### INTHE UNI TED S TATESCOU RT OFAPPEALS FORTHE FIFTH CIRCU IT

N o. 08- 10144

AG ACC EP TA NCE CORP ORAT I ON; RAB O AGRI FI NANCE I NC P l ai n t i f fs- A pp el l ees v. ROBERT W AYNE VE I GEL; S TE VE V EI GEL; T ERRA XXI L TD; VEI GEL CAT TL E COM PA NY; T ERRA PA RT NERS ; BURNETT & VEI GEL I NC; W I L L I AMS & V EI GE L I NC; KI RK& V EI GE L I NC; MAS S EY , KI RK& VEI GEL I NC D efen da n t s- A pp el l an t s

A p p ea lf

rom the U n i ted S tates D i stri ct C ou rt f or t h e N ort h ern D i st ri ctof T exas
B ef ore R E AV L E Y , B A R K S D A L E , an d G A R Z A , C i rcui t Ju dg es . E M ILIO M
. G A R Z A , C i rcui tJu dg e: I n t hi s pr ope r t y di sput e, cr edi t or s A G A c c ept ance C or por at i on and R abo A gri f i n an ce Inc. ( col l ect i vel y, t h e “ C redi t ors” ) f i l ed su i t against deb t ors R obert Vei ge l , hi s fam i l y m e m be r s , a nd v ar i o us fam i l y- r e l at e d e nt i t i e s (c o l l e c t i ve l y, t he

“V ei gel s” )

. T h e C r edi t or s so ught t o q ui ett i t l e t o 9 60 ac r es of l and ( t he “ 960 A cres ” ) previ ou sl y u sed i n t h e V ei gel s’far m i n g operati on s. F ol l ow i n g a ben ch t r i al , t h e d i st ri ctc o ur te nt e r e d a de c l ar at o r y j udg m e nts pe c i f yi ng t hat( 1) t he C redi t ors properl y f orecl osed an d execu t ed on the 96 0 A cres , ( 2) t h e V ei gel s’ att em pts t o t ran sfer t h e property w ere f rau du l en t un d e r the T exas U n i f orm United States Court of App eals

Fifth Circuit 

### F I L E D April 1, 2009 Cha rl es R. F ulb ru g e II I ClerkN o. 08- 10144

2 F r a u d u le n t T r a n s fe rA c t (“ T U F T A ”), T EX . B US
. & C OM
. C ODE § 24. 001 e tse q ., a n d (3 ) th e C r e d ito r s w e r e e n tit le d t o a tt o r n e y ’ s fe e s . T h e V e ig e ls n o w a p p e a l. Fort he f

o l l o w i ng r e as o ns , w e r e ve r s e t he aw ar d of at t o r ne y’ s fe e s a nd a f f i r m t he ju d g m e n t in a ll o th e rre s p e c ts
. I Th i s c as e i nvol ves t w o s epar at e pr ope r t y i nt e r e s t s i n t he 9 6 0 A c r es — a 25% i n t erestan d a 75 % i n t erest
. Pri or t o th e e ven t s ati ssue, R obertV ei gelow n ed t he 2 5% i nt e r e s ta nd c e r t ai n o f hi s r e l at i ve s (t he “Vei ge lRel at i ve s ” ) o w ne d t he 7 5 % in te r e s t. F o rcla r ity , t h e s u b s e q u e n t h is to r y o f e a c h p r o p e r ty in te r e s t w ill b e d is c u s s e d s e p a r a te ly

