Court Opinion

ID: 4670608
Source: CourtListenerOpinion
Date Created: 2021-03-23 18:00:33.307811+00
Date Added: 2024-06-11T08:02:04.075013
License: Public Domain

Case: 20-50271     Document: 00515791655         Page: 1    Date Filed: 03/23/2021

           United States Court of Appeals
                for the Fifth Circuit                         United States Court of Appeals
                                                                       Fifth Circuit

                                                                     FILED
                                                               March 23, 2021
                                  No. 20-50271                  Lyle W. Cayce
                                                                     Clerk

   Transverse, L.L.C.,

                                            Plaintiff—Appellee Cross-Appellant,

                                      versus

   Iowa Wireless Services, L.L.C., doing business as i wireless,

                                          Defendant—Appellant Cross-Appellee.

                  Appeal from the United States District Court
                       for the Western District of Texas
                              USDC 1:10-CV-517

   Before Higginbotham, Smith, and Dennis, Circuit Judges.
   Patrick E. Higginbotham, Circuit Judge:
         In these cross appeals we address whether either party to this long-
   running contract dispute is entitled to attorneys’ fees. Iowa Wireless
   Services, LLC (IWS) contends that it is entitled to a fee award under the
   Texas Theft and Liability Act and that the district court ignored our prior
   decision when it concluded otherwise. IWS also contends that the district
   court erred by awarding fees to Transverse, LLC on its claim for breach of
   the parties’ Supply Contract. Transverse disagrees on both issues and
   contends that it is entitled to an additional fee award for prevailing on its
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   claim for breach of the parties’ Non-Disclosure Agreement. We reverse in
   part and remand.
                                                    I.
           This case has come before us on two previous occasions. In
   Transverse I, we heard cross appeals from jury and bench trials that resulted
   in an $11.7 million award to Transverse on its breach-of-contract claim
   against IWS.1 IWS, a wireless telephone service provider, had hired
   Transverse to develop custom billing software called “blee(p).” The parties’
   relationship was formalized in a Supply Contract and a Mutual Non-
   Disclosure Agreement (NDA). When IWS realized that Transverse could
   not deliver the custom billing software on schedule, it sought the services of
   a competitor and terminated the Supply Contract.2 Transverse then sued
   IWS under the Supply Contract, the NDA, the Texas Theft Liability Act
   (TTLA), and tort theories of conversion and misappropriation. 3 IWS
   counterclaimed for breach of the Supply Contract. The parties tried the
   Supply-Contract claims to a jury and submitted the remainder to a bench trial
   based on a jury-waiver provision in the NDA.4 After these proceedings, the
   district court rendered judgment for Transverse on its claim that IWS’s
   termination had breached the Supply Contract. But the district court held
   that IWS had not breached the NDA and was not liable to Transverse in tort.
   Both parties appealed.

           1
            Transverse, L.L.C. v. Iowa Wireless Servs., L.L.C. (“Transverse I”), 617 F. App’x
   272 (5th Cir. 2015).
           2
               Transverse I, 617 F. App’x at 274.
           3
               Id. at 273.
           4
               Id. at 274.

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           We affirmed that IWS’s termination breached the Supply Contract
   but reversed the district court on the NDA claim, holding that IWS had
   breached that agreement by sharing meeting notes containing Transverse’s
   confidential information with a competitor.5 We remanded for consideration
   of “the proper amount and type of damages that Transverse may collect on
   its breach-by-termination claim; the amount of damages, if any, that
   Transverse may collect for IWS’s breach of the NDA; and whether IWS is
   liable under any of the tort theories pressed by Transverse.”6 On remand, the
   district court awarded Transverse $1,700,000 in reliance damages on its
   Supply-Contract claim. But the district court ordered Transverse to “take
   nothing” on its claims for breach of the NDA, violation of the TTLA,
   conversion, and misappropriation of trade secrets. Both parties again cross-
   appealed.
           In Transverse II, we affirmed the district court’s award of reliance
   damages to Transverse on the Supply-Contract claim and the take-nothing
   judgment on the NDA claim.7 We also affirmed that Transverse had failed to
   establish its tort claims against IWS.8 But we determined that IWS was, in
   fact, the prevailing party on the TTLA claim.9 Thus, we vacated
   Transverse’s take-nothing judgment on the TTLA claim and remanded the

           5
               Id. at 282.
           6
               Id.
           7
            Transverse, L.L.C. v. Iowa Wireless Servs., L.L.C. (“Transverse II”), 753 F. App’x
   184, 188–89 (5th Cir. 2018).
           8
               Id. at 190.
           9
               Id. at 190-91.

