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

This case arose from a complicated series of transactions often called “fronting arrangements” in the insurance industry. Lincoln was awarded $16.5 million on its tortious interference claims against CSi and Alpha. The case involved the diversion of funds from a reinsurance arrangement involving insurer Lincoln and a claims administrator, U.S. Auto. Numerous issues were raised on appeal. The court affirmed: (1) the judgment entered against CSi and Alpha; (2) the grant of summary judgment on Lincoln’s conversion claims; (3) the denial of Lincoln’s cross-motion for summary judgment on its fiduciary duty claims; and (4) the denial of the motion to alter the judgment to include ZVN. The court also held that Lincoln forfeited the right to appeal the dismissal of its claims against Doug Maxwell asserting alter ego liability. The court reversed: (1) the refusal to alter the judgment to include Lincoln General’s breach of contract claim against U.S. Auto; (2) the grant of summary judgment on all the fiduciary duty claims that Lincoln appealed, including the claims for aiding and abetting; and (3) the tortious interference claim against Jim Maxwell. Accordingly, the court remanded for further proceedings. View "Lincoln Gen. Ins. Co. v. U.S. Auto Ins." on Justia Law

Plaintiff, a crew member aboard a supply vessel that was mud-roped to the Deepwater Horizon and was off-loading drilling mud on the night of the 2010 blowout, filed suit claiming that he sustained physical injuries when the explosion rocked the vessel and threw him against a bulkhead. On appeal, BP challenged the district court's judgment in favor of plaintiff where the district court, over BP's objection, enforced a putative settlement agreement against BP in plaintiff's favor. The court held that the parties formed a binding settlement agreement; the district court correctly excused plaintiff’s failure to sign the release document where BP's refusal to send plaintiff the release excused that failure; but the district court should have held an evidentiary hearing to determine whether plaintiff fraudulently induced BP into entering the settlement agreement. Therefore, the court affirmed the district court’s order in part, but vacated the judgment and remanded for further proceedings. View "Young v. BP" on Justia Law

In these consolidated cases, BP appealed three settlement awards, related to the 2010 Deepwater Horizon oil spill, that it paid to nonprofits through its Court-Supervised Settlement Program. On appeal, BP argued that the Claims Administrator improperly interpreted the Settlement Agreement. The awards were based on the Claims Administrator’s determination that nonprofits may count donations and grants as “revenue” under the terms of the Agreement (the Nonprofit-Revenue Interpretation). As a preliminary matter, the court concluded that it has jurisdiction over this appeal under the collateral order doctrine and that BP's appeals were timely. On the merits, the court concluded that BP failed to show that the Nonprofit-Revenue Interpretation violates the plain language of the Agreement. The court held that the Nonprofit-Revenue Interpretation does not alter the class definition in violation of Rule 23 or Article III. Finally, the court concluded that there was no abuse of discretion in the district court's denial of review of the individual awards. Accordingly, the court affirmed the judgment. View "In Re: Deepwater Horizon" on Justia Law

BP and the Economic Property Damages Class entered into a Settlement Agreement in connection with the 2010 Deepwater Horizon oil spill. At issue is the district court's order approving the Final Rules Governing Discretionary Court Review of Appeal Determinations for claims processed through the Settlement Program. After determining that the court had jurisdiction over the appeal under the collateral order doctrine, the court concluded that the parties preserved their right to appeal from the district court under the settlement agreement. The court followed its sister circuits' decisions in similar cases involving consent decrees to hold that, where a settlement agreement does not resolve claims itself but instead establishes a mechanism pursuant to which the district court will resolve claims, parties must expressly waive what is otherwise a right to appeal from claim determination decisions by a district court. In this case, the parties have preserved their right to appeal. Finally, the court concluded that the Final Rules violate the right for parties to appeal claim determinations to this court where the district court failed to provide for the docketing of its orders regarding requests for review. Accordingly, the court vacated and remanded. View "Lake Eugenie Land v. BP" on Justia Law

This appeal stemmed from a contract dispute between Amerijet and Zero Gravity where Amerijet operated parabolic flights for Zero Gravity and provided maintenance services. On appeal, Amerijet challenged the district court's anti-suit injunction and petitioned for a writ of mandamus setting aside the district court's order reopening this case after the parties purportedly settled their dispute. Amerijet argued that the district court lacked subject matter jurisdiction because it erred in setting aside Amerijet's voluntary dismissal under Federal Rule of Civil Procedure 41(a)(1)(A)(i). The court affirmed the injunction and denied the petition, concluding that a pre-removal answer meeting the requirements of state law suffices to preclude voluntary dismissal under Rule 41. View "Amerijet Int'l v. Zero Gravity Corp." on Justia Law

