Opinion ID: 811017
Heading Depth: 3
Heading Rank: 3

Heading: Interest Repurchase Value and Attorneys’ Fees

Text: JNV argues that the district court erred by determining the Interest Repurchase Value and by ruling that JNV was not entitled to attorneys’ fees because neither party moved for summary judgment on these issues. We agree. Rule 56 of the Federal Rules of Civil Procedure provides: After giving notice and a reasonable time to respond, the court may: (1) grant summary judgment for a nonmovant; (2) grant the motion on grounds not raised by a party; or (3) consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute. Fed. R. Civ. P. 56(f) (emphasis added). “[W]e have vacated summary judgments and remanded for further proceedings where the district court provided no notice prior to granting summary judgment sua sponte, even where summary judgment may have been proper on the merits.” Tolbert ex rel. Tolbert v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 657 F.3d 262, 271 (5th Cir. 2011) (citations omitted). “[D]istrict courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that she had to come forward with all of her evidence.” Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986); see also Tolbert, 657 F.3d at 271. We also have held that a district court’s failure to provide such notice is reviewed for harmless error. Leatherman 11 Case: 11-10958 Document: 00512037269 Page: 12 Date Filed: 10/30/2012 No. 11-10958 v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 28 F.3d 1388, 1398 (5th Cir. 1994). The error is harmless “if the nonmoving party admits that he has no additional evidence anyway or if . . . the appellate court evaluates all of the nonmoving party’s additional evidence and finds no genuine issue of material fact.” Id. (citations omitted); see also Mannesman Demag Corp. v. M/V CONCERT EXPRESS, 225 F.3d 587, 595 (5th Cir. 2000) (reversing district court’s sua sponte grant of summary judgment where it provided no notice to the parties and the error was not harmless).5 Regarding the Interest Repurchase Value, neither party moved for summary judgment on this issue, and the district court did not provide notice to the parties that it intended to determine this value on summary judgment sua sponte. Thus, it was error for the district court to determine this issue on summary judgment without providing such notice. Moreover, the error was not harmless because the summary judgment record demonstrates that there is a genuine dispute between the parties regarding the value of JNV’s Interests on August 1, 2007: the parties have proffered vastly different measures of this value and were prepared to offer expert testimony on this issue at trial. We therefore vacate and remand the district court’s summary judgment determining the Interest Repurchase Value. Similarly, the district court erred by deciding that JNV is not entitled to attorneys’ fees based on Flight Options’ alleged bad faith. Ohio law permits the recovery of attorneys’ fees in a breach of contract action where: 1) the contract expressly provides for them; 2) a statute entitles the plaintiff to attorneys’ fees; or 3) where the plaintiff demonstrates that the defendant acted in bad faith. 5 We recognize that Leatherman and Mannesman interpreted the former version of Fed. R. Civ. P. Rule 56(c), which required that a district court provide a nonmovant with ten days’ notice prior to granting summary judgment sua sponte. The current version of Rule 56 does not contain this specific ten-day requirement, but it does require notice and a reasonable time to respond. Accordingly, the harmless error analysis still applies. 12 Case: 11-10958 Document: 00512037269 Page: 13 Date Filed: 10/30/2012 No. 11-10958 Sturm v. Sturm, 590 N.E.2d 1214, 1217 (Ohio 1992). Whether a party is entitled to attorneys’ fees is a question of fact. See id. (citation omitted) (acknowledging that attorneys’ fees are allowed where defendant’s conduct is “in bad faith, vexatious, wanton, obdurate or oppressive”). Neither party moved for summary judgment on the issue of attorneys’ fees, and the district court did not notify the parties that it intended to rule on this issue beforehand. Thus, the district court erred by deciding this issue on summary judgment sua sponte. Moreover, Flight Options and JNV dispute the facts underlying the parties’ conduct relevant to the bad faith inquiry. Therefore, because JNV’s entitlement to attorneys’ fees is a question of fact, there are material facts in dispute, and the parties did not have an opportunity to come forward with all of their evidence on this issue, the district court’s sua sponte summary judgment denying JNV attorneys’ fees was not harmless error. Accordingly, we vacate and remand the district court’s ruling that JNV is not entitled to attorneys’ fees.