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

Plaintiff, an investor and venture capitalist and the CEO of InterOil Corporation (“InterOil”), developed a business relationship. Throughout that relationship, Plaintiff (and “entities controlled and beneficially owned by him”) provided loans, cash advances, and funds to the CEO and InterOil. Plaintiff and the CEO continued to have a business relationship until 2016, at which point the CEO’s actions and words made Plaintiff concerned he would not receive his shares back from the CEO. In late 2017, as part of a larger suit against the CEO, Plaintiff and Aster Panama sued the J.P. Morgan Defendants for (1) breach of trust and fiduciary duty, (2) negligence, and (3) conspiracy to commit theft. The district court granted summary judgment on all counts relating to the J.P. Morgan defendants and awarded them attorneys’ fees under the Texas Theft Liability Act (“TTLA”).   The Fifth Circuit affirmed. Under Texas law, the only question is whether the J.P. Morgan Defendants expressly accepted a duty to ensure the stocks were kept in trust for Plaintiff or Aster Panama. That could have been done by express agreement or by the bank’s acceptance of a deposit that contained writing that set forth “by clear direction what the bank is required to do.” Texas courts require a large amount of evidence to show that a bank has accepted such a duty. Here, no jury could find that the proffered statements and emails were sufficient evidence of intent from the J.P. Morgan Defendants to show an express agreement that they “owe[d] a duty to restrict the use of the funds for certain purposes.” View "Civelli v. J.P. Morgan Chase" on Justia Law

In a case involving the denial of coverage for an automobile accident, the Fifth Circuit addressed whether uninsured motorist coverage can be denied simply because the driver, who was the son of the insured, was not listed on the policy? The court answered that question “no.” The other is whether the policy can be voided because the insured committed a material misrepresentation by failing in her application for insurance to name, as required, those of driving age who lived in her household? The court answered that question, “yes.”   The Fifth Circuit affirmed the district court’s ruling granting Viking Insurance’s motion for summary judgment in Plaintiffs’ suit seeking damages for a wrongful denial of benefits. The court concluded that if an insurer declines to exercise the greater power to void a policy, it still retains the lesser power to exercise a contractual right to deny coverage. The court explained that here, a knowing misstatement in the application about the drivers in the household was material if it would have caused Viking either not to issue the policy or to increase the premium. The court accepted that materiality is not affected by the relationship between the false statement and the specific coverage being sought in litigation. It is enough that the falsity was material to the decision of the company to issue the policy at the agreed price. Consequently, Viking could have voided the policy. By not voiding, Viking’s policy remained in effect. Accordingly, Viking had the right to deny Plaintiffs’ claim. View "Bradley v. Viking Insurance" on Justia Law

Fourteen women (“Plaintiffs”) from seven states brought the present putative class action against Ashley Black and her companies (“Defendants”), alleging false and deceptive marketing practices. They take issue with various representations in Defendants’ ads about a product called the FasciaBlaster, a two-foot stick with hard prongs that is registered with the Food and Drug Administration as a massager. The district court dismissed Plaintiffs’ claims in their entirety.  Plaintiffs appealed the order striking the class allegations and the dismissal of individual claims.   The Fifth Circuit found that the district court correctly struck Plaintiffs’ class allegations and properly dismissed all but two of their claims. Accordingly, the court affirmed in part, reversed in part, and remanded the case to the district court. The court explained that it agreed with the district court that Plaintiffs’ allegations suffer from a combination of defects, including a failure to plead adequately what representations were actually made when those representations were made, who made the representations, and where those representations occurred.   However, the court reversed the dismissal of Plaintiffs’ breach of express warranty under, respectively, California Consumer Code Sections 2313 & 10210, and Florida Statutes Sections 672.313 & 680.21. The court wrote that the district court did not apply the law of a specific jurisdiction when conducting its analysis. Plaintiffs on appeal cite various Fifth Circuit cases in addition to Texas and California state law precedents. Defendants proffer Fifth Circuit, California, and Florida precedents. Neither party, however, briefed what law should be applied to each claim. View "Elson v. Black" on Justia Law