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   case for further consideration because “IWS is entitled to a mandatory award
   of costs and attorney’s fees on this claim.”10
          After the second remand, the district court referred the parties’
   motions for attorneys’ fees to the magistrate judge. Based on the operative
   pleading, the only viable basis Transverse asserted for recovering fees was
   Texas Civil Practice & Remedies Code § 38.001. Fearing that the operative
   pleading would be inadequate if Iowa law applied, Transverse requested
   leave to amend its complaint “to make clear that its attorneys’ fee claim
   includes a claim for attorney’s fees under” the NDA and Supply Contract as
   well. The magistrate judge recommended denying leave to amend, noting
   that an amendment “would delay the Court’s consideration of the [fee] issue
   now before it, and unduly prejudice IWS.” The magistrate judge elaborated
   that, “while perhaps not ‘futile,’ the amendment is not necessary, as Texas,
   and not Iowa law is applicable.”
          The magistrate judge then addressed whether Transverse was entitled
   to fees on the NDA and Supply-Contract claims. He rejected Transverse’s
   contention that it had prevailed on the NDA claim because “Transverse was
   not awarded damages on its breach, and damages are an essential element of
   a contract claim under Texas law.” Thus, he recommended denying
   Transverse fees on the NDA claim. On the Supply-Contract claim, the
   magistrate judge first determined that Texas law was controlling under the
   law of the case, citing a previous statement to that effect by the district court.
   In so holding, he rejected IWS’s argument that Iowa law controlled based on
   the Supply Contract’s Iowa choice of law provision. Because Transverse had
   prevailed on its Supply Contract claim, the magistrate judge recommended
   an award of $2,001,442 in attorney’s fees.

          10
               Id. at 191.

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          Next, the magistrate addressed IWS’s motion for fees on the TTLA
   claim. IWS sought fees totaling $2,563,009, which was “approximately 50%
   of all fees it incurred in this case.” IWS represented that it had removed
   (1) “any fees relating to Transverse’s claim for breach of contract based on
   early termination,” (2) “fees related solely to discrete elements of
   Transverse’s ‘disclosure’ claims,” and (3) “fees that would not have been
   incurred on the TTLA claim alone.” But IWS contended that “all other
   claims in the case are ‘inextricably intertwined’ with the TTLA claim,” and
   thus it could not further segregate the remaining fees. The magistrate judge
   observed that the Transverse II mandate limited IWS to an “award [of]
   attorneys’ fees only for the TTLA claim.” He found that IWS failed to show
   that the fees attributable to the TTLA claim could not be segregated from the
   non-recoverable claims and, consequently, IWS was requesting fees for
   claims on which it was not entitled to recover. The magistrate judge
   recommended denying IWS’s motion for fees without prejudice and
   directing IWS “to submit documentation to the Court supporting its claim
   for attorneys’ fees for the TTLA claim only.” The district court adopted the
   magistrate’s report and recommendations.
          IWS filed an amended fee application with an affidavit and a series of
   supporting exhibits, requesting the same $2,563,009 in fees. IWS contended
   that the magistrate had applied an overly stringent segregation standard at
   odds with Texas law, by requiring IWS to isolate work performed solely on
   the TTLA claims. Counsel for IWS explained that to calculate recoverable
   fees, she had:
          reviewed each of the invoices that IWS paid for legal services
          and determined which services would have been necessary to
          defend the TTLA claim only, i.e., “even if” Transverse had
          not brought the related “disclosure” claims that arise from the
          same set of underlying facts . . . . excluded all time and entries
          for work related solely to Transverse’s claim for breach of

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          contract based on early termination . . . . excluded all time and
          entries for work related solely to other, non-TTLA disclosure
          claims . . . . [but] did not exclude services provided to defend
          the TTLA claim that also furthered IWS’s defense of related
          claims based on the same underlying facts[.]
   Transverse opposed the amended application, and the district court again
   referred IWS’s motion.
          The magistrate judge characterized IWS’s amended application as
   “defiant,” because it sought the exact same fee award as the original. Citing
   Transverse’s opposition, the magistrate gave several examples of IWS’s
   allegedly improper fees, including:
          (1) over $360,000 in fees that were incurred before IWS
          admitted the disclosure that led to Transverse’s claim;
          (2) $60,000 in fees for the deposition of Kleavin Howatt, who
          offered no testimony about any disclosure claims; (3) fees
          relating to the analysis of Transverse’s entire document
          production, when the disclosure claim production totaled
          about 240 pages, while the (unrecoverable) contract claim
          production totaled approximately 3,000,000 million pages;
          (4) fees for an Iowa suit filed in federal court by IWS that was
          purely a breach of contract case; (5) 22 of IWS’s 628 exhibits
          relate to the disclosure claims, yet IWS seeks 50% of its total
          fees for just the disclosure claims; and (6) . . . fees for review of
          Transverse’s damage expert reports that had placeholders for
          later discussion of the disclosure claims.
          The magistrate judge rejected IWS’s renewed argument for a less
   stringent fee-segregation standard, explaining that “intertwined facts do not
   make fees recoverable. Instead, the focus is whether the legal work performed

