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

In this case, the United States Court of Appeals for the Fifth Circuit considered an appeal by Colony Insurance Company against First Mercury Insurance Company related to a settlement agreement for an underlying negligence case. Both companies had consecutively insured DL Phillips Construction, Inc. (DL Phillips) under commercial general liability insurance policies. After the settlement, Colony sued First Mercury, arguing that First Mercury needed to reimburse Colony for the full amount of its settlement contribution, as it contended that First Mercury's policies covered all damages at issue. The district court granted summary judgment in favor of First Mercury, prompting Colony's appeal.In the underlying negligence case, DL Phillips was hired to replace the roof of an outpatient clinic in Texas. Shortly after completion, the roof began leaking, causing damage over several months. The clinic's owner sued DL Phillips for various claims, including breach of contract and negligence. A verdict was entered against DL Phillips for over $3.7 million. Both Colony and First Mercury contributed to a settlement agreement, and then Colony sued First Mercury, arguing it was responsible for all the property damage at issue.The appellate court held that under the plain language of First Mercury's policies and relevant case law, First Mercury was only liable for damages that occurred during its policy period, not all damages resulting from the initial roof defect. The court also found that Colony failed to present sufficient evidence to create a genuine dispute of material fact about whether there was an unfair allocation of damages, which would be necessary for Colony's contribution and subrogation claims. As such, the court affirmed the district court's decision to grant summary judgment in favor of First Mercury and denied summary judgment for Colony. View "Colony Insurance Company v. First Mercury Insurance Company" on Justia Law

Plaintiffs are Constance Swanston (“Swanston”), Shannon Jones (“Jones”), and Women’s Elevated Sober Living, LLC (“WESL”) (collectively, “Plaintiffs”). Swanston is an individual in recovery from substance use disorders (“SUDs”) and the owner and operator of WESL. In November 2018, WESL opened a sober living home (the “Home”) on Stoney Point Drive in Plano, Texas. Jones is a caretaker and resident of the Home. Defendant-Appellant, the City of Plano (the “City”) appealed the district court’s judgment holding that it violated the Fair Housing Act (“FHA”) due to its failure to accommodate Plaintiffs as to the capacity limits in the applicable zoning ordinance. The district court enjoined the City from (1) restricting the Home’s occupancy to fewer than fifteen residents; (2) enforcing any other property restriction violative of the FHA or ADA; and (3) retaliating against Plaintiffs for pursuing housing discrimination complaints under the FHA and ADA. Following a hearing, awarded Plaintiffs nominal damages of one dollar.   The Fifth Circuit vacated the district court’s injunction and remanded it. The court held that the district court erred in determining that the evidence satisfied the applicable legal standard. The court explained that the Third Circuit concluded that, based on its strict reading of Section 3604(f)(3)(B) and the prior jurisprudence in its court and its sister circuits, the resident failed to prove that her requested accommodation was necessary considering the definition of the term, the purpose of the FHA, and the proffered alternatives. The court wrote that for the same reasons, it holds that Plaintiffs have failed to establish that their requested accommodation was therapeutically necessary. View "Women's Elevated v. City of Plano" on Justia Law

Plaintiffs are three Texas residents whose assets escheated to the State under Texas’s Unclaimed Property Act. Plaintiffs brought a class action lawsuit against the Texas Comptroller and a director in the Comptroller’s office, alleging that the State is abusing the Unclaimed Property Act to seize purportedly abandoned property without providing proper notice. The district court dismissed most of Plaintiffs’ claims. Defendants contend that Plaintiffs cannot invoke Ex parte Young because they lack standing to seek prospective relief and have not alleged an ongoing violation of federal law.   The Fifth Circuit agreed with Defendants and reversed the district court’s denial of Eleventh Amendment sovereign immunity, and remanded with instructions to dismiss Plaintiffs’ remaining claims for prospective relief without prejudice. The court explained that Plaintiffs have failed to allege facts indicating that Texas’s alleged abuse of the UPA is ongoing or will continue in the future. As there is no ongoing violation of federal law sufficiently pleaded in the complaint, Plaintiffs have failed to satisfy the Ex parte Young requirements, and their claims for prospective relief are barred by sovereign immunity. View "James v. Hegar" on Justia Law

