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

Joseph Mirelez submitted a claim under his homeowner’s insurance policy with State Farm Lloyds for wind damage to his property. Disputes arose regarding the amount of loss and repair costs, leading Mirelez to invoke the appraisal process. In January 2023, an agreement on the loss amount was reached, but coverage issues persisted. Mirelez filed a lawsuit in state court in May 2023, alleging breach of contract, violations of the Texas Prompt Payment of Claims Act (TPPCA), various bad faith claims under the Texas Insurance Code, and breach of the duty of good faith and fair dealing. State Farm removed the case to federal court, citing diversity jurisdiction, and subsequently paid the appraisal award amount, minus the deductible and prior payments, plus interest.The United States District Court for the Southern District of Texas granted summary judgment in favor of State Farm on all claims. Mirelez conceded that summary judgment was appropriate for his breach of contract and TPPCA claims but contested the dismissal of his statutory and common law bad faith claims. The district court concluded that State Farm had paid all benefits owed under the policy and that Mirelez was not entitled to any additional damages under the Texas Insurance Code.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court’s decision. The court held that under Texas Supreme Court precedent, specifically Ortiz v. State Farm Lloyds, payment of an appraisal award forecloses an insurer’s liability for breach of contract and bad faith claims unless the insured suffered an independent injury. Since Mirelez only sought policy benefits that had already been paid and did not allege any independent injury, his extracontractual bad faith claims were barred. View "Mirelez v. State Farm" on Justia Law

A&T Maritime Logistics, Inc. had an insurance contract with RLI Insurance Company and a bareboat charter agreement with Alexis Marine, L.L.C. While operating the M/V Uncle John, a vessel owned by Alexis Marine, A&T Maritime caused the ship to allide with an embankment. Believing the damage to be minimal, A&T Maritime did not take immediate action. After a lawsuit was filed, RLI was notified of the claim. A&T Maritime and Alexis Marine sought defense and indemnification from RLI, which denied coverage under the insurance contract. The district court upheld RLI's denial of coverage on summary judgment, finding that RLI was prejudiced by the delayed notice.The United States District Court for the Eastern District of Louisiana initially denied A&T Maritime's and Alexis Marine's motions for partial summary judgment seeking reimbursement for defense costs, noting that the policy did not include a duty to defend. The Champagnes, who had purchased the damaged property, settled their claims for $200,000, funded solely by Alexis Marine. RLI then moved for summary judgment, arguing that the Uncle John was not covered under the policy. The district court disagreed but granted partial summary judgment to RLI, holding that the prompt notice requirements were breached and RLI was prejudiced.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The court held that RLI was actually prejudiced by the delayed notice from both A&T Maritime and Alexis Marine, as the damage worsened over time and the opportunity to settle for a lower amount was lost. Consequently, the denial of coverage for both A&T Maritime and Alexis Marine was appropriate. The court also concluded that RLI had no duty to reimburse defense costs, as indemnification depended on coverage, which was voided due to the breach of the prompt notice requirement. View "A&T Maritime Logistics v. RLI Insurance Co." on Justia Law

Three states challenged an executive order issued by President Joseph R. Biden, which mandated that federal contractors pay their workers a minimum hourly wage of $15. The states argued that the President exceeded his authority under the Federal Property and Administrative Services Act (FPASA) and that the order violated the Administrative Procedure Act (APA) and the nondelegation doctrine. The district court for the Southern District of Texas agreed with the states, finding that the FPASA did not grant the President broad authority to set minimum wages for federal contractors and that the executive order was a major question beyond the President's authority. The court permanently enjoined the executive order.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court examined whether the executive order was a permissible exercise of the President's authority under the FPASA. The court found that the FPASA's language was clear and unambiguous, granting the President broad authority to prescribe policies necessary to carry out the Act's provisions, as long as those policies were consistent with the Act. The court determined that the executive order met these requirements, as it aimed to promote economy and efficiency in federal procurement by ensuring contractors paid their workers adequately.The Fifth Circuit also addressed the application of the major questions doctrine, concluding that it did not apply in this case because the FPASA's text was clear and unambiguous. The court noted that the President's exercise of proprietary authority in managing federal contracts did not raise a major question requiring clear congressional authorization. Consequently, the court reversed the district court's permanent injunction and remanded the case for further proceedings consistent with its opinion. View "State of Texas v. Trump" on Justia Law

