### IN THE UNI TED STAT ES COURT OF APPEALS

FOR THE FIF TH CIRCU IT

N o

. 1 0

- 1 0 1 8 5

S u m m a r y C a l e n d a r

P R O V I D E N T F I N A N C I A L I N C

. , A s s i g n e e o f S M I M a r k e t i n g I n c

. ,

P l a i n t i f f

S M I M A R K E T I N G

, I N C

. ,

I n t e r v e n o r P l a i n t i f f

- A p p e l l a n t

v

.

S T R A T E G I C E N E R G Y L

. L

. C

. ,

D e f e n d a n t

- A p p e l l e e

A p p e a l f

r o m t h e U n i t e d S t a t e s D i s t r i c t C o u r t

f o r t h e N o r t h e r n D i s t r i c t o f T e x a s

U S D C N o

. 3 : 0 7

- C V

- 7 0 0

B e f o r e H I G G I N B O T H A M

, S M I T H

, a n d H A Y N E S

, C i r c u i t J u d g e s

.

P E R C U R I A M : *

S M I M a r k e t i n g

, I n c

. ( “ S M I ” ) a p p e a l s a d i s t r i c t c o u r t ’ s o r d e r d e n y i n g i t a n

a w a r d o f a t t o r n e y s ’ f e e s a f t e r S M I w o n a s u i t a g a i n s t S t r a t e g i c E n e r g y L

. L

. C

.

( “ S t r a t e g i c ” ) f

o r b r e a c h o f c o n t r a c t

. B e c a u s e P e n n s y l v a n i a l a w

, w h i c h g o v e r n e d U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t



### F I L E D

Decem ber 6 , 20 10

Lyle W . Cayce

Clerk

Pursua nt to 5 T H C I R

. R. 47.5

, the cour t has d ete rm ined t hat this op inion s hould not *

be publ ish ed and is not pr ece dent excep t unde r the lim ite d cir cum st ance s se t for th in 5 T H C I R

. R. 47.5 .4. Case: 10-10185 Document: 00511312864 Page: 1 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

t h e s u b s t a n t i v e i s s u e s i n t h i s c a s e

, d o e s n o t a l l o w r e c o v e r y o f a t t o r n e y s ’ f e e s f o r

S M I ’ s c a u s e o f a c t i o n

, w e f i n d n o e r r o r i n t h e d i s t r i c t c o u r t ’ s d e c i s i o n

. T h e r e f o r e

,

w e A F F I R M

.

I

. F a c t s a n d P r o c e d u r a l H i s t o r y

W e p r o v i d e a s h o r t s u m m a r y o f t h e f a c t s a n d p r o c e d u r a l h i s t o r y a s t h e y

r e l a t e t o t h e a t t o r n e y s ’ f e e i s s u e

, a s n e i t h e r S M I n o r S t r a t e g i c a p p e a l e d t h e

m e r i t s o f t h e j u d g m e n t i n f a v o r o f S M I o n t h e b r e a c h o f c o n t r a c t c l a i m

.

W h e n S t r a t e g i c f a i l e d t o p a y c o m m i s s i o n s t o S M I f o r c u s t o m e r c o n t r a c t s

p r o c u r e d b y S M I o n S t r a t e g i c ’ s b e h a l f

, P r o v i d e n t F i n a n c i a l I n c

. ( “ P r o v i d e n t ” )

,

S M I ’ s a s s i g n e e

, f

i l e d s u i t i n T e x a s s t a t e c o u r t a g a i n s t S t r a t e g i c s e e k i n g t o

r e c o v e r t h e c o m m i s s i o n s

. S t r a t e g i c r e m o v e d t h e c a s e t o t h e U n i t e d S t a t e s

D i s t r i c t C o u r t f

o r t h e N o r t h e r n D i s t r i c t o f T e x a s

. S M I i n t e r v e n e d a s a p l a i n t i f f

,

a l s o s e e k i n g r e c o v e r y o f t h e u n p a i d c o m m i s s i o n s

. W h i l e t h e c a s e w a s i n s t a t e

c o u r t

, S t r a t e g i c a s s e r t e d a g e n e r a l d e n i a l o f a l l c l a i m e d e n t i t l e m e n t t o r e l i e f

, a s

w e l l a s a s p e c i f

i c d e n i a l t h a t S M I a n d P r o v i d e n t w e r e e n t i t l e d t o a t t o r n e y s ’ f e e s

.