. In 2 0 0 1 , th e V eigel R elati ve s sold t h e 75 % i n teres t to A G A ccep tan c e , a c r e d i t o ro f

t h e Ve i g e lfa m i l y ’ s fa r m i n go p e r a t i o n . The f o l l o wi n gy e a r , AG A c c e p ta n c e a g r e e d to s e ll th e 7 5 % in te r e s t b a c k to T e r r a X X I, a V e ig e l-fa m ily
en t i t y. In A u gu stof 20 03, A G A ccept an ce t ran sferred t h e 75% i n t erestt o T erra X X I, w h i ch i n t u rn exec u t ed a n ot e an d deed of t rust as securi t y f or t h e pu rchase pri ce. T h e d ay af

t er executi n g t h e note, T erra X X I t ran sferred t h e 75% i n t erest t o T erra Pa rt n ers, an ot h er V ei gel -fam i l y en t i t y. N ei t h er Terra X X I n or Terra Pa r t n e r s e v e r m a d e a p a y m e n to n t h e n o t e t o AG Ac c e p t a n c e . Ac c o r d i n g l y , AG A c c e p ta n c e fo r e c lo s e d o n th e 7 5 % in te r e s t in O c to b e r o f 2 0 0 3
. I n 2000, R obe r tV ei gell eas ed hi s 25% i nt er es t to T er r a P ar t ner s. In 20 03, as A G A ccept an ce m oved to col l ecton d ebts ow ed by the V ei gel s, R obertV ei gel
ex ecu ted a lea se m od i fi ca ti on ex ten d i n g th e T erra P a rtn ers lea se u n ti l20 1 2
. In 20 06 , a s c r e di t o rRabo Agr i f i nanc e m o ve d t o c o l l e c t o n o t he r de bt s o w e d b y t he V e ig e ls , R o b e r t V e ig e l e x e c u te d a s e c o n d m o d ific a tio n e x te n d in g th e le a s e u n til 2021 and p erm i tti ng hi m se l f t o c l ai m a hom es t ead o n t he l and. Rabo A g r ifin a n c e s u b s e q u e n tly s e c u r e d a $ 3 .9 m illio n ju d g m e n t a g a in s t t h e V e ig e ls
a n d mo v e d t o e x e c u t e o n t h e 2 5 % i n t e r e s t i n sa t i s fac t i o n o f t h e j u d g m e n t
. As t hi s e xe c ut i o n pr o c e e di ng w as pe ndi ng, Rob e r t Vei ge la n d h i s w i fe f i l e d aN o. 08- 10144

3 h om est ead decl arati on on the 25% inter est
. H ow ever, t h e V ei gel s w ere denied h o m e s te a d p r o te c tio n , a n d R a b o A g r ifin a n c e e x e c u te d o n th e 2 5 % in te r e s t. In the i n sta n t c a s e, th e C red i tors i n i ti a l l y b rou gh t a d i ve rsit y a cti on to pa r t i t i o n t he 9 60 Ac r e s . W he n t he C r e di t o r s sub s e que nt l y ac qui r e d 1 00 % o f t he property, t h e c o m p l ai n tw as am en ded t o ess en t i al l y requ esta decl arator y j u d g m e n t (1 ) qu i et i n g t i t l e i n t h e property and ( 2) decl ari n g t h at t h e V ei gel s’ vari ou s t ran sfe rs an d l ease m odi f i cat i on s w ere “ f

rau du l en t t ran sfers” un der TU FTA

. I n res pon se, t h e V ei gel s c h al l en ged R abo A gri f i n an ce’ s executi on o n t he 25% i nt er es t , ar gui ng t hat t he i nt er es t w as a pr ot ec t ed hom es t ead underTexas l a w . T h ey also ch a l l en ge d A G A ccep tan ce’ s f ore cl osu re on the 75 % in te r est. Af t e ra b e nc h t r i al , t h e c o ur te nt e r e d j udg m e nti n fav o r o f t he Cr e di t o r s . The
c our tf ound t hat( 1) A G A ccep t ance val i dl y f or ec l os ed o n t he 75% i nt er es t , ( 2) R a b o A gr ifi n a n ce v a l i d l y e xe cu ted on the 25 % i n teres t, w h i ch w a s n ot a protec t ed h om est ead , an d ( 3) both t h e t ran sfer of t h e 75% i n t erestt o T erra P art n ers an d the l ease m odi f i cat i on s w ere f