The City of Austin, Texas, issued an ordinance (1) declaring that the shoreline properties are within the city’s full purpose jurisdiction; (2) repealing a 1986 ordinance that putatively declared the shoreline properties to be within the city’s limited purpose jurisdiction but promised not to tax those properties until the city made city services available to them; and (3) announcing that the shoreline properties are subject to taxation by the city, albeit without providing city services. The owners asserted claims under the due process, equal protection, takings and ex post facto clauses of the Constitution, together with state law claims, and sought various declarations, injunctions, and writs of mandamus. They alternatively sought just compensation for the taking of their properties’ jurisdictional status. The district court dismissed all claims without prejudice as barred by the Tax Injunction Act. 28 U.S.C. Section 1341 Plaintiffs appealed that judgment.   The Fifth Circuit affirmed in part, reversed in part, and remanded. The court explained that apart from two minor exceptions, Plaintiffs do not ask the district court to “enjoin, suspend or restrain the assessment, levy or collection of any tax under State law.” Their claims thus fall outside the TIA. The court explained that Plaintiffs here seek the invalidation of the 2019 ordinance and a declaration that their properties are within the city’s extraterritorial or limited purpose jurisdiction. Although the ordinance authorized the taxation of Plaintiffs’ properties, the county tax assessor had to add their properties to the Travis County Appraisal District’s rolls, appraise the properties, determine their tax liabilities, levy the taxes, collect the taxes, and remit those payments to the city. View "Harward v. City of Austin" on Justia Law

SR Construction held a lien on real property owned by RE Palm Springs II. The property owner is a corporate affiliate of Hall Palm Springs LLC, who had financed the original undertaking for a separate real estate developer. The latter requested leave of the bankruptcy court to submit a credit bid to purchase the property from its affiliate, which the bankruptcy court granted. The bankruptcy court later approved the sale and discharged all liens. The construction company appealed the bankruptcy court’s credit-bid and sale orders. Finding that the lender was a good faith purchaser, the district court affirmed the bankruptcy court and dismissed the appeal as moot under Bankruptcy Code Section 363(m).   The Fifth Circuit affirmed. The court explained that the pandemic dramatically changed not only the lender’s plans for the Property but it also severely impacted the affiliate’s ability to market and sell a hotel, particularly an unfinished one. In sum, these two factors must also be weighed in considering whether any of the actions or procedures, particularly with regard to pricing or timing issues, were performed in bad faith or as a result of sub-optimal external forces beyond the lender’s control. The court explained that the record facts, framed by the external context and circumstances, make plain that there is no error in the judgments of the able bankruptcy and district courts. Accordingly, the court held that the lender did not engage in fraud and was a “good faith purchaser.” View "SR Construction v. Hall Palm Springs" on Justia Law

This dispute involves three construction projects (the “Projects”) in Galveston County, Texas. Defendants, Binnacle Development, Lone Trail Development, and SSLT, are land developers. Each developer contracted with R. Hassell Properties, Inc. to complete paving and infrastructure projects in Galveston County Municipal Utility District (“MUD”) No. 31. The three Hassell contracts were form MUD contracts created by MUD attorneys. Each contract stated that it was “for Galveston County Municipal Utility District No. 31.” Hanover subsequently sued the developers in federal court to recover the contract balances on the Projects. The liquidated-damages clause would, if enforced, amount to an offset of $900,000. Both parties moved for summary judgment. The district court concluded that because no district is a party to the contracts at issue, the economic disincentive provision from the Water Code does not apply. On the second issue, the district court found that the damages clauses in the contracts constitute an unenforceable penalty. The court granted summary judgment for Hanover.   The Fifth Circuit affirmed. The court held that Section 49.271 allows “economic disincentive” clauses only in contracts where a district is a contracting party. Because no district is party to the Hassell contracts, they cannot incorporate “economic disincentive” clauses permitted under the Texas Water Code. The court also wrote it would not disturb the district court’s finding that the clause is an unenforceable penalty under Texas law. View "Hanover Ins v. Binnacle Development" on Justia Law

In 2017, Plaintiff discovered a crude oil leak on its property. Despite 15 years of remediation efforts, the leak persists and the cause of the leak remains unknown. Plaintiff filed a claim with Defendant insurance company under a commercial general liability policy. However, the policy contains a "total pollution exclusion endorsement" which removes coverage for various events related to "pollution."Initially, the insurer agreed to cover Plaintiff's loses, but later denied the claim. In January 2017, Plaintiff filed this lawsuit in state court seeking: (1) coverage for past and future expenses it incurred in cleaning up the spill; (2) coverage for defense costs in connection with the Lawsuit; and (3) damages, penalties, and attorney fees. The insurer removed the case to federal court and the district court determined that the total pollution exclusion barred coverage.The Fifth Circuit affirmed, explaining "the absolute pollution exclusion in Liberty Mutual’s policy unambiguously excludes coverage ... related to 'clean up' or 'remov[al]' of the crude oil, as well as for any 'property damage’ which would not have occurred in whole or part but for the . . . release or escape” of the crude oil." View "Central Crude v. Liberty Mutual Ins" on Justia Law

