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

MIECO, L.L.C., an energy trading firm, entered into a contract with Pioneer Natural Resources USA, Inc. to purchase a specified quantity of natural gas daily on a Firm basis from November 2020 to March 2021. The contract included a force majeure clause excusing performance for certain uncontrollable events. In February 2021, Winter Storm Uri struck Texas, causing severe weather that disrupted natural gas production and delivery. Pioneer failed to deliver the contracted amount from February 14 to 19 and issued a force majeure notice. MIECO purchased replacement gas at higher prices and later sued Pioneer for breach of contract, seeking over $9 million in damages. Pioneer admitted nonperformance but argued it was excused by the force majeure provision.The United States District Court for the Northern District of Texas initially granted summary judgment in favor of Pioneer, finding the storm was a force majeure event and Pioneer had exercised due diligence. MIECO appealed, and the United States Court of Appeals for the Fifth Circuit reversed, holding that genuine disputes of material fact remained regarding whether Pioneer’s performance was truly prevented and if Pioneer exercised reasonable efforts and due diligence. The Fifth Circuit remanded the case for a bench trial. After the trial, the district court again found for Pioneer, determining the storm prevented performance and Pioneer had made reasonable efforts both before and after the storm to mitigate its impacts.Upon appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s factual findings for clear error and legal issues de novo. The court held that the district court complied with its mandate, properly found that Winter Storm Uri prevented Pioneer’s performance, and that Pioneer exercised due diligence. The court also found no abuse of discretion in the admission of Pioneer’s expert testimony and exclusion of MIECO’s expert testimony. The judgment of the district court was affirmed. View "Mieco v. Pioneer Natural Resources" on Justia Law

A patient underwent surgery in Texas, during which a specific surgical stapler and staple product were used to reconnect sections of his colon. After initial success, he suffered severe complications days later, including sepsis, allegedly caused by a defect in the staple line. This resulted in months of treatment and ultimately his death. His widow and children sued several product manufacturers and sellers, asserting claims for breach of implied warranty of merchantability and other product liability theories.Initially, the plaintiffs brought suit in the United States District Court for the Western District of Texas against Johnson & Johnson, Ethicon, and Ethicon Endo-Surgery, Inc. (“Phillips I”). Discovery revealed confusion about the identity of the actual seller, prompting the plaintiffs to file an amended complaint against Ethicon Endo-Surgery, Inc. alone, asserting only breach of warranty claims. The magistrate judge recommended dismissing the claim for breach of implied warranty of merchantability without prejudice, primarily due to lack of presuit notice required under Texas law. The district court instead dismissed both claims with prejudice and denied leave to amend, finding that amendment would be futile and that the plaintiffs had not provided proper notice or shown how they could cure the defect.After dismissal in Phillips I, the plaintiffs filed a second suit in state court (“Phillips II”) against additional parties. This case was removed to federal court, where the defendants moved for dismissal based on res judicata and collateral estoppel. The district court adopted the magistrate judge’s recommendation and dismissed Phillips II with prejudice. On appeal, the United States Court of Appeals for the Fifth Circuit affirmed both district court judgments, holding that plaintiffs failed to state a claim due to lack of presuit notice, the denial of leave to amend was not an abuse of discretion, and preclusion doctrines properly barred the second suit. View "Phillips v. Ethicon Endo-Surgery" on Justia Law