rau du l en t u n der T U F T A

. Th e court al s o a wa r d e d a t t o r n e y ’ s fe e s t o t h e Cr e d i t o r s . Th e Ve i g e l s n o w c h a l l e nge t he ho m e s t e ad f

i ndi ng, t he f

r aud ul e nt
- t r ans fe r f i ndi ngs und e r TU FTA , a nd t he
a w a r d o f a tt o r n e y ’ s fe e s . II O n a ppe alf

r o m a b e nc h t r i al , w e r e vi e w f i ndi ngs o f

fac t f o r c l e are r r o ra nd l egal i ssues de no vo . Hou st on Explor ati on Co. v. Hall i bu rt on E n ergy Servs. , I n c. , 35 9 F. 3d 777 , 779 ( 5t h C i r . 2 00 4)

. “A f i ndi ng o f

fac t i s c l e ar l y e r r o ne o us w he n, al t ho ugh t he r e i s e vi de nc e t o s upp o r t i t , t he revi e w i ng c o ur t b as e d o n a l lt he evi den ce i s l ef

tw i t h t h e def

i n i t i ve an d f

i rm convic t i on t h at a m i st ak e ha s been
com m i tted.” Id . (in te r n a l q u o ta tio n m a r k s o m itt e d ).N o. 08- 10144

4 III A Th e Vei gel s c ont end t hat t he di st r i c t c our t er r ed i n f i ndi ng t hat t he 25% i nt e r e s tw as no ta ho m e s t e ad und e r Te xa s l aw. The Vei ge l s m ai nt ai n t hatt he pro per t y’ s st at us as a hom estead r ender ed i t ex em pt f r om ex ec ut i on by R abo A gri f i n an ce. W h et h er a c ert ai n parcelof lan d const i t u t es a hom est ead i s a q u e s tio n o f fa c t. Se e I n r e Ni l and , 8 2 5 F .2 d 8 0 1 , 8 0 6

– 0 7 (5 th C ir . 1 9 8 7 ). U nde rTe xa s l aw, a l and o w ne r m ayha ve o ne h om es t e ad t hati s e xe m pt fr o m e x e c u tio n b y c r e d ito r s . T EX . C ONST
. a r t
. XV I , § § 5 0– 51
. The pa r t y s e e ki ng ho m est ead pr o t e c t i o n ha s t he b ur de n o f e s t ab l i s hi ng t hata pa r c e lo f l and q u a lifie s a s a h o m e s te a d

. Chapm an v . O l bri ch , 217 S. W
. 3d 482, 495–96 ( Tex. A pp . — H ou st on [ 14th D i st
. ] 2 0 0 6 , n o pet. )

. W h en t h e l an dow n er does not act u al l y o c c upyt he l and ( as he r e ) , a ho m e s t e ad m ayb e e s t ab l i s he d i f t he l andow nerc an sho w ( 1) a pr e s e nti nt e ntt o o c c u p y a n d u s e t h e l a n d a s a h o me a n d (2 ) a n o v e r t a c t in f u r th e r a n c e o f th is in te n t. Far r i ngt o n v . Fi r s tNat ’lBank
of B ellv ille , 7 5 3 S .W .2 d 2 4 8 , 2 5 0 ( T e x . A p p .— H o u s to n [1 s t D is t.] 1 9 8 8 , w r it d en i ed ). A s to th e p rese n t- i n ten t p ron g, th e l a n d ow n er m u st sh ow a g oo d fa i th i nt e ntt o us e t he l and a s a ho m e “ i n a r e as o nab l e a nd d e f i ni t e t i m e i n t he futu re.” Id