Pie Development, L.L.C. was formed to develop an application to streamline the process of purchasing workers compensation insurance. The company alleged that Dax Craig, a consultant, stole the idea and shared it with John Swigart. Craig and Swigart then used the idea to create Pie Insurance Holdings, Inc. and other affiliated entities, generating significant profits. Pie Development sued Craig, Swigart, Pie Insurance Holdings, and Pie Insurance Services, alleging misappropriation of trade secrets under the Mississippi Uniform Trade Secrets Act (MUTSA) and the federal Defend Trade Secrets Act (DTSA), among other claims.The United States District Court for the Southern District of Mississippi dismissed the complaint for failing to provide sufficient detail on each claim, but allowed Pie Development to amend its complaint within thirty days. Pie Development chose not to amend and instead appealed. The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision, noting that Pie Development did not sufficiently plead that it took reasonable measures to protect its business plan's secrecy.While the appeal was pending, Pie Development filed a new lawsuit against additional defendants, including Pie Carrier Holdings, Gallatin Point Capital, Sirius Point Ltd., and Pie Casualty Insurance Company, and later added the original defendants. The district court dismissed the new claims, citing res judicata, as the claims were identical to those in the first lawsuit. Pie Development appealed this decision.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's dismissal. The court held that res judicata applied because the prior action was concluded by a final judgment on the merits when Pie Development chose to appeal rather than amend its complaint. The court also found that Pie Development failed to state a claim against Gallatin and Sirius, as the complaint did not plausibly allege that they knew or should have known about the misappropriation of trade secrets. View "Pie Development v. Pie Carr Holdings" on Justia Law

The case involves a challenge to the constitutionality of 18 U.S.C. §§ 922(b)(1) and (c)(1), which prohibit Federal Firearms Licensees (FFLs) from selling handguns to individuals aged eighteen to twenty. The plaintiffs, including individuals in this age group and several nonprofit organizations, argue that these provisions infringe on their Second Amendment rights and deny them equal protection under the Fifth Amendment.The United States District Court for the Western District of Louisiana found that the plaintiffs had standing but dismissed the case under Rule 12(b)(6). The district court assumed that the Second Amendment's plain text covered the purchase of firearms by eighteen-to-twenty-year-olds but concluded that the prohibition was consistent with the nation's historical tradition of firearm regulation, relying on the framework established by the Supreme Court in New York Rifle & Pistol Ass’n, Inc. v. Bruen.The United States Court of Appeals for the Fifth Circuit reviewed the case and concluded that the Second Amendment does cover the right of eighteen-to-twenty-year-olds to purchase firearms. The court found that the historical evidence presented by the government, including 19th-century laws, was insufficient to establish a tradition of restricting firearm rights for this age group in a manner similar to the contemporary federal handgun purchase ban. The court emphasized that the Second Amendment's protections extend to all law-abiding, adult citizens, including those aged eighteen to twenty.The Fifth Circuit held that 18 U.S.C. §§ 922(b)(1) and (c)(1) and their attendant regulations are unconstitutional as they are inconsistent with the nation's historical tradition of firearm regulation. The court reversed the district court's judgment and remanded the case for further proceedings consistent with its opinion. View "Reese v. Bureau of Alcohol, Tobacco, Firearms, and Explosives" on Justia Law

In 2014, McDonnel Group, L.L.C. served as the general contractor for the renovation of Jung, L.L.C.'s property. In 2015, McDonnel obtained insurance from Starr Surplus Lines Insurance Company and Lexington Insurance Company. In 2017, the project experienced significant water damage, leading McDonnel to file a claim for $3,226,164.30. The dispute arose over the flood deductible amount, with McDonnel asserting it was $500,000, while the insurers claimed it was $3,443,475, resulting in no payout under the policy.The United States District Court for the Eastern District of Louisiana granted summary judgment in favor of the insurers, determining that the policy language regarding the flood deductible was clear and unambiguous. The plaintiffs appealed, and the United States Court of Appeals for the Fifth Circuit found the policy language ambiguous and remanded the case for further proceedings to consider extrinsic evidence and the presumption in favor of coverage.Upon remand, the district court reviewed supplemental briefings and extrinsic evidence, ultimately finding in favor of the insurers. The court concluded that the extrinsic evidence resolved the ambiguity, showing that the industry standard interpretation of "VARTOL" (value-at-risk-at-time-of-loss) supported the insurers' deductible calculation. The plaintiffs appealed again.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. The appellate court agreed that the extrinsic evidence provided by the insurers, including industry standards and expert testimony, resolved the ambiguity in the policy language. The court also held that the district court did not err in not applying the presumption in favor of coverage, as the ambiguity had been resolved through extrinsic evidence. View "McDonnel Group v. Starr Surplus Lines" on Justia Law

Ignacia Carmona, representing herself and the estate of Veronica Carmona, filed a lawsuit against the City of Brownsville and several officers, claiming that the officers failed to provide necessary medical care to Veronica Carmona, who died while in pretrial detention. Veronica had been involved in multiple car accidents on the same night and exhibited visible injuries. Despite this, the officers did not seek medical attention for her, and she was later found dead in her cell due to internal bleeding from liver lacerations.The United States District Court for the Southern District of Texas dismissed the claims against the officers, granting them qualified immunity. The court concluded that the complaint did not plausibly allege that the officers had subjective knowledge of a substantial risk of serious harm to Veronica Carmona. The court found that the officers' failure to seek medical care did not amount to deliberate indifference because the injuries were not visibly apparent, and there were no complaints from Carmona that revealed the full extent of her injuries.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the plaintiff failed to plausibly allege that the officers were subjectively aware of the risk of internal bleeding. The court emphasized that actual knowledge of the risk is required for liability, and mere negligence or the fact that the officers should have known about the risk is insufficient. As a result, the officers were entitled to qualified immunity, and the dismissal of the deliberate-indifference claims was upheld. View "Carmona v. Olvera" on Justia Law

