IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-20485

STEVEN TURNER, 

 Plaintiff - Appellee

v.

GERALD YOUNG; HOPEWELL RISK STRATEGIES, L.L.C., 

 Defendants-Third Party Plaintiffs - Appellants

v.

CPST, INCORPORATED; HEALTH COST CONTROL, INCORPORATED, 

 Third Party Defendants - Appellees

Appeal from the United States District Court 

for the Southern District of Texas

USDC No. 4:15-CV-3152

Before DENNIS, OWEN, and SOUTHWICK, Circuit Judges.

PER CURIAM:*

We are tasked with reviewing the sufficiency of the evidence supporting

a district court’s judgment for plaintiff, following a two-day bench trial on

breach of contract and Lanham Act claims. We AFFIRM.

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

October 18, 2018

Lyle W. Cayce

Clerk

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I

In 2006, Plaintiff Steven Turner purchased Moody Review, Inc., a 

medical bill review company with whom he had been employed for nearly a 

year. Generally, medical review companies, including Moody Review, review 

medical bills for insurers and third-party administrators to identify which bills 

should be reduced or denied. Turner then sold substantially all the assets of 

Moody Review to Hopewell Risk Strategies, L.L.C. (Hopewell), a newly formed 

entity owned by Gerald Young and Robert Clemente, in 2009. The purchase 

agreement for this transaction set out a schedule for payment over time based 

in part on a formula. 

A subsequent lawsuit between the parties led to a settlement agreement, 

which is the contract at issue in this appeal. The settlement agreement 

provided, among other things, for Hopewell to make monthly payments to 

Turner. Additionally, the agreement provided that Turner and his companies, 

CPST, Inc. (CPST) and Health Cost Control, Inc. (HCC), would refrain from 

using trade names or trademarks now belonging to Hopewell, “including, but 

not limited to: ‘Moody’, ‘Moody Review’, [and] Moody Review, Inc.’ . . . for the 

purpose of, or in connection with, any trade or business in the medical bill 

review industry.” 

Pursuant to the settlement agreement, Young, through Hopewell, made 

monthly payments from June 2012 through July 2013. However, in August 

2013, Turner did not receive the monthly payment and emailed Young to 

inquire. In his response the following day, Young attached a letter, stating 

“[l]ast month it was brought to my attention that you and/or one of your 

companies (CPST and [HCC]) are still using ‘Moody Review’ in the 

marketplace. As a result, you have committed a material breach of the 

Settlement Agreement.” Young further stated in the letter that Hopewell “will 

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no longer make any of the monthly payments that would otherwise be due to 

[Turner].” 

Turner again emailed Young, asking Young to provide the “who, what, 

where, and when,” so that he “can look into it and make sure that whomever 

is in error is corrected immediately.” Young responded that Turner’s client, 

DakotaCare, “must believe they are working with Moody Review”1 because 

“[s]everal of their denial codes point out that the Bill Review was done by 

Moody Review.”2 In six of over 300 codes used by Turner’s client DakotaCare, 

the narrative stating the reason for denial stated that Turner’s company had 

performed the review, following the reference to Turner’s company with “(aka 

Moody Review, Inc.)” or “(aka Moody Review’s).” 

Hopewell later raised another ground for stopping payment. Shortly 

after the settlement agreement was signed in June 2012, Hopewell’s director 

of information systems made a phone call to a phone number associated with 

CPST, one of Turner’s companies, and recorded the answering message when 

no one picked up. That message, created by an employee of CPST, stated: 

“Thank you for calling CPST and Moody Review.” Hopewell and Young 

asserted at trial that the failure to change the recorded answering message 

after the settlement agreement constituted a material breach; however, 

Hopewell continued to make payments on the settlement agreement after 

learning of the message, and the issue was not raised until over a year later at 

an attempted mediation of the parties’ dispute.

 

1 Young’s email response also raised as a material breach that an ad in the Yellow 

Pages for Moody Review contained a phone number that “belongs to [Turner] or [Turner’s] 

companies.” However, Hopewell and Young abandoned this claim long before trial. 

2 Denial codes are statements of reasons, available online, corresponding with a 

numerical code that appears on a reviewed medical bill and explains to health care providers 

why certain expenses were denied.