N o n e o f t h e p a r t i e s d i s p u t e d t h a t

, p u r s u a n t t o a c o n t r a c t u a l c h o i c e

- o f

- l a w

p r o v i s i o n

, P e n n s y l v a n i a l a w g o v e r n e d t h e s u b s t a n t i v e i s s u e s i n t h e c a s e

.

H o w e v e r

, S M I a n d P r o v i d e n t a s s e r t e d t h a t t h e y w e r e e n t i t l e d t o a t t o r n e y s ’ f e e s

u n d e r T e x a s l a w

. S t r a t e g i c a l s o s t a t e d t h a t a t t o r n e y s ’ f e e s w e r e g o v e r n e d b y

T e x a s l a w i n i t s b r i e f i n s u p p o r t o f a m o t i o n f o r j u d g m e n t o n p a r t i a l f i n d i n g s

,

f i l e d t h e s a m e d a y a s t h e p a r t i e s ’ J o i n t P r e t r i a l O r d e r

.

T h e p a r t i e s f

i l e d a J o i n t P r e t r i a l O r d e r o n S e p t e m b e r 1 1

, 2 0 0 9

. I n t h i s

P r e t r i a l O r d e r

, u n d e r t h e h e a d i n g “ A S t a t e m e n t o f S t i p u l a t e d F a c t s

, ” t h e p a r t i e s

s t i p u l a t e d a s f

o l l o w s : “ T h e A g r e e m e n t i s g o v e r n e d b y a n d i s t o b e c o n s t r u e d

,

e n f o r c e d

, a n d p e r f

o r m e d i n a c c o r d a n c e w i t h t h e l a w s o f t h e C o m m o n w e a l t h o f

P e n n s y l v a n i a w i t h o u t r e g a r d t o p r i n c i p l e s o f c o n f l i c t s o f l a w

. ” B o t h p a r t i e s ’

d i s c u s s i o n o f a t t o r n e y s ’ f e e s t r a c k e d T e x a s l a w

, s t a t i n g t h a t r e c o v e r y w a s

c o n d i t i o n e d o n s u c c e s s o f t h e s u b s t a n t i v e c l a i m s

, b u t n e i t h e r p a r t y c i t e d a

2 Case: 10-10185 Document: 00511312864 Page: 2 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

s p e c i f i c s t a t u t e

. T h e s e c t i o n o f t h e O r d e r o n c o n t e s t e d i s s u e s d i d n o t i n c l u d e

w h e t h e r P e n n s y l v a n i a l a w a l l o w e d a p a r t y t o r e c o v e r a t t o r n e y s ’ f e e s i n a b r e a c h

o f c o n t r a c t a c t i o n

.

T h e c a s e w a s t r i e d w i t h o u t a j u r y

. D u r i n g o p e n i n g s t a t e m e n t s

, S t r a t e g i c

a r g u e d t h a t P e n n s y l v a n i a l a w p r e v e n t e d r e c o v e r y o f a t t o r n e y s ’ f e e s b y S M I a n d

P r o v i d e n t

. F o l l o w i n g t h e t r i a l

, t h e c o u r t a d v i s e d t h e p a r t i e s o f i t s r u l i n g s o n

p r i m a r y i s s u e s o f f a c t a n d l a w

, a n d t h e p a r t i e s s u b s e q u e n t l y a g r e e d o n t h e f o r m

o f j u d g m e n t

. T h e c o u r t e n t e r e d i t s f i n a l j u d g m e n t o n t h e m e r i t s o n N o v e m b e r

2 4

, 2 0 0 9

.

O n D e c e m b e r 7

, 2 0 0 9

, P r o v i d e n t a n d S M I f i l e d m o t i o n s f

o r a t t o r n e y s ’ f e e s

.

F o l l o w i n g b r i e f

i n g b y t h e p a r t i e s

, t h e m a g i s t r a t e j u d g e d e n i e d b o t h m o t i o n s

. T h e

c o u r t f o u n d t h a t

, u n d e r P e n n s y l v a n i a l a w

, a p a r t y c o u l d n o t r e c o v e r a t t o r n e y s ’

f e e s i n a b r e a c h o f c o n t r a c t a c t i o n a b s e n t a c o n t r a c t u a l p r o v i s i o n o r s t a t u t o r y

r i g h t p r o v i d i n g f

o r s u c h r e c o v e r y

. T h e c o u r t f u r t h e r f

o u n d t h a t S t r a t e g i c ’ s

s t a t e m e n t i n i t s m o t i o n f o r j u d g m e n t o n p a r t i a l f i n d i n g s t h a t T e x a s l a w a p p l i e d

t o t h e a t t o r n e y s ’ f e e s i s s u e w a s a n e r r o n e o u s s t a t e m e n t o n a q u e s t i o n o f l a w

.