A television production company maintained insurance coverage for its shows, including one chronicling the struggles of obese individuals to lose weight. In 2011, the insurer added an exclusion to the general liability portion of the policy, barring coverage for “any/all reality shows.” The company did not object to this exclusion. Years later, several participants or their families sued the production company for injuries allegedly arising from the show’s filming. The insurer refused to defend or indemnify the company, citing the “reality show” exclusion.The insurer brought a declaratory judgment action in the United States District Court for the Southern District of Texas, seeking confirmation that it had no duty to defend or indemnify. The production company counterclaimed for breach of contract, fraudulent inducement, and violations of Texas consumer protection statutes. The district court granted summary judgment to the insurer, finding that the exclusion unambiguously barred coverage for bodily injuries arising from reality shows like the one at issue. At a subsequent bench trial, the district court rejected the company’s fraud and statutory claims, finding no misrepresentation by the insurer and concluding the company could not have justifiably relied on any representation given its knowledge of the exclusion and the show’s nature.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed. The Fifth Circuit held that the company forfeited its argument about the ambiguity of "reality show" by not raising it in the district court and, in fact, previously represented the show as a “reality show.” The appellate court also found no clear error in the district court’s factual findings rejecting the fraud and consumer protection claims, noting substantial evidence of the company’s understanding of the exclusion. The district court’s judgment was affirmed in full. View "Megalomedia v. Philadelphia Indemnity" on Justia Law

Twin brothers, both Black international students, were enrolled as doctoral candidates at the University of Mississippi’s Department of Pharmacy Administration. One brother, Bennard, disagreed with changes to his faculty mentorship arrangement, objected to mandatory in-person meetings, and declined to complete a required program assessment called the Abilities Transcript. After being repeatedly warned and given extensions, he was placed on provisional status for failing to complete the requirement, which also caused the loss of his graduate assistantship. Bennard and his brother each filed lawsuits against the University and several faculty members, alleging constitutional, statutory, and contract violations related to academic sanctions and alleged discriminatory treatment.The United States District Court for the Northern District of Mississippi consolidated the brothers’ cases. It dismissed Bennard’s claims against the University on sovereign-immunity grounds, dismissed his remaining federal claims under Rule 12(b)(6) for failure to state a claim, and declined to exercise supplemental jurisdiction over his individual-capacity state contract claims. Bennard appealed, while his brother’s appeal was dismissed for failure to prosecute.The United States Court of Appeals for the Fifth Circuit reviewed Bennard’s remaining claims. The court held that sovereign immunity barred claims against the University, claims against one defendant in her official capacity, and official-capacity state-law contract claims; those dismissals must be without prejudice. The court further found that Bennard failed to plausibly allege First or Fourteenth Amendment violations, and that the faculty defendants were entitled to qualified immunity on individual-capacity claims. The court affirmed the district court’s refusal to exercise supplemental jurisdiction over the remaining contract claims and upheld consolidation of the cases and dismissal of moot preliminary injunction motions. The judgment was affirmed as modified to clarify the proper form of dismissal for sovereign-immunity-barred claims. View "Eriakha v. University of MS" on Justia Law

A dispute arose between a company and a port authority over responsibility for securing permits to dredge a ship channel in Lake Charles, Louisiana. The company had leased the channel to develop a grain terminal, but the lease did not specify which party was responsible for obtaining the dredging permit. After the terminal was built but could not be fully used without dredging, the company and the port disagreed over who bore this responsibility. The company sued in federal court, and, by consent of both parties, a U.S. Magistrate Judge presided over a bench trial and awarded the company nearly $125 million.After the trial and the entry of judgment, the port discovered that the magistrate judge and the company’s lead trial counsel had been close family friends for four decades—a relationship that was not fully disclosed. The only disclosure had been that the lead counsel’s daughter was the judge’s law clerk, who would be screened from the case. Upon learning about the undisclosed relationship, the port moved to vacate the magistrate judge referral. The United States District Court for the Western District of Louisiana held an evidentiary hearing and found that the port’s consent to the referral had not been knowing, as it had lacked crucial information about the judge’s conflict, and vacated the referral.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s decision for abuse of discretion. The Fifth Circuit held that a party’s consent to magistrate judge jurisdiction waives a fundamental constitutional right and, therefore, must be knowing, voluntary, and intelligent. The court rejected the argument that constructive knowledge by the party’s counsel—rather than actual knowledge—could suffice to establish valid consent. Because the district court applied the correct standard and found no actual knowledge, the Fifth Circuit affirmed the vacation of the referral. View "I F G Port v. Lake Charles Harbor" on Justia Law