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Turner filed suit in October 2015, alleging breach of contract against 

Hopewell and Young, who brought counterclaims for breach of contract and 

violation of the Lanham Act against Turner and third-party defendants CPST 

and HCC, Turner’s two companies. Although the parties’ earlier pleadings 

asserted multiple claims, the trial proceeded only on their competing breach of 

contract claims, as well as Hopewell and Young’s Lanham Act claim. At trial, 

Turner dropped his claim against Young and only asserted a breach of contract 

claim against Hopewell. Hopewell and Young argued that Turner materially 

breached the contract by maintaining a voicemail recording that referenced 

Moody Review and by their client DakotaCare’s references to Moody review in 

denial codes, entitling them to relief and excusing their own breach. Hopewell 

and Young also asserted that evidence of phone calls to Hopewell related to 

services provided by one of Turner’s companies shows confusion in the 

marketplace regarding the identity of the Moody Review name. 

After a two-day bench trial, the district court detailed its conclusions in 

a thirty-four-page order, finding that Hopewell materially breached the 

settlement agreement by stopping payment to Turner in August 2013, and that

“[n]o other party materially breached the [s]ettlement [a]greement prior to 

Hopewell’s material breach.” According to the district court, there was no 

evidence that any of Turner’s or his companies’ conduct following execution of 

the settlement agreement caused confusion in the marketplace, and 

DakotaCare’s references to Moody Review in its denial codes, and “CPST’s 

continued use of the Moody Review name in its telephone answering message 

in the two weeks or so after execution of the [s]ettlement [a]greement,” were 

not material breaches of the settlement agreement. The district court entered 

judgment in favor of Turner in the amount of $407,856.28, and additionally 

denied relief on Hopewell’s and Young’s Lanham Act claims. 

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On appeal, Hopewell and Young challenge the sufficiency of the evidence 

supporting the district court’s findings that the alleged breaches were not 

material, and contend that the district court clearly erred in finding Turner’s 

testimony credible.3

II

“The standard of review for a bench trial is well established: findings of 

fact are reviewed for clear error and legal issues are reviewed de novo.” In re 

Mid-S. Towing Co., 418 F.3d 526, 531 (5th Cir. 2005). “Findings of fact, 

whether based on oral or other evidence, must not be set aside unless clearly 

erroneous, and the reviewing court must give due regard to the trial court’s 

opportunity to judge the witnesses’ credibility.” FED. R. CIV. P. 52(a)(6). “A 

finding is clearly erroneous if it is without substantial evidence to support it, 

the court misinterpreted the effect of the evidence, or this court is convinced 

that the findings are against the preponderance of credible testimony.” Bd. of 

Trustees New Orleans Employers Int’l Longshoremen’s Ass’n v. Gabriel, Roeder, 

Smith & Co., 529 F.3d 506, 509 (5th Cir. 2008). However, “[w]hen the ‘district 

court’s account of the evidence is plausible in light of the record viewed in its 

entirety, the court of appeals may not reverse.’” Ruiz v. Medina, 980 F.2d 1037, 

1038 (5th Cir. 1993) (quoting Anderson v. City of Bessemer, 470 U.S. 564, 574 

(1985)). We apply the substantive law of the state of Texas in this diversity 

action. See Gebreyesus v. F.C. Schaffer & Assoc., Inc., 204 F.3d 639, 642 (5th 

Cir. 2000).

 

3 Hopewell and Young also contend that the district court erred in finding that 

Hopewell elected to treat the contract as continuing in effect after learning of the voicemail 

answering message, which they later alleged was a material breach of contract, because this 

finding relies on a counter-defense that Turner was required, and failed, to affirmatively 

plead. “[T]reating a contract as continuing after a breach deprives the nonbreaching party 

of any excuse for terminating his or her own performance.” 14 TEX. JUR. 3D CONTRACTS § 

311. Because we affirm the district court’s primary finding, we do not reach this secondary 

issue.

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III

Under Texas law, which follows the Restatement (Second) of Contracts, 

the fact-finder should consider the following factors to determine the 

materiality of an alleged breach: (1) “the extent to which the nonbreaching

party will be deprived of the benefit that it could have reasonably anticipated 

from full performance”; (2) “the extent to which the [nonbreaching] party can 

be adequately compensated for the part of that benefit of which he will be 

deprived”; (3) “the extent to which the party failing to perform or to offer to 

perform will suffer forfeiture”; (4) “the likelihood that the party failing to 

perform or to offer to perform will cure his failure, taking account of all the 

circumstances including any reasonable assurances”; and (5) “the extent to 

which the behavior of the party failing to perform or to offer to perform 

comports with standards of good faith and fair dealing.” Hernandez v. Gulf 

Group Lloyds, 875 S.W.2d 691, 693, n.2 (Tex. 1994); see also RESTATEMENT 

(SECOND) OF CONTRACTS § 241 (AM. LAW INST. 1981). 

