United States Court of Appeals

for the Fifth Circuit ____________

No. 21-40629

____________

D2 Excavating, Incorporated, 

Plaintiff—Appellee,

versus

Thompson Thrift Construction, Incorporated; Fidelity 

& Deposit Company of Maryland, 

Defendants—Appellants.

______________________________

Appeal from the United States District Court 

for the Southern District of Texas

USDC No. 2:16-CV-538

______________________________

Before King, Stewart, and Haynes, Circuit Judges.

Per Curiam:*

This is the second appeal in this contract dispute between D2 

Excavating Company (“D2”) and Thompson Thrift Construction

(“Thompson”). D2 sued Thompson for breach of contract after Thompson 

refused to pay D2 for removing dirt from a construction worksite in excess of 

the amount Thompson represented was at the site. A prior panel of this court 

_____________________

* This opinion is not designated for publication. See 5th Cir. R. 47.5.

United States Court of Appeals

Fifth Circuit

FILED

May 19, 2023

Lyle W. Cayce

Clerk

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No. 21-40629

2

affirmed in part and reversed in part the district court’s judgment for D2 and 

remanded the case for modification of the judgment consistent with its 

opinion. D2 Excavating, Inc. v. Thompson Thrift Constr., Inc., 973 F.3d 430, 

438 (5th Cir. 2020). Thompson now appeals the district court’s modified 

judgment, arguing that the prior panel’s decision was clearly erroneous 

because it relied on a breach-of-contract claim that was never pleaded or 

proven. Thompson thus contends that the district court erred in 

implementing the prior panel’s mandate. Thompson also argues that the 

district court erred in awarding trial and appellate attorney’s fees to D2 by 

failing to apply the “main issue” test that Texas law requires.

Finding no error in the district court’s adherence to the prior panel’s 

mandate and no error in its award of attorney’s fees, we AFFIRM. 

I. Facts & Procedural History1

Thompson subcontracted with D2 to provide excavation services on 

its worksite. The site was understood by both parties to be “balanced,” 

meaning no dirt had to be added or removed from the site, and D2 would only 

need to shift existing dirt around to meet the site plan’s specifications. This 

turned out to be untrue, and D2 encountered dirt far in excess of what the 

specifications called for. Because of this, D2’s expenses increased 

significantly and it began requesting additional payment from Thompson. 

Thompson assured D2 that it would be compensated for the extra work and 

stated that it would issue a written change order once the work was finished 

and the entire cost was determined. As D2 continued to work, Thompson 

repeatedly requested that D2 regrade areas that other subcontractors 

_____________________

1 The pertinent facts underlying this dispute are described in our previous opinion

and also briefly summarized here for purposes of clarity. See D2 Excavating, Inc., 973 F.3d 

at 432–33.

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disturbed by leaving debris—work that was outside the scope of the 

Subcontract. This interfered with D2’s ability to access certain areas to 

complete performance of the Subcontract requirements. Thereafter, D2 

again requested compensation for handling excess dirt and for all completed 

labor and materials under the Subcontract, minus the payment for the work 

that could not be accomplished due to the debris. Thompson refused to pay. 

As a result, D2 ceased performing work. 

D2 filed suit against Thompson and pursued multiple breach-ofcontract claims including (1) unpaid materials and labor and (2) costs 

generated by the removal of excess dirt. D2 also sued for quantum meruit, 

violations of the Texas prompt pay statute, and to foreclose on a statutory 

and constitutional lien. Thompson counterclaimed, alleging that D2 

breached the contract when it ceased performance prior to completion. Its

countersuit also included claims for breach of warranty, indemnification, and 

a declaration that D2’s lien was unenforceable. The district court held a 

bench trial and later issued a memorandum of findings of fact and conclusions 

of law which rejected all of Thompson’s counterclaims. It also ruled in favor 

of D2 on both breach-of-contract claims and the quantum meruit claim. It 

thus awarded damages in the amounts of $81,068.00 for the unpaid materials 

and labor and $257,588.53 for the costs generated by the excess dirt. Also 

included in the judgment was an award of attorney’s fees in favor of D2 for 

$356,080.91. 