The National Automobile Dealers Association and the Texas Automobile Dealers Association challenged the Federal Trade Commission's (FTC) Combating Auto Retail Scams Trade Regulation Rule (CARS Rule). They argued that the FTC violated its own regulations by not issuing an advance notice of proposed rulemaking (ANPRM), failed to provide a reasoned basis for the rule, and conducted an arbitrary and capricious cost-benefit analysis. Alternatively, they requested a remand for additional evidence consideration.The FTC published the CARS Rule without an ANPRM, which led to the petitioners seeking judicial review. The rule aimed to address deceptive practices in the auto sales industry, including misrepresentations, mandatory disclosures, prohibitions on valueless add-ons, and requirements for consumer consent. The FTC received over 27,000 comments during the rulemaking process.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that the FTC violated its own regulations by not issuing an ANPRM, which is required under subpart B procedures for rules promulgated under section 18(a)(1)(B) of the FTC Act. The court determined that the Dodd-Frank Act did not grant the FTC independent substantive authority to bypass the ANPRM requirement. The court also rejected the FTC's argument for deference under Auer v. Robbins and Kisor v. Wilkie, finding no relevant ambiguity in the regulations.The court concluded that the FTC's failure to issue an ANPRM was not harmless error, as it deprived the petitioners of a procedural benefit that could have influenced the final rule. Consequently, the court granted the petition for review and vacated the CARS Rule, without addressing the petitioners' remaining substantive challenges. View "National Automobile Assoc v. Federal Trade Commission" on Justia Law

In 2017, Baker Hughes Saudi Arabia Co., Ltd. (Baker Hughes) and Dynamic Industries Saudi Arabia, Ltd. (Dynamic) entered into a subcontract for an oil-and-gas project in Saudi Arabia. The subcontract included provisions for resolving disputes through arbitration, with Dynamic having the option to demand arbitration in Saudi Arabia. If Dynamic did not demand arbitration in Saudi Arabia, either party could initiate arbitration under the rules of the Dubai International Financial Centre’s joint partnership with the London Court of International Arbitration (DIFC-LCIA). In 2021, the United Arab Emirates abolished the DIFC-LCIA and created a new arbitral institution. A contract dispute arose, and Baker Hughes sued in state court, which was then removed to federal court. Dynamic moved to dismiss for forum non conveniens or to compel arbitration under Schedule E of the subcontract. The district court denied Dynamic’s motion, stating that the designated forum no longer existed, making the forum-selection clause unenforceable.The United States District Court for the Eastern District of Louisiana reviewed the case and denied Dynamic’s motion to dismiss or compel arbitration, reasoning that the DIFC-LCIA no longer existed, thus invalidating the forum-selection clause.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that the district court erred in refusing to compel arbitration. The appellate court found that the subcontract’s Schedule E designated only the rules of arbitration, not a specific forum. Even if the DIFC-LCIA was considered the designated forum, the court concluded that the forum-selection clause was not integral to the subcontract. The court reversed the district court’s decision and remanded the case for further proceedings, instructing the district court to consider whether the DIFC-LCIA rules could be applied by another available forum, such as the LCIA, DIAC, or a forum in Saudi Arabia, and to compel arbitration accordingly. The court also partially granted and denied Baker Hughes’s motion to strike portions of Dynamic’s reply brief. View "Baker Hughes v. Dynamic Industries" on Justia Law

Edgard Ernesto Aguilar-Quintanilla, a native and citizen of El Salvador, was removed from the United States in 2009 and unlawfully reentered in 2022. After being apprehended, the Department of Homeland Security (DHS) issued a notice of reinstatement of his prior removal order. However, due to the inadvertent disclosure of his personal information, DHS dismissed the withholding-only proceedings and placed him in removal proceedings. Aguilar-Quintanilla admitted to being removable and applied for asylum, statutory withholding of removal, and protection under the Convention Against Torture (CAT), claiming that he would be tortured by the Salvadoran government as a suspected gang member due to his tattoos and criminal record.The Immigration Judge (IJ) denied all relief, finding Aguilar-Quintanilla's testimony not credible and determining that general country conditions evidence alone did not entitle him to CAT protection. The Board of Immigration Appeals (BIA) upheld the IJ's decision, and Aguilar-Quintanilla filed a petition for review, challenging only the denial of deferral of removal under the CAT.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that Aguilar-Quintanilla's removal did not moot his appeal because ICE could facilitate his return to the United States if his petition were granted. The court held that the BIA and IJ failed to consider critical evidence, including affidavits describing a 2023 incident where police searched for Aguilar-Quintanilla at his father's home, in their likelihood-of-torture assessment. The court granted Aguilar-Quintanilla's petition for review and remanded the case for further proceedings consistent with its opinion. View "Aguilar-Quintanilla v. McHenry" on Justia Law