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   pertains solely to claims for which attorney’s fees are unrecoverable.” 11
   Holding that the district court has discretion to deny fees where the applicant
   fails to adequately segregate, he recommended denial here because IWS
   “affirmatively refused to try to carry” its burden to segregate. After de novo
   review, the district court adopted the recommendations and rejected IWS’s
   fee application in part, awarding only costs in the amount of $32,903.58 for
   the TTLA claim. For a third time, both parties cross-appealed.
                                                   II.
            “An award of attorney’s fees is entrusted to the sound discretion of
   the trial court.”12 Where a district court awards fees, our review is for abuse
   of discretion.13 But “[t]he availability of attorneys’ fees—as opposed to the
   amount awarded—is a question of law that we review de novo.”14 “We
   review de novo a district court’s compliance with our mandate.”15
       A. IWS’s Fees Under the Texas Theft Liability Act
            We begin with IWS’s entitlement to fees under the TTLA. In
   Transverse II, we held that “IWS is the prevailing party” on the TTLA claim
   “and is entitled to a mandatory award of attorney’s fees and costs.”16 On

            11
            Westergren v. Nat’l Prop. Holdings, L.P., 409 S.W. 3d 110, 137 (Tex. App.—
   Houston [14th Dist.] 2013) aff’d in part, rev’d in part, 453 S.W.3d 419 (Tex. 2015)) (cleaned
   up).
            12
                 Tex. Com. Bank Nat. Ass’n v. Cap. Bancshares, Inc., 907 F.2d 1571, 1575 (5th Cir.
   1990).
            13
              ATOM Instrument Corp. v. Petroleum Analyzer Co., L.P., 969 F.3d 210, 216–17
   (5th Cir. 2020), as revised (Sept. 17, 2020).
            14
                 GIC Servs., L.L.C. v. Freightplus USA, Inc., 866 F.3d 649, 665 (5th Cir. 2017).
            15
                 In re Deepwater Horizon, 928 F.3d 394, 398 (5th Cir. 2019) (internal quotations
   omitted).
            16
                 Transverse II, 753 F. App’x at 191.

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   remand, the district court concluded that IWS had not shown that fee
   segregation was “impossible,” so IWS needed to segregate its TTLA-related
   fees from those related to all other claims, including the NDA claim,
   Transverse’s failed claim for breach based on “access to Service,” and the
   claims for conversion and misappropriation of trade secrets. IWS concedes
   that it needed to segregate certain fees, but it argues that the district court
   used an overly demanding standard to assess its segregation efforts and
   contravened this Court’s mandate by awarding IWS no fees on the TTLA
   claim. We agree.
           “In diversity cases state law governs the award of attorney’s fees.” 17
   Texas follows the American Rule, under which a court may not award fees
   “unless authorized by statute or contract.” 18 The TTLA provides this
   authorization, stating that a court “shall” award fees to “each person who
   prevails in a suit under this chapter.”19 This includes those, like IWS, who
   successfully defend against a TTLA claim.20
           Where fees are authorized, “fee claimants have always been required
   to segregate fees between claims for which they are recoverable and claims
   for which they are not.”21 The party seeking fees bears the burden of properly
   segregating them.22 An exception to the fee-segregation requirement exists
   “when the fees are based on claims arising out of the same transaction that

           17
                Tex. Com. Bank Nat. Ass’n, 907 F.2d at 1575.
           18
                Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310 (Tex. 2006).
           19
                Tex. Civ. Prac. & Rem. Code Ann. § 134.005(b).
           20
            See Transverse II, 753 F. App’x at 190-91 (citing Spear Mktg., Inc. v. BancorpSouth
   Bank, 844 F.3d 464, 470 n.6 (5th Cir. 2016)).
           21
                In re Alonzo, 540 F. App’x 370, 373 (5th Cir. 2013) (internal quotations omitted).
           22
                Merritt Hawkins & Assocs., L.L.C. v. Gresham, 861 F.3d 143, 156 (5th Cir. 2017).