. a t 2 5 0

– 5 1 ; seeal so K end allB u i l d ers , I

n c. v. C h ess on , 149 S. W
. 3d 796 , 809 ( T ex. A pp . — A u st i n 2 004 , p et
. den i ed) ( exp l ai n i n g t h at t h e i n t en t m u st b e “b o n a fid e ”); Ma tter o f C lafli n , 76 1 F. 2d 1 08 8, 1 09 1 ( 5t h Ci r . 1 98 5) ( e xp l ai ni ng th a t th e in te n t m u st b e fi x e d , n o t “co n tin g e n t” o n oth e r e v e n ts). A s t o t h e overt
- act pron g, t h e l an dow n er m u st show “ prepa rat i on s t ow ard act u alocc u pa n cy an d use t h at are of such characteran d h ave p roceeded to such
an e xt e nta s t o m an i festb e yo nd d o ubtt he i nt e nt i o n t o c o m pl e t e t he i m p rov em en ts an d reside u p on the place as a h om e.” F arri ngt on , 753 S. W
. 2d at 250 (i nt e r nal quo t at i o n m ar ks o m i t t e d)

. I n o t he r w o r ds , m e r e c o m m e r ci al or recr eati on aluse of t h e l an d i s gen eral l y i n suff i ci en t

— t h e l an dow n er m u stshowN o. 08- 10144

5 an ac tof

pr e pa r at i o n t o us e t he l and a s ah o me . S e e I n r e B r o wn , 191 B
. R
. 99, 101 –02 ( B an kr. N
. D
. T ex. 199 5) ( f i n di n g t h at t h e l an dow n ers fai l ed to est abli sh
a h om est ead becau se t h e t h ey “ di d not m ak e an y repai rs t o or t ak e a n y oth er o v e r t s te p s to m o v e b a c k in to th e . . . h o u s e ”). In t h e proceedi n gs below , th e V ei gel s argued t h at R obertV ei gel est abl i s he d a ho m e s t e ad o n t he 2 5% i nt e r e s t
. The y r e l i e d p r i m ar i l y o n t he ho m e s t e ad de c l ar at i o n s i gne d b y Robe r t Vei ge lde c l ar i ng hi s i nt e ntt o us e t he 96 0 Acr e s a s a fam i l y ho m e . H o w e ve r , a f t e r r e vi e w i ng t he e vi de nc e a nd t e s t i m o ny, t he di s t r i c tc o ur tf o und t hatRob e r t Vei ge l( 1) di d no t po s s e s s t he pr e s e nti nt e ntt o us e a ny po r t i o n o f t he 9 60 Acr e s as a ho m e and ( 2) di d no t t ak e a n y o v e r t a c t in fu r th e r a n c e o f h is a lle g e d in te n t. W e h old th a t t h e d i stri ct cou rt’ s f i n d i n gs w ere n ot cl ea rl y erro n eo u s. F i rst, th e r e w a s m o r e th a n e n o u g h e v id e n c e t o s u p p o r t a fin d in gth a t R o b e r t V e ig e l d id nothave a bo na f

i de i n t en tt o use t h e 960 A cres a s a h o m e. Th e evi den ce de m o ns t r at e d t hatRob e r tVei ge lha d ne ve r l i ve d on t he 9 60 Ac r e s , ha d no t s pe nt
a n i gh tt h ere s i n ce 1998 , an d conti n u ed to cl ai m a sepa ra te hom est ead on an ot h er t ractof

l an d that hi s fam i l y h ad occ u pi ed f or yea rs . A lthou gh R obert V ei gelat t em pt ed t o di st ance hi m se l f f r om t hi s al t er nat i ve hom es t ead cl ai m at t r i a l , t h e c o u r ta p p a r e n t l y c h o s e n o t t o c r e d i t t h i s t e s t i m o ny . S e e Cof f e lv. St r y ke rCor

p. , 284 F
. 3d 625 , 634 ( 5th C i r. 200 2) ( “ Intent i s a fact q u e stion uni que l y w i t hi n t he r e al m o f t he t r i e r o f

fact b e c aus e i t s o de pe nds upo n t he
c r e d ib ility o f th e w itn e s s e s a n d th e w e ig h t t o b e g iv e n th e irte s tim o n y .”). M o r e o ve r , t he pr o f

