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

Appellant alleged that appellee played a key role as a strawman purchaser in a fraudulent land transfer where valuable property passed from a limited partnership, A&D, to another limited partnership in appellee's control, TAFI. Before the action was removed to federal court under bankruptcy jurisdiction, a Texas state trial court granted several evidentiary objections to appellant's detriment, dismissed his claims against appellee and TAFI on summary judgment, and expunged a notice of lis pendens that appellant had placed on the property.The Fifth Circuit found that the state trial court abused its discretion in granting the evidentiary objections and granting summary judgment despite there being issues of material fact with respect to all of appellant's claims. The court also found that the controversy surrounding the state court's expungement of the notice of lis pendens is moot because the property at issue was sold to a third party months after the trial court's expungement. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Cohen v. Gilmore" on Justia Law

Defendants appealed the district court's judgment favoring Five Star in a quiet title action over oil-and-gas interests. Five Star, asserting itself as the grantee’s successor-in-interest, sought a declaration that it owns a "floating" royalty entitling it to a three-eighths share of any leased royalty. The district court declared that Five Star owns an undivided three-eighths mineral interest pursuant to a 1927 deed. The Fifth Circuit affirmed the judgment, but clarified that Five Star's three-eighths mineral interest includes solely a right to receive a proportionate share of royalties and does not include an executive right or right to develop the land. View "Five Star Royalty Partners, Ltd. v. Mauldin" on Justia Law

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

This case involved an investor, Elbar, that wired money to Defendant Todd Prins, a former attorney, after the owner of a foreclosed property had declared bankruptcy. In this case, United hired Prins to conduct a foreclosure sale; Elbar wired funds to Prins; Prins stole those funds and used them to reimburse other clients.The Fifth Circuit held that the bankruptcy court properly found that Elbar violated the automatic stay thrice, and twice willfully. Furthermore, the court agreed with the bankruptcy court that Elbar is an extremely knowledgeable and sophisticated litigant that understands perfectly that its actions were a direct violation of the Bankruptcy Code. Therefore, the bankruptcy court was correct to weigh those violations against Elbar in its decision. The court also agreed with the bankruptcy court that neither Elbar's claim for equitable subrogation nor its claim for fraud in a real estate transaction warrant relief. Finally, the court rejected Elbar's claims against TransWorld and Industry including money had and received, unjust enrichment, and conversion. Because the district court failed to explain the exceptional circumstances justifying its denial of prejudgment interest, the court remanded with instructions to explain the exceptional circumstances, if any, that justify denial of prejudgment interest or to order prejudgment interest. View "Elbar Investments, Inc. v. Prins" on Justia Law

The Fifth Circuit denied a petition for rehearing en banc and substituted the following opinion.The court certified a question to the Supreme Court of Texas: Is a lender entitled to equitable subrogation, where it failed to correct a curable constitutional defect in the loan documents under section 50 of the Texas Constitution? Because the Supreme Court of Texas answered in the affirmative, the court reversed the district court's judgment to the contrary and remanded for further proceedings. View "Zepeda v. Federal Home Loan Mortgage Corp." on Justia Law

The Sabine River meanders between Texas and Louisiana. Two state agencies jointly regulate its waterways and operate a hydroelectric plant--the Toledo Bend Reservoir and Toledo Bend Dam. In March 2016, heavy rains led to heavy water inflow into the reservoir and flooding of the River. The plaintiffs, about 300 Texas and Louisiana property owners, alleged that the flooding of their property was caused or exacerbated by the reservoir’s water level becoming too high and the spillway gates at the reservoir being intentionally opened. The defendants removed the case to federal court, which remanded back to Texas state court. The cases were removed again. The Texas federal district court denied a motion to remand but later dismissed all claims against private power companies and remanded the claims against the state authorities to state court.The Fifth Circuit affirmed. Federal jurisdiction obtained at the time of removal because the suit then qualified as a “mass action” under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d)(11)(A); an exception for a local single event does not apply. CAFA mass actions “may be removed by any defendant without the consent of all defendants.” The court upheld the dismissals of the power companies based on findings that the plaintiffs did not adequately allege any violations of the FERC license; that under Texas law, only state authorities may be found liable for floodwater damage; and that the plaintiffs failed to show that the operation of the generators was a proximate cause of plaintiffs’ losses. View "Bonin v. Sabine River Authority of Louisiana" on Justia Law