Two former students of Tulane University, on behalf of a putative class of current and former students, sued the University for failing to provide a partial refund of tuition and fees after Tulane switched from in-person instruction with access to on-campus services to online, off-campus instruction during the COVID-19 pandemic. The district court agreed with Tulane that the student's complaint should be dismissed for failure to state a claim.   The Fifth Circuit reversed and remanded. The court concluded that the claim is not barred as a claim of educational malpractice because the Students do not challenge the quality of the education received but the product received. Second, the court rejected Tulane’s argument that the breach-of-contract claim is foreclosed by an express agreement between the parties because the agreement at issue plausibly does not govern refunds in this circumstance. And third, the court concluded that Plaintiffs have not plausibly alleged that Tulane breached an express contract promising in-person instruction and on-campus facilities because Plaintiffs fail to point to any explicit language evidencing that promise. But the court held that Plaintiffs have plausibly alleged implied-in-fact promises for in-person instruction and on-campus facilities. Moreover, the court found that the Students’ alternative claim for unjust enrichment may proceed at this early stage. Finally, genuine disputes of material fact regarding whether Plaintiffs saw and agreed to the A&DS preclude reliance on the agreement at this stage. Thus, Plaintiffs have plausibly alleged a claim of conversion. View "Jones v. Admin of the Tulane Educ" on Justia Law

Appellant in his capacity as Litigation Trustee for the Erickson Litigation Trust, appeals the dismissal of his avoidance and recovery claims under the bankruptcy laws. In broad terms, these claims seek avoidance of settlement releases approved in Delaware state court, as well as two payments related to Erickson Air-Crane, Inc.’s acquisition of Evergreen Helicopters, Inc. (EHI) (the “Evergreen Transaction”).   The Fifth Circuit affirmed the dismissal of the claims relating to the settlement releases and reversed in part the dismissal of the payments relating to the Evergreen Transaction itself. The court concluded that consistent with Besing and Erlewine, there was reasonable equivalence as a matter of law. The Delaware settlement “should not be unwound by the federal courts merely because of its unequal division of [settlement proceeds].” Further, the court wrote that Appellant’s attempt to attack the Delaware releases as actually fraudulent transfers also fails. The court wrote it saw no error in the lower court's conclusion that Appellant failed to adequately plead actual fraud, and his arguments on appeal do not convince the court otherwise. Moreover, the court found that acting in his specific capacity, Appellant is not enjoined by the Delaware settlement from asserting creditor claims that arose only under the Bankruptcy Code. View "Ogle v. Morgan, et al" on Justia Law

The Fifth Circuit affirmed the district court’s order denying Klairmont Korners, L.L.C. (“Klairmont”) claim that a debtor’s decision to reject a commercial lease pursuant to 11 U.S.C. Section 365 should not receive deference under the business judgment rul Klairmont Korners, L.L.C. (“Klairmont”) appeals a district court order denying its claim that a debtor’s decision to reject a commercial lease pursuant to 11 U.S.C. Section 365 should not receive deference under the business judgment rule because of “bad faith, whim, or caprice” inherent in a third party’s negotiations with Klairmont.   The Fifth Circuit affirmed. The court explained that Klairmont’s contentions fail under this court’s own standard for overcoming the business judgment rule, as well as the “bad faith” test Klairmont encourages us to adopt. The court explained that Klairmont’s position is untenable, even under the test it proposes the court adopt from another circuit, under which courts should not defer to a debtor’s decision under Section 365 that is “the product of bad faith, or whim, or caprice.” Klairmont misunderstands this standard, urging the court to hold that any bad faith involved in the bankruptcy proceedings should prompt a bankruptcy court to decline a debtor’s decision regarding an executory contract. That is not the test these other courts have adopted. Klairmont will not find relief in asserting that the debtor’s decision deserves no deference under the business judgment rule.     . View "Klairmont Korners, L.L.C." on Justia Law