The district court concluded that neither CPST’s voicemail answering 

message making reference to Moody Review, nor DakotaCare’s denial codes 

containing similar references, was a material breach. The district court’s 

detailed factual findings provide ample support for this conclusion. With 

respect to the voicemail answering message allegations, the district court made 

findings pertinent to four of the five Restatement factors. With regard to 

factors one and two, the district court found that CPST changed its voicemail 

answering message shortly after the settlement agreement, that “[n]o 

customer or potential customer of Hopewell is shown to have ever been 

confused” by the message, and that “Hopewell sustained no injury, harm, or 

loss” because of the message. As to factors four and five, the district court 

determined that “[n]either Turner nor CPST acted in bad faith or intentionally 

delayed changing CPST’s recorded telephone message.” As for DakotaCare’s 

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use of the name Moody Review in its denial codes, the district court made 

several findings going directly to the materiality factors, including that 

“Turner notified DakotaCare to refer no longer to CPST as Moody Review,” and 

otherwise “promptly took action to dissociate himself and his businesses . . . 

from Moody Review;” that “DakotaCare has sole control over the content of its” 

denial codes, only six of DakotaCare’s 300 denial codes referenced Moody 

Review, these references could easily have meant “fka” or “formerly known as,” 

and “it is very difficult for a medical bill review company to get a client to 

change the content of its [denial codes];” and “Hopewell sustained no injury, 

harm, or loss attributable to Turner, CPST, or HCC by reason of DakotaCare’s 

parenthetical reference to ‘aka Moody Review, Inc.’” To the extent Young and 

Hopewell allege that any other conduct constitutes prior material breaches by 

Turner or his companies, the district court found such conduct “pre-dat[ed] the 

[s]ettlement [a]greement” and, in any event, did not “constitute[] a material 

breach.” 

Despite these comprehensive findings, Hopewell and Young argue that 

“the district court’s findings largely bypass [the materiality] factors,” reflecting 

legal error. Although the district court’s fact findings do not track the 

materiality factors verbatim, such precision is not required. Instead, the 

district court was entitled to—and did—tailor its findings to the facts of the 

case, accounting for the flexible and fact-bound nature of the materiality 

determination. See RESTATEMENT (SECOND) OF CONTRACTS § 241 cmt. a

(noting materiality factors “to be applied in the light of the facts of each case 

in such a way as to further the purpose of securing for each party his 

expectation of an exchange of performances,” and that “[t]his Section . . . states 

circumstances, not rules, . . . to be considered in determining whether a 

particular failure is material”). Accordingly, we perceive no legal error in the 

district court’s materiality conclusions.

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The district court’s detailed findings were also supported by substantial 

evidence and were “plausible in light of the record viewed in its entirety.” See 

Ruiz, 980 F.2d at 1038 (quoting Anderson, 470 U.S. at 574). The district court’s 

findings reflect direct reliance on trial testimony from multiple witnesses. For 

example, Turner testified regarding efforts he took to dissociate from Hopewell 

and Moody Review, a Hopewell employee and Young both admitted their 

response to the voicemail alleged breach was delayed, and little, if any, specific 

evidence was presented about any harm caused by the alleged breaches. The 

district court also explicitly rested many of its findings on witness credibility, 

further reflecting that its findings should not be disturbed. See Guzman v. 

Hacienda Records & Recording Studio, Inc., 808 F.3d 1031, 1039 (5th Cir. 

2015) (“[C]redibility determinations . . . are entitled to great deference on 

appeal, as only the trial judge was positioned to observe the demeanor of 

[witnesses] and to adjudge the veracity of their testimony.”). Finally, despite 

Hopewell and Young’s argument that inconsistencies and contradictory 

documentary evidence indicate that the district court erred in relying on 

Turner’s testimony, no real inconsistencies exist in Turner’s testimony, and no 

documentary evidence directly contradicts it. In short, Hopewell and Young’s

“assertion that the trial court clearly erred . . . essentially rests upon a line of 

reasoning that asks us to reweigh the evidence and decide credibility questions 

differently,” which we will not do. Reich v. Lancaster, 55 F.3d 1034, 1052 (5th 

Cir. 1995). Accordingly, the district court did not clearly err in finding that 

Turner did not materially breach the contract, and correctly concluded that 

Hopewell’s breach of contract was not excused.

We therefore AFFIRM.

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