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   are so intertwined and inseparable as to make segregation impossible.” 23 But
   the exception requires more than a “common set of underlying facts[;]” “it
   is only when discrete legal services advance both a recoverable and
   unrecoverable claim that they are so intertwined that they need not be
   segregated.”24 Whether claims are so intertwined is a “mixed question of law
   and fact.”25
          IWS contends that Transverse’s “disclosure claims”—breach by
   “access to the service,” breach of the NDA, misappropriation of trade
   secrets, and conversion—are “intertwined with the fees incurred in defense
   of the TTLA claim.” Each of these claims was premised on IWS’s alleged
   disclosure of meeting notes and a document containing the parties’ “user-
   acceptance-test” criteria for the custom billing system to Transverse’s
   competitor.26 Transverse contends that the “disclosure” claims are not
   inseparable because they require proof of different elements.
          Texas provides no general rule for determining when claims are
   sufficiently intertwined to come within the exception. But the Texas
   Supreme Court has deemed the exception applicable where, for instance, a
   plaintiff in a breach-of-contract case must overcome related counterclaims in
   order to recover on that claim.27 Here, certain disclosure claims have an
   analogously close legal relationship to the TTLA claim. Although the
   abstract claim elements are different, the district court believed that each
   disclosure claim was subject to the same proof, given that all turned on the

          23
               Kinsel v. Lindsey, 526 S.W.3d 411, 427 (Tex. 2017).
          24
               Tony Gullo Motors, 212 S.W.3d at 313; Kinsel, 526 S.W.3d at 427.
          25
               Tony Gullo Motors, 212 S.W.3d at 313.
          26
               Transverse I, 617 F. App’x at 274, 280-82.
          27
               Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007) (per curiam).

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   legal significance of IWS’s alleged disclosure of meeting notes to
   Transverse’s competitor. In its post-trial findings of fact and conclusions of
   law, the district court observed that “Transverse’s theft-of-trade-secret
   claim rests on the same evidence and seeks the same damages as
   Transverse’s misappropriation-of-trade-secrets and conversion claims that
   the court has found subsumed in Transverse’s claim for breach of the NDA.”
   The district court then concluded that Transverse’s TTLA claim must fail
   “for the same reasons Transverse’s misappropriation of trade secrets and
   conversion claims fail.”
             When this Court remanded after Transverse I, the district court
   repeated verbatim its explanation of how the disclosure claims were
   functionally identical to the TTLA claim.28 This view of the interrelatedness
   of the claims was even shared by counsel for Transverse, at least earlier in the
   case.29
             Our earlier decisions in this dispute prompt us to stop short of finding
   that all the disclosure claims are inextricably intertwined with the TTLA
   claim. In Transverse I, we resolved the “access to Service” breach claim,
   based solely on the language of the Supply Contract, indicating that this claim
   is not inextricably intertwined with the other disclosure claims, which are

             28
              Transverse, LLC v. Iowa Wireless Serv., LLC, No. A-10-CV-517-LY, 2016 WL
   11586869, at *5 (W.D. Tex. Sept. 21, 2016) (“Transverse’s theft-of-trade-secret claim rests
   on the same evidence and seeks the same damages as Transverse’s misappropriation-of-
   trade-secrets and conversion claims that the court has found subsumed in Transverse’s
   claim for breach of the NDA. Therefore, for the same reasons Transverse’s
   misappropriation-of-trade-secrets and conversion claims fail, Transverse’s theft-of-trade-
   secrets claim also fails.”).
             29
              In a 2013 communication, counsel for Transverse wrote to counsel for IWS
   stating: “The ‘giving a competitor access’ breach of Contract claim involved the same
   issues, facts, arguments, and work that the NOA, trade secret misappropriation, Theft
   Liability Act, and conversion claims involved.”