T h e r e f o r e

, i t d i d n o t c o n s t i t u t e a b i n d i n g j u d i c i a l a d m i s s i o n

. F i n a l l y

, t h e c o u r t

f o u n d n o e v i d e n c e t o s u p p o r t a c l a i m t h a t S t r a t e g i c ’ s c o n d u c t d u r i n g t h e

p r o c e e d i n g s w a r r a n t e d a n a w a r d o f a t t o r n e y s ’ f e e s u n d e r a P e n n s y l v a n i a s t a t u t e

p r o s c r i b i n g b a d f a i t h c o n d u c t

. S M I t i m e l y a p p e a l e d

.

I I

. S t a n d a r d o f R e v i e w

W e r e v i e w a d i s t r i c t c o u r t ’ s l e g a l c o n c l u s i o n s

, i n c l u d i n g d e c i s i o n s o n

c h o i c e

- o f

- l a w i s s u e s

, d e n o v o

. M u m b l o w v

. M o n r o e B r o a d

. , I n c

. , 4 0 1 F

. 3 d 6 1 6

,

6 2 0 ( 5 t h C i r

. 2 0 0 5 )

. W e r e v i e w a t r i a l c o u r t ’ s f i n d i n g s o f f a c t f

o r c l e a r e r r o r

. I

d

.

3 Case: 10-10185 Document: 00511312864 Page: 3 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

I I I

. D i s c u s s i o n

T h e c o n t e n t s o f t h e P r e t r i a l O r d e r g u i d e o u r d e c i s i o n i n t h i s c a s e

. O u r

c i r c u i t a b i d e s b y t h e r u l e t h a t a j o i n t p r e t r i a l o r d e r s i g n e d b y b o t h p a r t i e s 1

s u p e r s e d e s a l l p l e a d i n g s a n d g o v e r n s t h e i s s u e s a n d e v i d e n c e t o b e p r e s e n t e d a t

t r i a l

. Q u i c k T

e c h s

. , I n c

. v

. S a g e G r

p

. P L C

, 3 1 3 F

. 3 d 3 3 8

, 3 4 5 n

. 5 ( 5 t h C i r

. 2 0 0 2 )

( c i t a t i o n a n d q u o t a t i o n s o m i t t e d )

. “ E a c h p a r t y h a s a n a f f i r m a t i v e d u t y t o a l l e g e

a t t h e p r e t r i a l c o n f e r e n c e a l l f a c t u a l a n d l e g a l b a s e s u p o n w h i c h t h e p a r t y

w i s h e s t o l i t i g a t e t h e c a s e

. ” T r i n i t y C a r t o n C o

. v

. F a l s t a f f B r e w i n g C o r

p

. , 7 6 7

F

. 2 d 1 8 4

, 1 9 2 n

. 1 3 ( 5 t h C i r

. 1 9 8 5 )

. “ F a i l u r e t o d o s o m a y i m p l i c a t e w a i v e r o f t h e

i s s u e a t t h e d i s c r e t i o n o f t h e t r i a l c o u r t

, s u b j e c t t o c o n s i d e r a t i o n s o f f a i r n e s s a n d

e f f i c i e n t a d m i n i s t r a t i o n o f j u s t i c e

. ” I d

.

H e r e

, b o t h p a r t i e s s t i p u l a t e d t h a t P e n n s y l v a n i a l a w a p p l i e d t o t h e

s u b s t a n t i v e i s s u e s i n t h i s c a s e i n t h e J o i n t P r e t r i a l O r d e r

. T h e P r e t r i a l O r d e r 2

s u p e r s e d e d a n y o t h e r p l e a d i n g s

, i n c l u d i n g a n y s t a t e m e n t s b y t h e p a r t i e s t h a t

T e x a s l a w g o v e r n e d t h e r e q u e s t f o r a t t o r n e y s ’ f

e e s

. F o r S M I t o b e r e l i e v e d o f i t s 3

We note that the Joint Pret rial Or der cont ained in the rec ord on app eal i s s i g n e d 1

only by S t rat egic’ s couns el. Gi ven SM I’s reli ance upon it and ref ere nce to it as the par tie s’

pr etr ial ord er, ho we ver, w e c oncl ude that S MI wa ived any ar gume nt as to its aut hent icit y.