Arch Specialty Insurance Company appealed the grant of summary judgment in favor of Amerisure Mutual Insurance Company. In 2006, Amerisure issued a Texas Commercial Package Policy to Admiral Glass & Mirror Co. The policy afforded coverage in excess of any coverage afforded by a controlled insurance program policy. Arch issued an Owner Controlled Insurance Program (“OCIP”) policy to Endeavor Highrise, LP and its contractors and subcontractors for bodily injury and property damage arising out of construction of the Endeavor Highrise. Admiral was a subcontractor insured under the OCIP policy. Endeavor sued Admiral and others for faulty work. Amerisure tendered the lawsuit to Arch as the primary insurer. Prior to Arch accepting the defense, Amerisure incurred $23,879.27 in defense fees. In April 2012, Arch withdrew from defense of the Endeavor lawsuit asserting that attorneys’ fees, defense costs, and settlements of $2,000,000.00 from defending Admiral and other subcontractor defendants exhausted policy limits. Amerisure took over the defense and incurred additional fees and costs of $114,957.14 before settling the claims against Admiral. In total, Arch paid a settlement of $1,555,000.00 and defense costs of $159,543.15 under the general coverage limit of the OCIP, and paid settlements totaling $1,472,032.61 and defense costs of $527,967.36 under the products-completed operations coverage of the OCIP policy. Amerisure sued Arch in Texas state court for breach of contract, contending that Arch wrongfully refused to defend and indemnify Admiral. Amerisure argued on appeal that the term “expenses” in the Supplementary Payments provision did not include attorneys’ fees and other costs of defense. It also argued that, even if “expenses” includes defense costs, the effect of the statement “All other terms and conditions of this Policy remain unchanged” read together with the language that the duty to defend expires when “we have used up the [policy limits] in the payment of judgments or settlements” means that the policy limits are eroded only by payment of “judgments or settlements,” not defense costs. For its part, Arch argued that “expenses” included defense costs and that the endorsement controlled over any contrary language such that it converts this policy into an eroding policy. The Fifth Circuit agreed with Arch, concluding that the endorsement transformed the policy into an “eroding limits” policy. The Court affirmed the district court’s judgment regarding the duty to indemnify, reversed the district court’s judgment regarding the duty to defend, and rendered judgment for Arch. View "Amerisure Mutual Ins. Co. v. Arch Specialty Ins. Co." on Justia Law

This arbitration case stemmed from disputes over Appellee Organizational Strategies, Inc.'s (OSI) captive insurance program, created with Appellants Capstone Insurance Management, Ltd., Capstone Associated Services, and Capstone Associated Services (Wyoming), LP's (collectively, "Capstone") assistance. Appellant PoolRe, managed by Capstone, provided insurance services to OSI's newly created captive insurance companies. Capstone and OSI entered into contracts requiring AAA arbitration, whereas PoolRe and the captive insurance companies entered into contracts requiring ICC arbitration. An arbitrator joined all of the parties for arbitration under AAA rules. Because the arbitrator acted contrary to the express provisions of the PoolRe arbitration agreements, the district court held that arbitrator exceeded his authority and, pursuant to 9 U.S.C. 10, vacated the award. Finding no reversible error, the Fifth Circuit affirmed. View "PoolRe Insurance Corp. v. Organizational Strategies, Inc." on Justia Law

Law firms Campbell Harrison & Dagley, L.L.P. (CHD), and Calloway, Norris, Burdette & Weber, P.L.L.C. (CNBW) (collectively, the firms), challenged the district court’s partial vacatur of most of an arbitration award, rendered pursuant to a fee agreement (combining a high hourly-rate fee and a low-percentage contingency fee), which governed the firms’ representation of Albert G. Hill, III, and his wife, Erin Hill. After arbitrating a dispute over the requested payment to the firms under the fee agreement, the arbitrators awarded them approximately $28 million. Although the district court, inter alia, enforced the hourly-rate fee award, it vacated the contingency-fee award as unconscionable. In rejecting the arbitrators’ determinations regarding the uncertainty of recovery, the reasonableness of the total fee, and unconscionability, the Fifth Circuit concluded the district court “substitute[d] [its] judgment for that of the arbitrators merely because [it] would have reached a different decision”. As a result, it erred in vacating the contingency-fee-portion of the award and related awards (for the arbitration, the firms’ attorney’s fees, other fees, expenses, and arbitrators’ compensation; and pre-judgment interest on the contingency-fee portion). The Fifth Circuit vacated the district court with respect to the unconscionability issue, and remanded the case for further proceedings. The district court was affirmed in all other respects. View "Campbell Harrison & Dagley, et al v. Hill" on Justia Law

Noatex Corp. and Kohn Law Group, Inc. appealed two district court decisions in an interpleader action brought by Auto Parts Manufacturing Mississippi, Inc. (“APMM”) that named Noatex, King Construction of Houston, L.L.C., and Kohn as claimants. Appellants claimed that the district court erred in discharging APMM from the action, enjoining all parties from filing any proceedings relating to the interpleader fund without a court order, and in denying their motion to compel arbitration. After careful consideration of the trial court record, the Fifth circuit found no reversible error and affirmed the discharge of APMM and its accompanying injunction, the denial of appellants' motion to compel arbitration and to stay proceedings pending arbitration. King Construction was dismissed from these appeals, and appellants' alternative motion to vacate the trial court's rulings was denied. View "Auto Parts Mfg MS, Inc. v. King Const of Houston,LLC" on Justia Law

At issue in this appeal was a contract dispute involving a Right-of-Way Easement Option (Agreement) between plaintiff-appellee Angus Chemical Company and defendant-appellant Glendora Plantation, Inc. This appeal stems from the district court’s grant of Angus’s motion for partial summary judgment, denial of Glendora’s motion for partial summary judgment, and denial of Glendora’s motion to compel discovery. Specifically, the issues presented were: (1) whether Angus had authority under the Agreement to abandon the original 12” pipeline in place when it constructed a new 16” pipeline; (2) whether Angus had authority under the Agreement to install fiber optic cables; and (3) whether it was improper for the district court to deny Glendora’s motion to compel discovery. Upon review, the Fifth Circuit concluded: (1) the there was still a material fact issue as to whether the Agreement required removal of the 12" pipeline; (2) the Agreement was sufficiently clear allowing Angus to install fiber optic cables; and (3) because the Fifth Circuit was remanding for consideration of other facts and issues, the Fifth Circuit remanded for the trial court to consider the motion to compel. View "Angus Chemical Company v. Glendora Plantation, Inc" on Justia Law