The plaintiff financed his home with a VA loan in 2003, qualifying due to his military service. After failing to make payments for at least ten years, the loan was assigned to HSBC Bank USA and serviced by Specialized Loan Servicing, LLC (SLS). HSBC eventually foreclosed on the property in 2022 and sold it to Northsky, LLC. The VA Servicing Guidelines, which were incorporated into the mortgage contract, required HSBC to notify the plaintiff of the default and explore options to cure it. SLS claimed to have mailed multiple payoff statements and a notice of default to the plaintiff, but he asserted he never received these communications.The plaintiff brought suit in Texas state court against HSBC, SLS, and Northsky, alleging violations of federal and Texas law and seeking to set aside the foreclosure sale. HSBC and SLS removed the case to the United States District Court for the Northern District of Texas. The district court granted partial summary judgment for HSBC and SLS, permitting the plaintiff to proceed on claims for violations of the VA Servicing Guidelines, quiet title, and trespass to try title. At a bench trial, HSBC and SLS presented circumstantial evidence of mailing, relying on business records and testimony from a corporate representative. The district court found this evidence sufficient and, applying the mailbox rule, presumed the plaintiff received the notices, concluding the defendants fulfilled their obligations under the VA Servicing Guidelines.The United States Court of Appeals for the Fifth Circuit reviewed the appeal, applying a deferential standard to the district court’s factual findings. The Fifth Circuit held that the district court correctly applied the mailbox rule based on the evidence presented and that the plaintiff failed to rebut the presumption of receipt. The Fifth Circuit affirmed the district court’s judgment. View "Rummans v. HSBC Bank" on Justia Law

A conservation district in Montgomery County, Texas, required large water users to reduce groundwater usage by 30%. To facilitate compliance, the San Jacinto River Authority (the “River Authority”), a political subdivision of Texas, created a joint groundwater reduction plan and entered into contracts with about 80 utilities, including Quadvest, L.P. (“Quadvest”). These contracts required participants to pay certain fees and, at the River Authority’s discretion, to connect to surface water provided by the River Authority. The fees aimed to equalize costs between groundwater and surface water users and to finance new infrastructure. Quadvest, a family-owned utility, initially operated only in the retail market and later expanded into wholesale water supply.After the relevant groundwater regulations were rescinded due to political changes and litigation, Quadvest challenged the lawfulness of its contract with the River Authority in the United States District Court for the Southern District of Texas. It alleged that the contract constituted an unlawful restraint of trade under the Sherman Act, specifically as per se illegal horizontal price-fixing and market allocation. After a bench trial, the district court found in favor of the River Authority, concluding that Quadvest failed to prove its claims.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s findings of fact for clear error and legal conclusions de novo. The Fifth Circuit held that the challenged contract did not constitute a per se illegal horizontal restraint because the parties were not competitors at the time of contracting, and the agreement was vertical in nature. The court further determined that the contract did not fix prices or allocate markets in a manner prohibited by the Sherman Act. Under the rule of reason, Quadvest also failed to define the relevant market and thus could not demonstrate anticompetitive effects. The Fifth Circuit affirmed the judgment of the district court. View "Quadvest v. San Jacinto River Auth" on Justia Law