fe r e d ho m e s t e ad de c l ar at i o n i t s e l f fai l s t o es t ab l i s h t he
r e qui s i t e i nt e nt
. The do c um e nts t at e s t hatRob e r t Vei ge la nd hi s w i fe ha d t he “p re se n t in te n t to re sid e on [th e 9 6 0 A cr e s] i n t h e ev en t th a t th e irp r e v io u s ly assert ed hom est ead ri gh t s i n adj oi n i n g property are n ot j u di ci al l y al l ow ed aft er a f i nala ppe al” ( e m pha s i s a dde d)

. Gi vi ng t hi s l ang uag e i t s pl ai n m e ani ng, t he fam i l y’ s i n t en tt o l i ve on the 96 0 A cres dep en ded on thei r bei n g den i edN o. 08- 10144

Th e Ve i ge l s r e ly h e avilyon G ra ha m v. K leb , 20 08 WL 243 669(S.D. T ex . Jan. 2 9, 1 200 8) (unpubli shed), for the propositionthat the overt acts n eed not nece ssarily relate to th e estab lish ment of adwel li ng . I n Graham , th e di strict court uphel d th e b ankruptcycourt’s find ing that lan d o w n e rKleb had es tabl ish ed a hom es teadon a rur al pro per ty, even though Kl ebha d n ottake nanysp ecif icst ep s tow arde st ab li shin gadwe llin g . Id

. at *4– 5. Th e co urt reaso n e d th at th e p r o p e rty h a d b e e n i n Kl eb ’ s f a m ily f o r m a ny ye ar s a n d th at Kl ebh ad im pr oved th e prop ertyb ymaintainin groa ds , fe nce s, a n d hu ntin gb lin ds

. Id

. at* 4
. The Vei ge ls’ r eli anc e o n this case is misplaced. First, the district co urt in Grahamwas r eviewin g the bank rup tcy cou rt’ s fi ndin g in favo r of homestea d ri ghts for clearerror. Secon d, th e bankruptcycourt specificallycre dited Kleb’s tes t im on y t hath e inten ded tobuild a home a s so ona s hisf

in a nce s w ouldp er mit. Id . Thir d, indir ectc on t r as tto the case at han d, “[t]h e evidence showed th at Kleb ha d not cl aimed anyoth er p roperty as his homestea d.” Id . Finally, to the extentth at this unr eporte d federal c ase stands for the prop osition that th e ove rt act nee d not de monstrate a home-useinte nt, it isc le arlyinco n si st ent withT ex a s c a sel aw. See Farrin gton , 7 5 3S .W .2 d at 2 5 0
. 6 h o m e s te a d rig h ts in th e irp r im a r y re s id e n c e fo llo w i n g a s ta te -c o u r t a p p e a l. U nde rTe xa s l aw, t hi s t yp e o f c o nt i nge nti nt e nti s i ns uf f i c i e ntt o e s t ab l i s h a h o m e s te a d