In add itio n to the st atem ent alre ady quot ed, unde r the sum mar y of the clai ms and 2

def ens es that it sub mi tte d, SM I st ated that “Penns ylvania law

, wh en app lied to the sim ple and

unam biguous pr ovis ions in the Agreem ent, hold s clea rly that :

. . . (vi) Provid ent and SM I are

enti tle d to an aw ard of att orne ys’ fee s in thi s m a t t e r a s a ny suc h aw ard is cond itio ned on

suc ces s on thei r sub st antive clai ms

. ” L i k e w i se

, Str ategic use d the sam e ope ning language

about Penns ylvania law and then sp ecif ical ly st ated that “ [ n ]ei ther Provid ent nor SM I are

enti tle d to an aw ar d o f a t t o r n e y s’ fee s in this mat ter as any suc h aw ard is cond itio ned on

suc ces s on thei r sub st antive c laim s. ”

We note that we are not bound to acc ept st ipul atio ns as to ques tio ns of law

. Equita ble 3

Lif e As sur anc e Co. v. Ma cG il l

, 551 F.2d 978, 983 (5t h Cir. 1977) ; Ov erton v. Aus tin

, 748 F.2d

941, 957 (5t h Cir. 1984) (c itin g Ma cG il l ). Entit lem ent to att orne ys’ fee s is genera lly a ques tio n

of law

. Ma cG il l

, 551 F.2d at 983. Thus, to the exten t that the par tie s mad e err oneo us

st ipul atio ns on a ques tio n of law

, we are not bound to acc ept thos e st ipul atio ns. Ho we ver, the

par tie s are bound to thei r fac tual st ipul atio ns, wh ich “have the e f f e c t o f w i t hdr aw ing a fac t

fr om is sue and d isp ens ing w holly wi th the need for pr oof of the fac t. ” Chri stia n Legal Soc’ y

Chap ter of the Uni v. of Cal

. v. Ma rtine z

, 130 S. Ct. 2971, 298 3 ( 2 0 1 0 ) ( c i t atio n om itt ed)

.

4 Case: 10-10185 Document: 00511312864 Page: 4 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

s t i p u l a t i o n s

, i t m u s t s h o w t h a t m a n i f e s t i n j u s t i c e w o u l d r e s u l t

. S e e F E D

. R

. C I V

.

P

. 1 6 ( 6 ) ( s t a t i n g t h a t a p r e t r i a l o r d e r c o n t r o l s t h e s u b s e q u e n t c o u r s e o f a c t i o n

u n l e s s m o d i f

i e d a t t r i a l t o p r e v e n t m a n i f e s t i n j u s t i c e ) ; M a c G i l l

, 5 5 1 F

. 2 d a t 9 8 3

( r e f u s i n g t o e n f

o r c e a p a r t y ’ s s t i p u l a t i o n t h a t a F l o r i d a s t a t u t e e n t i t l e d i t s

o p p o n e n t t o r e c o v e r a t t o r n e y s ’ f e e s i f i t p r e v a i l e d b e c a u s e t h e F l o r i d a S u p r e m e

C o u r t d e n i e d s u c h r e c o v e r y a n d e n f o r c i n g t h e s t i p u l a t i o n w o u l d t h e r e f o r e r e s u l t

i n m a n i f e s t i n j u s t i c e )

.

O u r c h o i c e

- o f

- l a w a n a l y s i s c o n f i r m s t h e p a r t i e s ’ s t i p u l a t i o n r e g a r d i n g

P e n n s y l v a n i a l a w

, a n d S M I c a n n o t s h o w m a n i f e s t i n j u s t i c e

. U n d e r T e x a s

c h o i c e

- o f

- l a w p r i n c i p l e s

, c o n t r a c t u a l c h o i c e

- o f

- l a w c l a u s e s a r e g i v e n e f f e c t i f t h e 4

l a w c h o s e n b y t h e p a r t i e s ( 1 ) h a s a r e a s o n a b l e r e l a t i o n s h i p t o t h e p a r t i e s a n d t h e

c h o s e n s t a t e a n d ( 2 ) i s n o t c o n t r a r y t o a f u n d a m e n t a l p o l i c y o f t h e s t a t e

