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The Fifth Circuit affirmed the district court's dismissal of Golden Spread and Westport's tort claims against Emerson. The claims arose after Emerson installed a new control system for Golden Spread and the control system's software had been programmed incorrectly.The court held that the economic loss rule, which prevents recovery in tort for purely economic damage unaccompanied by injury to persons or property, is applicable in this case. The court reasoned that the Texas Supreme Court would conclude that the risk suffered here is better addressed in contract than in tort. In this case, the parties are sophisticated, commercial actors that actually did negotiate over the allocation of risk. Furthermore, the parties themselves were in the best position to understand and allocate the risks of their transaction ahead of time to resolve any ambiguities in the application of that rule to their circumstances. View "Golden Spread Electric Cooperative v. Emerson Process Management Power & Water Solutions" on Justia Law