. S ee Ma tter o f C lafli n , 7 61 F
. 2d a t 1 091 (f i n di n g t h at t h e l an dow n ers fai l ed to est abli sh a h om est ead becau se t h ey “ assert ed on l y a conti n gen t f u t u re in te n t t o m o v e to th e H o u s to n P r o p e r ty if [o n e s p o u s e ] c o u ld n o t e s ta b lis h h e r s e lf p r o fe s s io n a lly in A u s tin ” ). In t h e al t erna t i ve, t h ere i s al so suff i ci en t evi den ce t o sup port t h e di st ri ct court’ s f i n di n g t h at R obert V ei geldi d n ott ak e an y overtact i on i n f u rt h eran ce o f h i s a l l e g e d i n t e n t
. Th e Ve i g e l s e s s e n t i a l l y c o n c e d e t h a t h e d i d n o t t a ke a ny st eps t o bu i l d, pl an , or occupy a hom e on the 960 A cres . I n st ead , t h ey rel y on Robe r tVei ge l ’ s l o ng o w ne r s hi p and t he c o m m e r c i al i m pr o ve m e nt s m ad e t o t he property over t h e years, such a s i rri gati on system s an d t h e on - si t e of f i ce. Th ese are pl ai n l y n ot “ prepa rat i on s t ow ard act u al occupa n cy an d use t h at are of such ch a ra cter a n d h a ve p roce ed ed to su ch a n e xte n t a s to m a n i fest beyo nd d oubtt he in te n tio n to co m p le te th e im p r o v e m e n ts a n d r e s id e u p o n th e p la c e a s a h o m e .” 1 F arri ngt on , 7 53 S. W
. 2d at 250 ( e m pha s i s adde d and i nt e r nalquo t at i o n m ar ks
o m itt e d ).N o. 08- 10144

Our homeste ad holdingh as aseco nd conse que nce: The Vei ge ls also clai m the district 2 co urte rr edinf

in din gth e l ea semodif ic ation s tobe“fr au dule nt tr a n sf er s”un de r TUFTA

. On this point, th eyar gu e o nlyth at the 25% inte rest was a homeste ad p roperty and thu s exempt from TUFTA. B ecau se we find that th e 25% interest was not a homestea d, th e Veigels’ clai m of e rroro nthisp oint mu stf ail

. The Vei ge ls co nten d th at it was unnece ssaryfor the m to raiseth e vali d-lie n argument 3 below be cau se this ca se was tried to the be nc h. They cite Colo nial P ennI ns. v. Marke t Plan ners Ins. AgencyI nc. , 15 7F. 3 d 10 3 2 , 1 0 3 6

– 3 7( 5 thC ir

. 1 9 9 8), for the propositionth at a partymayr ais e a ni ssu e fo r th e firs t ti meonapp eal fo llowin gab enchtri al. Ho wever , Colo nial Pen nh olds only that aparty nee d not obj ect to acourt’s factual findin gs or l egal conclusions ino rd ert o pre se rve th e a pp eal of suchf in din g s an d co nclu sion s. Id . This hol ding doe s no t re li eve ap artyo f it s r es po n sib ilityf orr ais in gth e sub stantive le g al argu me ntsth at j u stif y re li ef durin gtri al. See Inre Lilje berg Enters., I

nc. , 304 F.3 d 410 , 468–69 ( 5t h Ci r . 20 02) (findingth at the party’s failure to raise a l egal argument durin g the bench trial c onstitute d waiver). Thus, the Vei ge ls waived th e vali d-lie n issue, and the extrao rdin ary -circu mstance s te stapp li eso nthisapp eal. 7 T h e d i stri ct cou rt did n ot cl ea rl y e rr i n f i n d i n g th a t t h e V eigels fa i l ed to
es t abl i sh a hom es t ead underTexas l aw . Acc or di ngl y, t he 25% in tere stw as properl y sub j ectt o executi on by R abo A gri f i n an ce. 2 B Th e Vei gel s nextc ont end t hat t he di st r i c t c ou rt e r r ed i n f i ndi ng t hat t h e t ran sfer o f the 75 % i n t erestt o T erra Pa rt n ers w as a f rau du l en t t ran sfer unde rTU FTA

. Fo rt he f i r s tt i m e o n appea l , t he Vei ge l s a r gue t hatt he t ran sact i on w as ex em pt f rom T U F T Ab ecau se the 75% inter estw as encu m bered b y a v a lid lie n a t t h e tim e o f th e tr a n s fe r . S ee T EX . B US
. & C OM
. C ODE A NN . § 2 4 .0 0 2 (1 2 ) & (2 ). U n der t h i s C i rcui t ’ s gen eral rul e, argu m en t s n ot rai sed bef ore t h e di st ri ct
c our tar e w ai ved and w i l lnotbe c ons i der ed o n appeal u n l ess t he par t y c an dem on st rat e “ extr aordi n ary ci rcum st an ces. ” S e e N
. Al am o W at e rSupp l

y Cor p. 3
v . Ci ty of

San Juan , 90 F
. 3d 910 , 916 ( 5th C i r. 199 6)