. I n t ’ l 5

I n t e r e s t s

, L

. P

. v

. H a r d y

, 4 4 8 F

. 3 d 3 0 3

, 3 0 6

- 0 7 ( 5 t h C i r

. 2 0 0 6 )

. S t r a t e g i c ’ s

p r i n c i p a l p l a c e o f b u s i n e s s i s i n P e n n s y l v a n i a

, t h u s e s t a b l i s h i n g a r e a s o n a b l e

r e l a t i o n s h i p

. S e e S a l a z a r v

. C o a s t a l C o r p

. , 9 2 8 S

. W

. 2 d 1 6 2

, 1 6 7 ( T e x

.

A p p

. — H o u s t o n [ 1 4 t h D i s t

. ] 1 9 9 6

, n o w r i t ) ; C h a s e M a n h a t t a n B a n k

, N

. A

. v

.

G r e e n b r i a r N

. S e c t i o n I I

, 8 3 5 S

. W

. 2 d 7 2 0

, 7 2 5 ( T e x

. A p p

. — H o u s t o n [ 1 s t D i s t

. ]

1 9 9 2

, n o w r i t )

. F u r t h e r

, w e f i n d n o v i o l a t i o n o f a f u n d a m e n t a l s t a t e p o l i c y

, a s

T e x a s c o u r t s h a v e d e n i e d a t t o r n e y s ’ f e e s i f p r o h i b i t e d b y t h e s t a t e l a w

Ult im atel y, we need not engage in an in

- d e p t h analys is as to wh at type of st ipul atio ns the

par tie s mad e, as we find that Penns ylvania law gove r n e d this cas e regar dle ss of the

st ipul atio ns.

To det erm ine wh ich st ate ’ s s u b s t a ntive law s cont rol, we fol low the choi ce- of- law 4

pr incip les of

the for um s tat e. Kla xon Co. v. Stentor Elec. Mfg. Co. , 313 U. S. 487, 496 (194 1);

Smi th v

. EMC Corp

. , 393 F.3d 590

, 597- 98 ( 5th Cir. 200 4).

In C aton

, we held that a fed eral cour t has an obligat ion to app ly the for um st ate’ s 5

choi ce- of- law rule s even if t h e par tie s are in agree me nt as to the cont roll ing law

. Caton v.

Leac h Corp

., 896 F.2d 939, 942 (5t h Cir. 1990) ; see al so Kre ger v. Ge n. Steel Corp

. , No. 07-5 75,

2010 U. S. Di st

. LEXIS 86043, at *32 (E. D. La. July 19, 2010) (c itin g Caton and st ating that

wh ile othe r cir cuit s mi ght have conc lude d t h a t c h o ice of law ques tio ns can be st ipul ated or

wa ived, t he Fift h Cir cuit has no t)

.

5 Case: 10-10185 Document: 00511312864 Page: 5 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

d e s i g n a t e d i n a c h o i c e

- o f

- l a w p r o v i s i o n

. S m i t h

, 3 9 3 F

. 3 d a t 5 9 7

- 9 8

. T h u s

,

P e n n s y l v a n i a l a w g o v e r n e d t h e s u b s t a n t i v e i s s u e s i n t h i s c a s e a n d

,

c o n s e q u e n t l y

, t h e a w a r d o f a t t o r n e y s ’ f e e s

. I n g a l l s S h i

p b u i l d i n g v

. F

e d

. I n s

. C o

,

4 1 0 F

. 3 d 2 1 4

, 2 3 0 ( 5 t h C i r

. 2 0 0 5 ) ( “ T h e a w a r d o f a t t o r n e y s ’ f e e s i s g o v e r n e d b y

t h e l a w o f t h e s t a t e w h o s e s u b s t a n t i v e l a w i s a p p l i e d t o t h e u n d e r l y i n g c l a i m s

. ” ) ;

K u c e l v

. H e l l e r & C o

. , 8 1 3 F

. 2 d 6 7

, 7 3 ( 5 t h C i r

. 1 9 8 7 ) ( n o t i n g t h a t T e x a s l a w m a y

c o n t r o l t h e a w a r d o f f e e s

, n o t b e c a u s e T e x a s i s t h e f o r u m s t a t e

, b u t o n l y b e c a u s e

T e x a s l a w g o v e r n s t h e o t h e r s u b s t a n t i v e r i g h t s )

.