Plaintiffs filed suit under 42 U.S.C. 1983 alleging that BVGCD violated Plaintiff Fazzino's equal protection right and has taken his property without compensation, and that BVGCD violated Plaintiff Stratta's First Amendment right to free speech. The district court dismissed plaintiffs' claims on the grounds of Eleventh Amendment immunity, ripeness, Burford abstention, and qualified immunity. The Fifth Circuit held that the district court erroneously concluded that BVGCD is an arm of the State of Texas and therefore immune from suit in federal court under the Eleventh Amendment. In this case, five of the six Clark factors weigh against finding BVGCD is an arm of the state of Texas where, most importantly, funds from the Texas treasury will not be used to satisfy a judgment against the entity. Furthermore, the Directors are likewise not entitled to assert such immunity.The court also held that Fazzino's takings claim is ripe for adjudication because Fazzino fully pursued the administrative remedies available to him before filing this action, and the district court abused its discretion in deciding to abstain under Burford. Finally, the court held that neither BVGCD nor its Board was required to respond on the merits, and thus the substance of these allegations must be tested in discovery and further proceedings. The court reversed the district court's Rule 12(b)(6) dismissal as to all defendants and remanded. However, the court affirmed the district court's judgment dismissing Stratta's First Amendment claims. View "Stratta v. Harris" on Justia Law

In a prior dispute between plaintiff and her lender, Feddie Mac, the Fifth Circuit certified to the Supreme Court of Texas the following question: "Is a lender entitled to equitable subrogation, where it failed to correct a curable constitutional defect in the loan documents under section 50 of the Texas Constitution?" The Texas Supreme Court answered in the affirmative. In light of the Texas Supreme Court's answer, the court reversed the district court's holding to the contrary and remanded for further proceedings. View "Zepeda v. Federal Home Loan Mortgage Corp." on Justia Law

Defendants own the surface of land sitting atop the property leased by Petro Harvestor. When the lease expired, Petro Harvestor sought a declaratory judgment that it could continue to operate its oil and gas activities on the property. Defendants claimed that the Surface Lease required Petro Harvester to return the surface land to its pre-lease condition upon expiration, requiring that Petro Harvester remove its machinery and vacate the property.The Fifth Circuit affirmed the district court's grant of summary judgment for Petro Harvestor, holding that the district court correctly held that the Surface Lease here does not supersede the Mineral Lease; the district court properly rejected defendants' affirmative defenses of waiver, ratification, and estoppel; Mississippi's statute of limitations does not bar Petro Harvester's declaratory judgment action; and defendants waived any argument that there are genuine issues of material fact that preclude summary judgment. View "Petro Harvester Operating Co. v. Keith" on Justia Law

Plaintiff requested that the court set aside a foreclosure sale of his residence because his lender mailed him a preforeclosure notice with the wrong deadline for curing default. In this case, the letter contained a deadline thirty days from the day the notice was printed, even though the deed of trust called for a deadline thirty days from the day the letter was mailed.The Fifth Circuit held that the district court correctly applied Texas precedents and denied plaintiff relief, because the lender's "minor" non-compliance with the terms of the deed of trust did not justify unwinding the foreclosure sale. The court held that the error in the foreclosure notice did not clearly harm or prejudice plaintiff, where he does not dispute that, even if the notice had stated the correct deadline, he would not have had the funds to pay the past-due balance on his account. View "Casalicchio v. BOKF, N.A." on Justia Law