. “ E xtr aord in a ry c i r c u m s t a n c e s e x i s twh e n t h e i s s u e i n v o l v e d i s a p u r e q u e s t i o n o f l aw and a
m i sca rriag e of j u sti ce w ou l d resu l t from ou r fa i l u re to con sider i t. ” Id

. H e r e , t he V e ig e l s ’ b r ie fin gis d e v o id o f a n y a r g u m e n t t h a t a m is c a r r ia g e o f ju s tic e w o u ldN o. 08- 10144

As to har m, the Vei ge ls do sugge st that the TUFTA rulin g affects Terra Partne rs’ j oint 4 liabilityfor the award of attorn ey’s fee s. However , pursuant to Part II I(C) of this opinion , th e awardo f att orn ey’sf

ee s i s r ever se d initse ntire ty
. 8 r e s u lt fr o m o u rfa ilu r e to co n s id e r th e T U F T A is s u e . S ee id

. ( e xp l ai ni ng t hatt he b u rd e n to e sta b li sh e x tra o rd in a ry circ u m sta n ce s i s on th e p a rty se e k in gre v iew ). M o r e o v e r , th e V e ig e ls co n c e d e th a t r e v e r s a l o n th is is s u e w o u ld n o t a ffe c t t itle to th e 7 5 % in te r e s t, a s th e v a lid ity o f A G A c c e p ta n c e ’ s s u b s e q u e n t fo r e c lo s u r e is
u n d isp u te d on a p p e a l. A cc o rd in g ly, b e ca u se th e V e ige ls h a v e failed to ide n tify
a n y h a rm resu l ti n g from the distr ic t c ou rt’ s T U F T Aru l i n g, w e d ecli n e to 4
c o n s id e rth e irs u b s ta n tiv e a r g u m e n t fo r th e fir s t t im e o n a p p e a l. C The Vei ge l s ne xtc o nt e nd t hatt he di st ri ct c o ur t e r r e d i n a w ar di ng at t or ney’ s fee s t o t he C r edi t or s. Thi s c as e w a s tri ed under t he Feder al D ec l ar at or y Jud gm entA c t( “ FD JA ” ) , 28 U
. S. C

. § 2201 etse q . , w h i ch au t h ori zes a n aw a rd of a ttorn ey ’ s fees “w h ere ‘ con troll i n g [state] su b stan ti ve l a w ’pe rm i ts
su ch reco ve ry . ” S ee S elf-In s. In st. o f A m ., In c. v. K o rio th , 53 F
. 3 d 69 4 , 69 7 ( 5 th Ci r . 1 99 5)

. The di s t r i c tc o ur tde t e r m i ne d t hat t he Te xa s D e c l ar at o r y Jud gm e nt A ct (“ T D J A ”), T EX . C IV . P RA C
. & R EM . C ODE A NN . § 37. 001 etse q . , w as t he
c o nt r o l l i ng s ubs t ant i ve l aw i n t hi s di ve r s i t y s ui t
. Af t e r bo t h pa r t i e s b r i e fe d t he i s s ue und e rthe r e l e va ntTD JA s t and ar d, t he c o ur t de t e r m i ne d t hatt he C r e d ito r s w e r e e n tit le d to a tt o r n e y ’ s fe e s . Fort he f

i r s t t i m e o n ap pe al , t he Vei ge l s c o r r e c t l y ar gue t hato urpr e c e de nt p r e c l u d e s a n a wa r d o f a t t o r n e y ’ s fe e s p u r s u a n t t o t h e TDJ A a s a ma t t e r o f l a w. S ee Utica L loy d ’