A d d i t i o n a l l y

, w e f

i n d u n p e r s u a s i v e S M I ’s c o n t e n t i o n t h a t S t r a t e g i c w a i v e d

a n y a r g u m e n t t h a t a t t o r n e y s ’ f e e s i n t h i s c a s e w e r e u n r e c o v e r a b l e u n d e r

P e n n s y l v a n i a l a w b e c a u s e S t r a t e g i c f a i l e d t o a s s e r t s u c h a n a r g u m e n t a s a n

a f f i r m a t i v e d e f e n s e

. A l t h o u g h r e l i a n c e o n a s t a t u t e p r o h i b i t i n g r e c o v e r y m a y 6

b e a n a f

f i r m a t i v e d e f

e n s e s u b j e c t t o w a i v e r

, S t r a t e g i c d i d n o t r e l y o n s u c h a

s t a t u t o r y b a r o r p l e a i n a v o i d a n c e

. S e e

, e

. g

. , I n g r a h a m v

. U n i t e d S t a t e s

, 8 0 8 F

. 2 d

1 0 7 5

, 1 0 7 9 ( 5 t h C i r

. 1 9 8 7 ) ( s t a t i n g t h a t a n a v o i d a n c e i n p l e a d i n g s i s a n

“ a l l e g a t i o n o r s t a t e m e n t o f n e w m a t t e r

, i n o p p o s i t i o n t o a f o r m e r p l e a d i n g

,

w h i c h

, a d m i t t i n g t h e f a c t s a l l e g e d i n s u c h f o r m e r p l e a d i n g

, s h o w s c a u s e w h y

t h e y s h o u l d n o t h a v e t h e i r o r d i n a r y l e g a l e f f e c t ” ( c i t a t i o n o m i t t e d ) )

. R a t h e r

,

S t r a t e g i c d e n i e d a n i n t r i n s i c e l e m e n t o f S M I ’ s c l a i m f o r a t t o r n e y s ’ f e e s

— t h a t

P e n n s y l v a n i a l a w a l l o w e d r e c o v e r y o f f e e s i n a b r e a c h o f c o n t r a c t a c t i o n

, a b s e n t

We rejec t the noti on that the Penns ylvania rule s of civil pr oce dur e govern this cas e. 6

Altho ugh in a diver sit y cas e, Penns ylvania law may det erm ine wh ethe r a def ens e cons tit utes

an a ff irm ative def

ens e, the Fede ral Rules of Civil Pr oce dur e go vern how a par ty mus t ple ad

that def ens e in fed eral cour t. See F E D

. R. C I V

. P. 8; F E D

. R. C I V

. P. 81(c ); Gr anny Go ose Foods

v. Bhd. of Tea ms ters & Auto Truc k Dr iv ers

, 415 U. S. 423, 437 (197 4) (“ Mo re im por tant ly, once

a cas e has been rem oved to f e d eral cour t, it is se ttl ed that fed eral rat her than st ate law

governs the fut ure cour se of pr oce edi ngs, notw iths tand ing st ate cour t ord ers is sue d pr ior to

rem oval. ”) ; Ar is me ndez v. Ni ghtingal e Ho me He al th C a r e

, In c

. , 493 F.3d 603, 610 (5t h Cir.

2007) (st ating tha t in a divers ity act ion, “ sub st antive stat e law dete rm ines what cons tit utes

a n aff irm ative def

ens e” and the Fede ral Rules of Civil Proc edur e “p rovid e the m a n n e r a n d

tim e i n w hich def

ens es ar e r ais ed and wh en wa iver occ urs ” (c itat ion om itt ed) ).