Fountain of praise, a church, leased space to Central Care Integrated Health Services. Shortly after the execution of the lease, the relationship soured when the parties disagreed on the frequency and amount of rent payments. Eventually, Fountain of Praise terminated the lease and successfully evicted Central Care from the premises.Subsequently, Central Care filed for Chapter 11 reorganization. Central Care then sued Fountain of Praise in state court, claiming breach of contract and unjust enrichment. Fountain of Praise then removed the case to bankruptcy court as an adversary proceeding. The bankruptcy court entered judgment in favor of Fountain of Praise, finding that any breach was excusable due to Central Care's failure to make timely rent payments and that Central Care lacked the requisite interest in the property for an unjust enrichment claim.Central Care appealed, and the district court judge assigned to the case reassigned the case to a magistrate judge who affirmed the bankruptcy court's judgment.On appeal, the Fifth Circuit vacated the magistrate judge's order, finding that the district court improperly authorized referral of the appeal from a bankruptcy court decision to a magistrate judge. Under 28 U.S.C. Section 158, appeals from a bankruptcy court must be heard either by the district court or a panel of bankruptcy court judges. View "South Central v. Oak Baptist" on Justia Law

The Texas Legislature limited beer-to-go sales to brewers and manufacturers that produced no more than 225,000 barrels annually “at all premises [they] wholly or partly owned.” Tex. Alco. Bev. Code Ann. Sections 62.122(a) and 12.052(a).   The Texas Alcoholic Beverage Commission (TABC) ordered CANarchy to cease and desist after it determined that CANarchy’s facilities collectively exceeded the 225,000-barrel limit. CANarchy complied with the order but then filed suit, seeking a declaratory judgment that the 225,000- barrel threshold did not apply to barrels produced at leased premises. The district court agreed with CANarchy that “premises wholly or partly owned” do not include leased premises and granted it summary judgment.   The Fifth Circuit affirmed the district court’s order granting Plaintiff’s motion for a declaratory judgment. The court held that “premises wholly or partly owned” do not include leased premises and granted it summary judgment.   The court wrote, “it is the Legislature’s prerogative to enact statutes; it is the judiciary’s responsibility to interpret those statutes according to the language the Legislature used, absent a context indicating a different meaning or the result of the plain meaning of the language yielding absurd or nonsensical results.” Here, the ordinary definition of “owned,” when applied to sections 12.052(a) and 62.122(a) of the Texas Alcoholic Beverage Code, establishes that the 225,000-barrel production threshold set in those statutes encompasses only barrels produced at premises owned by the brewer, either in whole or in part, and not at premises leased by the brewer. View "CANarchy Craft Brewery v. Texas Alcoholic" on Justia Law

Kelly owns 160 acres within compulsory oil and gas drilling and production units established by the Louisiana Commissioner of Conservation. Aethon is the designated operator of the units which include 16 producing wells. Kelly’s land is not subject to a valid oil, gas or mineral lease to Aethon or to anyone else. Louisiana’s oil and gas conservation law provides that the Commissioner may establish a drilling unit even if all owners of oil and gas interests have not agreed to pool their interests. When the operator proposes to drill a well in a unit, owners may participate in the risk by contributing to the drilling costs. If an owner does not participate and the well produces, the operator may recover out of production the nonparticipating owner’s share of expenditures and, in certain cases, a “risk charge” of 200 percent of that expenditure share. Louisiana law requires operators to report information to unleased owners if requested.Kelly sought a declaration that Aethon failed to comply with disclosure and reporting obligations and had forfeited its right to demand contribution from Kelly. In two certified mail letters to Aethon, Kelly had informed Aethon that it was an unleased owner within the Units and requested information regarding the wells, and subsequently, cited Aethon’s failure to provide that information. The district court granted Aethon summary judgment. The Fifth Circuit vacated in part. The district court impermissibly imposed requirements on Kelly that are not present in the statutes. Kelly’s letters complied with the statute. View "B A Kelly Land Co., L.L.C. v. Aethon Energy Operating, L.L.C." on Justia Law