Thompson timely appealed and a previous panel of this court affirmed 

in part and reversed in part. D2 Excavating, Inc., 973 F.3d at 438. The prior 

panel determined that, because of the interference of the debris on the 

construction site, D2 was entitled to cease performing before it completed 

the work and was fairly owed the $81,068.00 outstanding balance on the 

contract. Id. at 437. In doing so, it also affirmed the denial of Thompson’s 

counterclaims. Id. It, however, reversed the portion of the district court’s 

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judgment concerning the excess dirt, holding that “[n]either breach of 

contract nor quantum meruit allow[ed] D2 to recover for ‘excavation of 

unanticipated excess soil.’” Id. As a result, it remanded the case with 

instructions to modify the judgment consistent with its opinion. Id. at 438.

Thompson sought relief from the judgment through a Rule 60(b) 

motion. Specifically, Thompson argued that, because the previous panel 

reversed the “only breach-of-contract finding,” the district court should 

revisit the attorney’s fee award anew and hold that Thompson was the 

prevailing party. D2 then moved for an amended final judgment. The district 

court granted D2’s motion in part and denied Thompson’s. In granting D2’s 

motion, the court removed the damages award for the excess dirt and left 

intact the portion affirmed by the prior panel. It also awarded D2 statutory 

interest, costs, and post-judgment interest. As for attorney’s fees, the district 

court did not reduce the $356,080.91 in trial attorney’s fees that was awarded 

to D2 before the appeal. It also added $111,159.25 in appellate attorney’s fees 

to D2. Thompson appealed. 

Thompson now seeks reversal of the district court’s post-remand 

judgment for two reasons. First, Thompson argues that the district court 

erred in implementing the prior panel’s mandate which, according to 

Thompson, resulted in a manifest injustice. Second, Thompson argues that 

the district court applied the wrong legal standard when it awarded 

attorney’s fees to D2. 

II. Standard of Review

“We review de novo a district court’s interpretation of our remand

order, including whether the law-of-the-case doctrine or mandate rule

forecloses any of the district court’s actions on remand.” Deutsche Bank

Nat’l Tr. Co. v. Burke, 902 F.3d 548, 551 (5th Cir. 2018) (quotation 

omitted). “The mandate rule requires a district court on remand to effect

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our mandate and to do nothing else.” Id. (quotation omitted). We have,

however, provided that the mandate rule can be overcome in three

instances: “(i) the evidence on a subsequent trial was substantially

different, (ii) controlling authority has since made a contrary decision on

the law applicable to such issues, or (iii) the decision was clearly erroneous

and would work a manifest injustice.” Hopwood v. Tex., 236 F.3d 256, 272

(5th Cir. 2000).

An award of attorney’s fees by the district court is generally

reviewed for abuse of discretion, “bearing in mind that court’s superior

understanding of the litigation and of the costs and fees reasonably

incurred in that litigation.” Abner v. Kan. City S. Ry. Co., 541 F.3d 372, 378–

79 (5th Cir. 2008) (internal quotation marks and citation omitted). We

review the legal conclusions supporting a fee award de novo. Volk v.

Gonzalez, 262 F.3d 528, 534 (5th Cir. 2001).

III. Discussion

A. The Mandate Rule

Thompson argues that the district court should have disregarded the 

prior panel’s mandate because its decision was clearly erroneous and 

amounted to a manifest injustice. We disagree.

We have said that the manifest injustice exception is to be applied

narrowly, and that “mere doubts or disagreement about the wisdom of a prior

decision of this or a lower court will not suffice.” Hopwood, 236 F.3d at 272.

“To be clearly erroneous, a decision muststrike us as more than just maybe or

probably wrong; it must be dead wrong.” Id. at 272–73. Thompson claims

this narrow exception applies here because D2 never pleaded nor

prosecuted the breach- of- contract claim affirmed by the prior panel.

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dirt claim that the panel reversed. Thus, Thompson argues that the 

$81,068.00 damages award for unpaid labor and materials was improper 

because Texas law does not allow for a “freestanding contractual damages 

award.” 