6 Case: 10-10185 Document: 00511312864 Page: 6 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

v e x a t i o u s o r s i m i l a r c o n d u c t

. S e e i d

. ( n o t i n g t h a t i n d e t e r m i n i n g w h e t h e r a 7

d e f e n s e c o n s t i t u t e s a n a f f i r m a t i v e d e f e n s e

, t h e c o u r t i n q u i r e s i n t o w h e t h e r t h e

“ m a t t e r a t i s s u e f a i r l y m a y b e s a i d t o c o n s t i t u t e a n e c e s s a r y o r e x t r i n s i c e l e m e n t

i n t h e p l a i n t i f

f ’ s c a u s e o f a c t i o n ” )

. T h u s

, S t r a t e g i c ’ s a r g u m e n t a p p e a r s s i m i l a r

t o a d e f e n s e t h a t S M I f a i l e d t o s t a t e a c l a i m u p o n w h i c h r e l i e f c a n b e g r a n t e d

,

a n d S t r a t e g i c a s s e r t e d s u c h a d e f e n s e i n i t s r e p l y t o S M I ’ s c o m p l a i n t

. F u r t h e r

,

S t r a t e g i c ’ s d e n i a l o f a l l a l l e g a t i o n s i n S M I ’ s P r a y e r f o r R e l i e f

, a s w e l l a s

S t r a t e g i c ’ s s p e c i f

i c d e n i a l t h a t S M I w a s e n t i t l e d t o a t t o r n e y s ’ f e e s s u f f i c e d t o p u t

t h i s m a t t e r a t i s s u e

. S e e F E D

. R

. C I V

. P

. 8 ( r e q u i r i n g s h o r t a n d p l a i n s t a t e m e n t 8

o f c l a i m s a n d d e f

e n s e s ) ; S i m o n v

. U n i t e d S t a t e s

, 8 9 1 F

. 2 d 1 1 5 4

, 1 1 5 7 ( 5 t h C i r

.

1 9 9 0 ) ( n o t i n g t h a t i f a p a r t y r a i s e s a n i s s u e a t a “ p r a g m a t i c a l l y s u f f i c i e n t t i m e

, ”

a n d t h e o p p o s i n g p a r t y i s n o t p r e j u d i c e d i n i t s a b i l i t y t o r e s p o n d

, t h e r e i s n o

w a i v e r o f t h e c l a i m o r d e f e n s e ( c i t a t i o n o m i t t e d ) )

.

W e a l s o d o n o t f

i n d t h a t S t r a t e g i c w a i v e d i t s a r g u m e n t t h a t P e n n s y l v a n i a

l a w d e n i e d r e c o v e r y o f a t t o r n e y s ’ f e e s b e c a u s e S t r a t e g i c f a i l e d t o a s s e r t t h i s

d e f e n s e w i t h s p e c i f

i c i t y i n t h e P r e t r i a l O r d e r

. T h e c h o i c e

- o f

- l a w p r o v i s i o n i t s e l f

,

t h e s t i p u l a t i o n s a s t o P e n n s y l v a n i a l a w i n t h e P r e t r i a l O r d e r

, a n d S t r a t e g i c ’ s

o p e n i n g a r g u m e n t s a t t h e t r i a l a l l p r o v i d e d n o t i c e t o t h e d i s t r i c t c o u r t a n d t o

S M I a n d t h u s p r e s e r v e d t h e c h o i c e

- o f

- l a w i s s u e

. S e e E m p ’ r s I n s

. o f W a u s a u v

. 9

S MI adm itt ed in its r epl y br ief that it coul d find no autho rit y for the ass ert ion that 7

the nonexist ence of a st atut e pr ovidi ng rec overy of attor neys ’ fee s const itut ed an aff irm ative

def ens e.

We note that even if Str ategic ’s argum ent qualif ied as an aff

i r m a t i v e d efe nse and 8

Str ategic fai led to asse rt it pr ope rly, SM I st ill had the burd en to pr ove that it wa s enti tle d to

att orne ys’ f

ees und er Penns ylvania law

.

Und er Texas pr oce dur al law

, a par ty wi shi ng to ass ert a choi ce- of- law i s s ue mus t 9

ple ad and pr ove the app lica bilit y of t hat law or requ es t that the cour t tak e jud icia l n oti ce of

it. Ge vi nson v. M

anha ttan Co nst. Co. of Okl a. , 449 S. W.2 d 458, 465 n.2 (Tex. 196 9); see a ls o

T E X

. R. E V I D

. 202 (d etai ling me thod of pr oving anot her st ate’ s law ). Ot herw ise

, a Texas cour t

pr es ume s that t he law of t he for eign juris dic tio n is the sam e as the for um st ate and app lies

the law of the for um stat e. Id. How ever, the Feder al Rules of Civil Proce dur e and Eviden ce

