Court Opinion

ID: 69409
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:45:05+00
Date Added: 2024-06-11T08:05:25.041199
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                          October 29, 2009

                                       No. 08-41156                    Charles R. Fulbruge III
                                                                               Clerk

MUGWORLD INC,

                                                   Plaintiff-Appellee
v.

G G MARCK AND ASSOCIATES INC,

                                                   Defendant-Appellant

                   Appeal from the United States District Court
                         for the Eastern District of Texas
                              USDC No. 4:05-CV-441

Before BENAVIDES, DENNIS, and ELROD, Circuit Judges.
PER CURIAM:*
       This is a breach of contract case. Defendant-Appellant, Marck, supplied
nine containers of mugs to Plaintiff-Appellee, Mugworld, under a 2005
agreement. When issues over the mug quality arose, a series of e-mails were
exchanged between the parties. After Mugworld returned the coffee mugs, a
dispute over the credit due arose between the parties. When resolution of the
problem deteriorated, Mugworld filed suit in Cooke County, Texas, and Marck
had the case removed to the Eastern District of Texas predicated on diversity.

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
                                 No. 08-41156

Mugworld’s motion for summary judgment on Marck’s counterclaims under the
Lanham Act, unfair competition claims and related conspiracy claims was
granted by the district court. The district court denied Mugworld’s summary
judgment motion on the construction of the new agreement between the parties
and proceeded to a bench trial on the breach of contract claim and Texas
Business and Commerce Code’s Deceptive Trade Practice Act (DTPA) claim.
      At trial, the district court found that an original agreement existed
between Marck and Mugworld for the sale of nine containers of mugs but that
the communications between Marck and Mugworld in the resolution of the
dispute that subsequently arose acted as a novation.        The district court
determined that under the new agreement, Marck offered to credit Mugworld for
all mugs deemed not acceptable to Mugworld upon the return of the mugs to
Marck. Because Mugworld returned the mugs, the district court found that
Mugworld accepted the new agreement. The district court stated that Marck’s
October 6, 2005 e-mail to Mugworld informing Mugworld that Marck would no
longer issue a full credit for returned mugs was a breach the parties’ new
agreement by Marck; thus, the district court awarded breach of contract
damages to Mugworld along with attorney’s fees. The district court also found
that Marck did not violate any sections of the DTPA but that Mugworld did not
bring the claims in bad faith, and therefore, the court denied Marck’s
counterclaim under Section 17.50(c) of the DTPA for attorney’s fees and costs.
      We have jurisdiction over this case pursuant to 28 U.S.C. § 1291 because
the district court entered final judgment on September 18, 2008. Marck insists
that its Lanham Act and other related claims involved material facts that should
have proceeded to trial.   Marck contends that the novation only permitted
Mugworld to return commercially unacceptable mugs, not all the coffee mugs,
and asserts that the attorney’s fees awarded were unreasonable.

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                                  No. 08-41156

      We affirm the district court’s judgment for the following reasons. As
neither a Mugworld consumer or direct or indirect competitor, Marck lacked
standing to bring a Lanham Act and unfair competition claim. See Proctor &
Gamble Co. v. Amway Corp., 242 F.3d 539, 562-63 (5th Cir. 2001) (adopting a
balancing test for statutory standing under the Lanham Act and considering the
directness or indirectness of the asserted injury as one of five factors that must
be weighed by the court); see also Little v. KPMG LLP, 575 F.3d 533, 541 (5th
Cir. 2009) (“The competitors’ claim of injury depends on several layers of
decisions by third parties–at minimum, KPMG’s Texas clients–and is too
speculative to confer Article III standing.”). Even if we assume standing exists,
Marck failed to prove that it had been or was likely to be injured as a result of
a Lanham Act violation and failed to raise a fact issue with respect to several
elements of its claims, including that it was injured by Mugworld’s conduct or
that any deception actually deceived or had a tendency to deceive consumers and
caused consumers to buy Mugworld’s mugs over a competitor’s. See Schlotzsky’s,
Ltd. v. Sterling Purchasing & Nat’l Distrib. Co., 520 F.3d 393, 401 (5th Cir.
2008) (“[A]t least the likelihood of injury must be proven in this case even if only
injunctive relief is to be ordered.”). Marck did not offer non-speculative evidence
to show even the likelihood of injury. The district court thus did not err in
granting Mugworld’s motion for summary judgment as to Marck’s counterclaims.
      Marck next argues that while a novation existed, the new agreement did
not allow Mugworld to return all the coffee mugs for credit, only those deemed
commercially unacceptable. Because the new agreement between the parties
appeared ambiguous, the meaning of the new agreement presented a question
of fact. See Harris v. Rowe, 593 S.W.2d 303, 306 (Tex. 1979). The district court’s
factual findings as to the meaning of the agreement should therefore be reviewed
under the deferential clear error standard. See Houston Exploration Co. v.
Halliburton Energy Servs., Inc., 359 F.3d 777, 779 (5th Cir. 2004) (reviewing the

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                                  No. 08-41156

district court’s factual findings in a bench trial under the clear error standard).
A plausible finding of fact may not be reversed by a court of appeals, “even
though convinced that had it been sitting as the trier of fact, it would have
weighed the evidence differently.” Anderson ex rel. Anderson v. Canton Mun.
Separate Sch. Dist., 232 F.3d 450, 453 (5th Cir. 2000) (citation omitted). After
reviewing the entire record, the district court was within its discretion to find
whether an agreement to accept only commercially unacceptable mugs did or did
not exist based on the evidence presented. Although a reasonable argument can
certainly be made that some of the evidence indicates the parties contemplated
that only commercially unacceptable mugs could be returned to Marck, an
alternative reasonable interpretation of the evidence is not sufficient to establish
clear error. Instead, the district court found that Mugworld was entitled to
return any mugs it deemed as unacceptable under the novation. Therefore, the
district court’s interpretation of the new agreement is not clearly erroneous.
      Marck also contends that no attorney’s fees should be awarded because
Mugworld sought recovery based on the original contract instead of the novation
agreement. This court reviews awards of attorney’s fees under an abuse of
discretion standard. Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646,
656 (5th Cir. 2004). Texas law requires a plaintiff to segregate the hours worked
among claims when the plaintiff seeks to recover fees in a case involving
multiple claims, at least one of which supports a fee award and at least one of
which does not. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d. 299, 310-11
(Tex. 2006). Mugworld did not assert separate and distinguishable claims for
recovery.   This dispute was simply a contract claim, on which Mugworld
prevailed. The district court noted that Marck failed to cite any Texas cases
mandating the sort of intra-claim segregation that it requests—and so do we.
Because the district court found that Marck breached the new agreement

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                                 No. 08-41156

entitling Mugworld to an award of damages on the breach of contract claims, the
district court did not abuse its discretion in awarding fees to Mugworld.
      For the above reasons, the district court’s judgment is AFFIRMED.

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