s of T ex a s v . Mitch ell , 1 38 F. 3d 20 8, 21 0 ( 5t h Ci r . 1 99 8) (ho l di ng t h a t “ a p a r t y m a y n o t r e l y o n t h e [ TDJ A] t o a u t h o r i z e a t t o r n e y ’ s fe e s i n a d iv e r s ity ca s e b e c a u s e th e s ta tu te is n o t s u b s ta n tiv e la w ”). B e c a u s e t h e V e ig e ls aga i n fai l ed to rai se t h i s argum en t bel ow , w e m u stconsi der w h et h er “e x tr a o r d in a r y c ir c u m s ta n c e s ” ju s tify o u r co n s id e r a tio n o f th e is s u e o n a p p e a l.N o. 08- 10144

9 S ee N
. A l am o W

ate r , 90 F
. 3d at 916 ( exp l ai n i n g t h at “ [ e] xtr aordi n ary c i r c um s t anc e s e xi s tw h en the i s s ue i nvo l ve d i s a pur e q ue s t i o n o f l aw and a
m i s c ar r i ag e of

j us t i c e w o ul d r e s ul t f r o m o urfai l ur e t o c o ns i de r i t ” )

. H e r e , t he V ei gel s have de m ons t r at ed t hat s uch c i r c um st ance s exi st : Fi r st , t he ge ner al
a v a i l a b i l i t y o f

a t t o r n e y ’ s fe e s u n d e r a p a r t i c u l a r s t a t u t e i s a p u r e q u e s t i o n o f l a w. S ee Fi nger Fu rnit u re C o. In c. v. C om m on w eal t h In s. Co. , 40 4 F
. 3 d 31 2 , 31 5 ( 5 th C i r . 2005)

. Sec ond, ourfai l ure t o c or r ec t t he i ss ue w oul d res ul t i n a m i sc ar r i age of j u st i ce. I n t h i s c on t ext, w e ha ve of t en c o n sid e re d w h et h er t h e al l eged err or is o b v io u s o rm e r e ly d e b a ta b le

. S ee C on l ey v. B d

. of Trs. , 7 0 7 F
. 2 d 17 5 , 17 8 ( 5 th Ci r . 1 98 3) ( r e a s o n i n g t h a t fa i l u r e t o r e a c h t h e i s s u e wo u l d n o t r e s u l t i n a
m i scarr i age of

j u st i ce because “ t h e m eri t of t h e [ pa rt y’ s] om i t t ed cl ai m i s not so pl ai n orob vi ous ” )

. H er e, t he di st r i c t co u rt ’ s aw ar d of at t or ney’ s fee s w as p a te n tly e r r o n e o u s in lig h t o f c o n tr o llin gp r e c e d e n t. S ee Uti c a L loy d ’s , 138 F. 3d at2 10
. Fur t he r m o r e , ourfai l ur e t o re ac h t he i s s ue w o ul d r e s ul t i n s i gni f i c ant
a c tu a l h a r m to th e V e ig e ls

— lia b ility fo r a p p r o x im a te ly $ 2 0 6 ,5 4 4 .5 2 in
u nju s tifie d a tt o r n e y ’ s fe e s . In sum , t h e V ei gel s hav e dem on st rat ed the extr aordi n ary ci rcum st an ces
n e c e s s a r y t o j u s t i f

y o u rr e v i e w o f

t h e i r u n r a i s e d a r g u me n t
. Ac c o r d i n g l y , we ad h ere to ou r prec eden tan d reverse t h e di st ri ctcourt ’ s aw ard of att orney’ s f

ees p u r s u a n t t o th e T D J A

. S ee Uti c a L loy d ’s , 1 3 8 F .3 d a t 2 1 0
. IV F or t h e f

oregoi n g reasons, w e R E V E R S E t h e di st ri ctcourt ’ s aw ard of
a tt o r n e y ’ s fe e s a n d A F F IR M th e ju d g m e n t in a ll o th e r re s p e c ts
.