7 Case: 10-10185 Document: 00511312864 Page: 7 Date Filed: 12/06/2010N o

. 1 0

- 1 0 1 8 5

O c c i d e n t a l P e t r o l e u m C o r p

. , 9 7 8 F

. 2 d 1 4 2 2

, 1 4 3 0 n

. 8 ( 5 t h C i r

. 1 9 9 2 ) ( s t a t i n g t h a t

a p a r t y i n t e n d i n g t o r a i s e a c h o i c e

- o f

- l a w i s s u e h a s a n o b l i g a t i o n t o c a l l t h e

a p p l i c a b i l i t y o f a n o t h e r f o r u m ’ s l a w t o t h e c o u r t ’ s a t t e n t i o n ) ; K u c e l

, 8 1 3 F

. 2 d a t

7 3 ( f i n d i n g a p a r t y d i d n o t w a i v e a c h o i c e

- o f

- l a w p r o v i s i o n

, a s t h e p r o v i s i o n i t s e l f

p r o v i d e d n o t i c e

, t h e p a r t y r a i s e d t h e i s s u e i n i t s m o t i o n s t o d i s m i s s

, a n d t h e

p r e t r i a l o r d e r d i d n o t p r e c l u d e c o n s i d e r a t i o n o f c h o i c e

- o f

- l a w i s s u e s )

.

F i n a l l y

, w e r e j e c t S M I ’ s a r g u m e n t t h a t i t s u f f e r e d p r e j u d i c e b e c a u s e

,

b e l i e v i n g t h a t T e x a s l a w a p p l i e d t o a t t o r n e y s ’ f e e s

, S M I c h o s e n o t t o o f f e r

e v i d e n c e t o e s t a b l i s h a n a l t e r n a t i v e g r o u n d o f r e c o v e r y f o r s u c h f

e e s u n d e r

P e n n s y l v a n i a l a w

. S M I b a s e s t h i s a r g u m e n t o n S t r a t e g i c ’ s a l l e g e d l y m e r i t l e s s 1 0

d e f e n s e t o t h e b r e a c h o f c o n t r a c t i s s u e

, a m a t t e r s q u a r e l y p r e s e n t e d a t t r i a l a n d

n o t e x t r a n e o u s t o t h e d i s p u t e s a l r e a d y b e f o r e t h e c o u r t

. H a v i n g h e a r d a l l t h e

e v i d e n c e

, i n c l u d i n g t h e e v i d e n c e o f S t r a t e g i c ’ s a l l e g e d b a d f a i t h i n a s s e r t i n g a

d e f e n s e

, t h e d i s t r i c t c o u r t f o u n d i n s u f

f i c i e n t s u p p o r t i n t h e r e c o r d f o r a n a w a r d

o f a t t o r n e y s ’ f e e s a s a s a n c t i o n f o r a n y c o n d u c t o n t h e p a r t o f S t r a t e g i c

. A s S M I

h a s n o t s h o w n a n y e r r o r a s t o t h i s h o l d i n g

, w e w i l l n o t d i s t u r b i t

, a n d S M I

c a n n o t e s t a b l i s h p r e j u d i c e f r o m t h e a l l e g e d s u r p r i s e

.

I V

. C o n c l u s i o n

B e c a u s e w e f

i n d n o e r r o r i n t h e d i s t r i c t c o u r t ’ s d e c i s i o n t o d e n y S M I ’ s

m o t i o n t o o b t a i n a t t o r n e y s ’ f e e s t h a t a r e u n r e c o v e r a b l e u n d e r P e n n s y l v a n i a l a w

,

w e A F F I R M

.

govern this cas e and unde r our cir cuit ’s pr ece dent

, a par ty mus t sim ply bring the choi ce- of- law

iss ue to the cour t’s at tent ion in tim e for the cour t to cons ide r it. Kuce l

, 813 F.2d at 73. The

par ty need not ple ad and pr ove the cont ent of the forei gn law or show that it dif fer s from the

law of the for um st ate, as fed eral cour ts mus t tak e judic ial noti ce of the cont ent of the law s of

every st ate. Id.

Pennsylvani a l aw al low s a p art icip ant to rec eive couns el fee s as a sanct ion agains t 1 0

anot her par tic ipan t for d ilat ory, ob dur ate, or vexat ious c ondu ct. 42 P A

. C O N S

. S T A T

. § 2 503( 6), ( 7), ( 9) (200 4).

8 Case: 10-10185 Document: 00511312864 Page: 8 Date Filed: 12/06/2010