Thompson’s “single claim for breach of contract” argument directly 

contradicts the record and the district court’s rulings. From the very outset 

of the litigation, D2 pursued multiple breach-of-contract claims. Not only did 

D2 allege that Thompson failed to pay for the removal of excess dirt, but it 

also alleged that Thompson failed to pay for labor and materials pursuant to

the terms of their agreement. Thompson has consistently refuted the unpaidbalance allegation throughout the litigation of this case—in its Answer and 

on summary judgment. The claim nevertheless survived summary judgment 

and the district court determined that Thompson was required to pay the 

unpaid balance. 

When the prior panel reviewed the district court’s decision on the 

unpaid-balance claim, Thompson contended that it was not required to pay 

the $81,068.00 because D2 stopped performing before it completed the 

work. However, the panel agreed with the district court that “Thompson’s 

prior breach and its failure to manage the construction site excused D2’s 

failure to perform.” In other words, because D2 was unable to complete its 

work in certain parts of the site because of debris, Thompson prevented D2 

from performing its part of the contract, which is an excuse for 

nonperformance. The panel therefore affirmed the district court on this 

ground and held that Thompson breached the contract when it failed to pay

the unpaid balance for labor and materials, thereby causing damage to D2 in

the amount of $81,068.00. We see nothing “dead wrong” with that decision. 

Deutsche, 902 F.3d at 551. Because the prior panel accurately interpreted the 

district court’s factual findings and conclusions of law, we affirm the district

court’s order implementing the mandate.

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B. Attorney’s Fees

Next, Thompson challenges the award of trial and appellate 

attorney’s fees in D2’s favor. “State law controls both the award of and the 

reasonableness of fees awarded where state law supplies the rule of 

decision.” Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). In Texas, 

parties are generally required to pay their own attorney’s fees unless a statute 

or contract provides otherwise.2 See In re Nat’l. Lloyds Ins. Co., 532 S.W.3d 

794, 809 (Tex. 2017). In this case, the parties did not have a contract 

provision providing for fees. Instead, D2 requested and the district court 

awarded fees pursuant to Chapter 38 of the Texas Civil Practice and 

Remedies Code. 

i. Chapter 38 Fees

Chapter 38 “provides that a party ‘may recover reasonable attorney’s 

fees from an individual or corporation, in addition to the amount of a valid 

claim and costs, if the claim is for . . . an oral or written contract.’” Green 

Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997) (quoting § 38.001(8)). 

“To recover attorney’s fees under [§] 38.001, a party must (1) prevail on a 

cause of action for which attorney’s fees are recoverable, and (2) recover 

damages.” Id. (citing State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 

(Tex. 1995)); Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 

S.W.3d 650, 662 (Tex. 2009). Given our determination that the district court 

did not err in issuing the $81,068.00 award of damages to D2, the second 

prong is satisfied. The issue before us—whether D2 is entitled to Chapter 38 

fees—thus turns on whether D2 prevailed on its cause of action.

_____________________

2 The parties agree that this issue is guided by Texas law.

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According to Thompson, Texas law requires courts to apply the 

“main issue” test, and the district court committed reversible error by failing 

to do so. Thompson contends that, had the district court applied the “main 

issue” test, it would have identified the excess-dirt claim as the main issue of 

the litigation and, because Thompson successfully defended against that 

claim, the court would have determined that it was the prevailing party 

instead of D2. We disagree.

In determining prevailing party status, Texas courts only consider 

what the main issue of the litigation was “where both parties received 

judgment under the cause of action, i.e., where both parties breached the 

contract.” Flagship Hotel, Ltd. v. City of Galveston, 117 S.W.3d 552, 564 (Tex. 

App. 2003); see also Hrdy v. Second St. Props. LLC, 649 S.W.3d 522, 560 (Tex. 

App.—Houston [1st Dist.] 2022, pet. filed). But when only one party 

receives a judgment in the cause of action, Texas courts focus the prevailing 

party analysis on the “success on the merits, i.e., the party who is vindicated 

by the trial court’s judgment.” Flagship Hotel, Ltd., 117 S.W.3d at 565 (citing 

City of Amarillo v. Glick, 991 S.W.2d 14, 17 (Tex. App.—Amarillo 1997, no 

pet.) (concluding that the plaintiffs were the prevailing party even though 

they did not receive all requested relief)).