Highland Capital Management, L.P. and HCRE Partners (now NexPoint Real Estate Partners) collaborated on a large real estate project in 2018, forming SE Multifamily Holdings, LLC to acquire substantial residential assets. HCRE, controlled by James Dondero, and Highland structured their membership interests in the LLC through an amended agreement after another investor joined. When Highland later entered Chapter 11 bankruptcy, HCRE, led by Dondero, filed a proof of claim asserting entitlement to distributions and seeking contract reformation regarding membership allocation. Both Dondero and another officer, Matt McGraner, admitted during litigation that their claim lacked merit, and evidence showed the claim was filed without investigation, likely to protect SE Multifamily’s assets from Highland’s creditors.The United States Bankruptcy Court for the Northern District of Texas oversaw the proceedings, including extensive discovery and a motion to disqualify HCRE’s counsel, which the court granted. As discovery continued, HCRE sought to withdraw its claim two days before critical depositions, but the bankruptcy court denied the motion, finding withdrawal would prejudice Highland. After a bench trial, the bankruptcy court ruled against HCRE, rejecting its contract reformation theory and disallowing its proof of claim. Subsequently, the court imposed sanctions on HCRE, finding bad faith in both the filing and litigation of the claim. The United States District Court for the Northern District of Texas affirmed the imposition of sanctions.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the lower courts’ decisions. The Fifth Circuit held that clear and convincing evidence supported the bankruptcy court’s finding that HCRE acted in bad faith by filing a baseless claim and litigating it in bad faith, including frivolously opposing the disqualification of counsel and seeking to withdraw the claim to avoid discovery while preserving it for future litigation. The court also held the sanctions were causally related to HCRE’s conduct and not an abuse of discretion. View "NexPoint v. Highland" on Justia Law

A national flooring retailer contracted with a Louisiana-based construction management company for the construction of a retail store in Metairie, Louisiana. The relationship soured after the retailer terminated the agreement, allegedly due to delays. Shortly after termination, the construction company disputed that it had breached the contract and demanded payment for work performed. The retailer did not respond to the payment demand.The construction company filed suit in the United States District Court for the Middle District of Louisiana under the Louisiana Private Works Act, seeking recovery for the work performed. The retailer moved to compel arbitration based on the agreement’s dispute resolution provision and also sought to transfer the case. The district court granted the transfer to the United States District Court for the Eastern District of Louisiana and denied the motion to compel arbitration without prejudice. When the motion to compel arbitration was renewed in the new court, the district court denied it again, concluding the retailer had not followed the prerequisite steps outlined in the contract’s dispute resolution process.On appeal, the United States Court of Appeals for the Fifth Circuit conducted de novo review. The appellate court determined that the arbitration clause in the contract, which gave the retailer sole discretion to elect arbitration, was a contract of adhesion under Louisiana law. Applying state contract principles and relevant Louisiana Supreme Court precedent, the court found that the lack of mutuality and the imbalance in bargaining power rendered the clause unenforceable. The court held that the arbitration provision was adhesionary and thus invalid, and affirmed the district court’s denial of the motion to compel arbitration. View "MAPP v. Floor and Decor" on Justia Law

A Louisiana limited liability company (LLC) with a sole member voluntarily dissolved in April 2024 and subsequently had its Texas registration terminated in May 2024. Prior to dissolution, the LLC had developed a bid strategy for certain oilfield assets and shared confidential information with a bank to seek financing. The assets were ultimately acquired by a different bidder, also financed by the same bank, and the LLC alleged that its confidential information was improperly conveyed to the winning bidder. After dissolution, the LLC initiated a lawsuit in July 2024 against the bank and the winning bidder, asserting trade secret misappropriation and breach of contract.In the United States District Court for the Southern District of Texas, the defendants moved for judgment on the pleadings, arguing the LLC lacked capacity to sue due to its prior dissolution. The LLC did not contest its lack of capacity but requested a stay while it sought reinstatement in Louisiana state court. The district court granted judgment on the pleadings for lack of capacity, denied the LLC’s request for a stay, and denied the defendants’ request to seek attorneys’ fees. The court also sealed various filings relating to the mental health of the LLC’s sole member.The United States Court of Appeals for the Fifth Circuit reviewed the case. It affirmed the district court’s judgment on the pleadings, holding that under Texas law, an entity dissolved prior to suit lacks capacity to file suit, and that Louisiana law does not permit retroactive reinstatement of an LLC dissolved by affidavit to pursue claims known before dissolution but filed after. The Fifth Circuit denied the LLC’s request to certify a question to the Louisiana Supreme Court and affirmed the denial of attorneys’ fees. However, it vacated the district court’s sealing order, remanding for proper balancing of the public’s right of access to court records, as required by precedent. View "Juneau Group v. Vendera Management" on Justia Law