Appellant Advanced Indicator and Manufacturing, Inc. claims its building was damaged by Hurricane Harvey’s winds. Advanced’s insurer, Acadia Insurance Company, determined that the damage to the building was caused by poor maintenance and routine wear and tear. When Acadia denied Advanced’s claim, Advanced sued. Advanced filed a motion to remand the case to state court   The district court granted Acadia’s motion and granted summary judgment on Advanced’s extra-contractual claims. The Fifth Circuit affirmed the district court’s denial of the motion to remand, reversed the grant of summary judgment on Advanced’s claims, and remanded the matter to the district court.   The court explained that Advanced’s argument is unavailing because it fails to consider Flagg’s command that “the district court must examine the plaintiff’s possibility of recovery against that defendant at the time of removal.” At the time of removal, then, it would have been proper for the district court to find that “there is no possibility of recovery by [Advanced] against an in-state defendant.” Accordingly, the differences between Sections 542A.006(b) and 542.006(c) are not material as long as the insurer elects to accept liability for the agent before removal. The court held that summary judgment was not warranted on Advanced’s breach of contract claim given the evidence Advanced has put forth. This conclusion requires the reversal of the district court’s dismissal of Advanced’s other claims. View "Adv Indicator v. Acadia Ins" on Justia Law

Plaintiff began receiving prescription medication administered through a pain pump and filled by AIS Healthcare (“AIS”). In 2021, she discovered that AIS was billing her insurer at a rate of $120 per day for allegedly unauthorized services. Plaintiff filed suit in state court, seeking damages for contract, tort, and unjust enrichment claims. AIS removed to federal court and moved to dismiss the case on grounds that Plaintiff lacked standing to sue because she had suffered no injury. Noting that “a breach of contract alone is an insufficient injury in fact,” the district court concluded that Plaintiff could not satisfy standing’s redressability element for the claims asserted and dismissed them with prejudice under Rule 12(b)(1).   The Fifth Circuit affirmed the district court’s judgment dismissing Plaintiff’s claims for lack of standing, however, the court modified the district court’s judgment dismissing Plaintiff’s claims for lack of standing. First, the court explained that the district court erred in holding that Plaintiff failed to show an injury in fact through her associated breach of contract and tort claims. However, because the court agreed with the district court that Plaintiff’s claims are not redressable by the damages she seeks, the court affirmed its dismissal of her claims for lack of standing. Further, the district court’s dismissal with prejudice appears to be a “scrivener’s” error. The court thus modified the district court’s judgment dismissing Plaintiff’s claims with prejudice to make it without prejudice and affirm the judgment as modified. View "Denning v. Bond Pharmacy" on Justia Law

In a dispute over the applicability of a forum selection clause contained in a franchise agreement, the Fifth Circuit held that non-signatories to a franchise agreement may be bound to the contract’s choice of forum provision under the equitable doctrine that binds non-signatories who are “closely related” to the contract. View "Franlink v. BACE Services" on Justia Law

During the covid-19 pandemic, state and local authorities in Louisiana ordered nonessential businesses to close for a time. This required Plaintiff to temporarily shut his jewelry stores and event spaces in New Orleans. To recoup income lost during the closure, Plaintiff claimed reimbursement under his insurance policy’s coverage for “direct physical loss of or damage to” his property. Plaintiff’s insurer, Axis, denied the claim.   Plaintiff sued Axis along with his insurance agent and broker. The district court dismissed Plaintiff’s claims, concluding that Plaintiff suffered no covered loss or damages and that his agent and broker violated no duty to advise Plaintiff about pandemic-related coverage.   The Fifth Circuit affirmed. The court explained that what denied Plaintiff use of his property was the government’s closure orders. Such losses do not involve a “tangible alteration to, injury to, or deprivation of property.” The district court therefore correctly dismissed Plaintiff’s claims against Axis. Further, contrary to Plaintiff’s arguments, what creates a Louisiana insurance agent’s duty to procure particular coverage is not a “close relationship” with the insured but an insured’s “specific” request for “the type of insurance coverage . . . needed.” Here, Plaintiff did not allege he specifically requested pandemic-related coverage from either the wholesale broker or insurance agent, therefore Plaintiff’s claims against those Defendants were properly dismissed. View "Adler & Sons v. Axis Surplus Ins Co" on Justia Law