For example, in Flagship, the plaintiff sued the city for breach of 

contract alleging (1) failure to properly maintain and repair the pier, (2) 

liability for excess payments, and (3) liability for taxes collected in violation 

of the lease. The plaintiff recovered damages on one of the three breach-ofcontract theories—liability for taxes—and he also recovered attorney’s fees. 

On appeal, the city argued that the plaintiff was not entitled to fees 

under § 38.001 because it won on the main issue—maintenance and repairs. 

The court rejected this argument, emphasizing that the “main focus of the 

inquiry should be whether the agreement was breached, not the extent of the 

breach” because a prevailing party is not required to receive a judgment “to 

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the extent of its original contention.” Id. at 564 (citation omitted). It thus 

held that the plaintiff was entitled to attorney’s fees because it was the only 

party to prevail on the breach-of-contract cause of action and receive 

damages as required under § 38.001. Id. at 565. 

Likewise, here, the only party that prevailed on a breach-of-contract 

claim and received damages on that claim was D2. As the district court 

pointed out, D2’s failure to recover damages in the amount that it originally

sought does not prevent it from obtaining Chapter 38 fees. See City of 

Amarillo, 991 S.W.2d at 17. Recall, each party brought its own breach-ofcontract claim against the other party in this case. It was D2 that successfully 

defended against Thompson’s breach-of-contract counterclaim and obtained 

a take nothing judgment in its favor. Put simply, Thompson was not 

vindicated by the district court’s judgment. See Flagship Hotel, Ltd., 117 

S.W.3d at 565.

Thompson’s arguments to the contrary do not convince us otherwise. 

It argues that Texas courts have applied the main issue test “when both 

parties did not breach an agreement,” and thus Flagship is inconsistent with 

Texas law. To support this notion, it cites Happy Endings Dog Rescue v. 

Gregory, but that case is inapposite. 501 S.W.3d 287, 295 (Tex. App. 2016).

In Gregory, the Texas appellate court reversed the plaintiffs’ damages award

and, because they no longer prevailed on those claims, reversed their award 

of attorney’s fees. Unlike the Gregory court, the previous panel in this case 

affirmed the district court’s judgment for D2 on the breach-of-contract claim 

for the unpaid balance, and as a result, D2 was properly awarded damages on 

that claim. 

It next argues that under Texas law a defendant can prevail by 

successfully defending against an alleged breach. It then cites Rohrmoos 

Venture v. UTSW DVA Healthcare, LLP, a case in which the Supreme Court 

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of Texas applied the main issue test to construe “prevailing party” language 

that was not defined in the commercial lease at issue. 578 S.W.3d 469, 486

(Tex. 2019). In doing so, Thompson ignores that the Rohrmoos Venture court 

explained that cases involving Chapter 38 are merely instructive, not 

controlling, because the contractual standard, which did not require that the 

awardee obtain damages, was less stringent than Chapter 38.

3 Id. at 484–85. 

This case therefore provides little precedential support for application of the 

“main issue” test in this context. 

To contravene this, Thompson cites Dees v. Dees for the proposition 

that the main issue test is proper in Chapter 38 cases. No. 02-13-00184-CV, 

2014 WL 2538750, at *6 (Tex. App.—Fort Worth June 5, 2014, no pet.) 

(mem. op.). But this argument misses the point. In Dees, the court applied 

the main issue test to a claim for attorney’s fees under Chapter 38 and held 

that a party prevailed on the main issue—equitable subrogation. However, in 

a footnote, it noted that the defendant also recovered a judgment against the 

plaintiffs “on the loan agreement,” but those issues were not contested at 

trial and thus not the main issue. Id. at *6 n.7. This case is therefore consistent 

with Flagship in that it applied the main issue test where “both parties 

received [a] judgment.” Flagship Hotel, Ltd., 117 S.W.3d at 564. 

Accordingly, we hold that the district court did not err in determining 

that D2 prevailed on the cause of action. And for this reason, it was

mandatory for the district court to assess a reasonable fee award. DP Sols., 

_____________________

3 What’s more, Thompson’s breach of the contract contradicts its assertion that it 

successfully defended against the breach-of-contract suit. See Rohrmoos Venture, 578 

S.W.3d at 486 (holding that counter-defendant was excused for its breach by obtaining a 

jury verdict that the counter-plaintiff breached first, and thus it “successfully defended” 

against the counterclaim). Bigbee v. Samadian Fam. Ltd. P’ship, 2022 WL 4298725, *5 (Tex. 

App. Sept. 19, 2022).

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Inc. v. Rollins, Inc., 353 F.3d 421, 433 (5th Cir. 2003) (citations omitted) 

(assessing reasonableness of district court’s award of Chapter 38 fees).

4

Lastly, Thompson argues that the district court erred in granting 

appellate attorney’s fees because this court reversed the excess dirt claim on 

appeal. However, in determining that D2 prevailed on its cause of action, we 

are holding that it prevailed overall. Indeed, “Texas law requires that if an 

award of trial attorney’s fees is mandatory under civil practice and remedies 

code [§] 38.001, an award of appellate attorney’s fees is likewise mandatory.” 

DaimlerChrysler Motors Co., LLC v. Manuel, 362 S.W.3d 160, 199 (Tex. App. 

2012); see also Gill Sav. Ass’n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 

1990) (per curiam). Having determined that the district court did not err in 

awarding to D2 attorney’s fees under Chapter 38, we next turn to whether such 

fees were reasonable. See Mathis, 302 F.3d at 461.

ii. Reasonableness of Fees

Typically, under these circumstances, the attorney’s fees would be 

subject to a reduction thatreflect the prevailing party’s minimized recovery on 

appeal. However, Thompson made a strategic choice in this case to take an allor-nothing approach. That is, it never argued to the district court or on appeal 

that the amount of fees awarded to D2 were unreasonable.

5 Instead, it only 

argued that D2 was not entitled to attorney’s fees at all. Accordingly, we must 

decide the case as it is presented to us.

_____________________

4 Given our holding that D2 was entitled to Chapter 38 fees, we need not address 

the district court’s alternative holding that D2 is entitled to attorney’s fees under Texas 

Property Code provisions §§ 28.005(b) and 53.156.

5 Thompson further confirmed at oral argument that it had not argued for the 

apportionment or reasonableness of the fee awards because of its strongly held position that 

D2 was not a prevailing party under the main issue test. See Oral Arg. at 1:20-2:33.

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Here, D2 submitted attorney’s fee affidavits, along with time records 

for counsel, requesting a total award. The district court held that the award 

of trial attorney’s fees should not be reduced on the basis of D2’s limited 

recovery after the appeal. According to the district court, although D2 did 

not recover an award on the excess-dirt claim, the legal work expended to 

litigate the unpaid-balance claim was interrelated, especially with respect to 

D2’s efforts to defeat Thompson’s counterclaim. As to the appellate 

attorney’s fees, the district court reduced the amount sought by D2 by 30%

because the billing records included duplicative work. The district court did 

so, even though Thompson offered no controverting evidence challenging 

the entries of the fee requests. 

Given our deferential standard of review and Thompson’s failure to 

specify any expenses that were unreasonably granted, we cannot say that the 

district court erred in granting the amount of attorney’s fees that it did. See

Bencon Mgmt. & Gen. Contracting, Inc. v. Boyer, Inc., 178 S.W.3d 198, 208–10

(Tex. App. 2005) (rejecting segregation and excessive challenge to attorney’s 

fee award where party did not object and awarding fees two times more than 

actual damages recovered); Lee v. Perez, 120 S.W.3d 463,469–70 (Tex. App. 

2003) (holding that the court does not have discretion to award nothing when 

there was uncontested evidence of reasonable appellate attorney’s fees that 

were sought by a prevailing party);Bank of Tex. v. VR Elec., Inc., 276 S.W.3d 671, 

685 (Tex. App. 2008) (holding that uncontroverted evidence was sufficient to 

support the jury’s award of trial and appellate attorney’s fees that were four 

times the damages recovered). 

For these reasons, we AFFIRM the district court’s judgment in full.

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