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   more closely related to the NDA.30 But in Transverse II, we agreed with the
   district court “that Transverse’s misappropriation of trade secrets,
   conversion, and Texas Theft Liability Act claims fail” all because “IWS’s
   disclosure resulted in no lost value to Transverse.” 31 This was also the basis
   on which we affirmed the district court’s take-nothing judgment on the NDA
   claim.32 Thus, this Court upheld the district court’s view that the resolution
   of these nominally distinct claims tended to collapse into one analysis under
   the circumstances of this case. Apart from the breach-by-access claim under
   the Supply Contract, our reasoning in Transverse II supports IWS’s argument
   that the TTLA claim was inextricably intertwined with the remaining
   disclosure claims.
           Regardless of the necessary degree of fee segregation, the district
   court erred when it concluded that it had discretion to deny completely
   IWS’s application for fees on the TTLA claim. Although a district court
   typically has discretion to award attorney’s fees, the TTLA states that the
   court “shall” award fees to a person prevailing under it. 33 Based on the plain
   statutory language, “[a]n award of attorney fees is mandatory when the
   statutory requirements under the TTLA are met.”34 In Transverse II, this
   Court held that IWS qualified as a prevailing person under the TTLA and
   was entitled to a mandatory fee award. 35 This holding met the TTLA’s

           30
                Transverse I, 617 F. App’x at 277–78.
           31
                Transverse II, 753 F. App’x at 190.
           32
              Id. at 189 (“[T]he district court correctly determined that Transverse failed to
   establish any lost value to blee(p) based on IWS’s disclosure of the User Acceptance Test
   document and meeting notes.”).
           33
                Tex. Civ. Prac. & Rem. Code § 134.005(b).
           34
                Raytheon Co. v. Indigo Sys. Corp., 895 F.3d 1333, 1344–45 (Fed. Cir. 2018).
           35
                Transverse II, 753 F. App’x at 190-91.

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   requirements and became law of the case, which the district court was not at
   liberty to revisit.36
           Although the district court retained its traditional discretion to
   determine the appropriate amount of fees, its discretion did not extend to
   denying IWS fees entirely. This follows from the decisions of this Court, the
   Texas Supreme Court, and numerous lower Texas courts concluding that a
   “failure to segregate attorneys [sic] fees does not preclude an attorneys-fees
   recovery.”37 Where a fee applicant has failed to segregate its fees properly, it
   is appropriate to “remand to the trial court for reconsideration of the
   attorneys-fees award.”38 Further, it is incorrect to say that “IWS has not
   submitted evidence as to the proper award of fees as to the discrete TTLA
   claim.” Even where the fee applicant fails to adequately segregate,
   “[u]nsegregated attorney’s fees for the entire case are some evidence of what
   the segregated amount should be.”39 In addition to halving its total case fees,

           36
              “The mandate rule is a subspecies of the law-of-the-case doctrine: . . . . It []
   operates on a vertical plane—constricting a lower court vis-à-vis a higher court. The
   vertical variant is what we call the ‘mandate rule,’ and it’s the kind at issue here.” In re
   Deepwater Horizon, 928 F.3d at 398 (internal citations omitted).
           37
             Kinsel, 526 S.W.3d at 428 (citing Tony Gullo Motors, 212 S.W.3d at 314); see also
   Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277, 298 (5th Cir. 2007) (“But the failure
   to segregate does not mean that a party cannot recover any of its attorney’s fees.”);
   Rappaport v. State Farm Lloyds, 275 F.3d 1079 (5th Cir. 2001) (“[I]f a party does not
   properly segregate attorney’s fees, it would be error to completely deny attorney’s fees on
   contract claims, as evidence of unsegregated attorney’s fees is more than a scintilla of
   evidence of segregated fees.”); Jacks v. G.A. Bobo, No. 12-10-00163-CV, 2011 WL 2638751,
   at *4 (Tex. App.–Tyler June 30, 2011, no pet.) (“A failure to segregate attorney’s fees does
   not mean that the claimant cannot recover any attorney’s fees.”) (citing Tony Gullo
   Motors, 212 S.W.3d at 314); 7979 Airport Garage L.L.C. v. Dollar Rent A Car Sys., Inc., 245
   S.W.3d 488, 510 (Tex. App.–Houston [14th Dist.] 2007, pet. denied) (same).
           38
                Kinsel, 526 S.W.3d at 428.
           39
                Navigant Consulting, Inc., 508 F.3d at 298 (quoting Tony Gullo Motors, 212
   S.W.3d at 314).

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   IWS submitted an affidavit and several exhibits affording the district court
   adequate bases for making a fee award. Because IWS is entitled to some fee
   award on the TTLA claim, we remand for a determination of the proper
   amount.
           We do not hold that IWS is entitled to the full fee amount requested
   in its latest two petitions. Within the principles set forth here, we entrust to
   the district court the task of looking at the fee application anew. But we clarify
   that the mandate of Transverse II did not depart from Texas law governing
   fee segregation, and fees incurred defending the TTLA claim do not become
   unrecoverable simply because they may have furthered another non-
   recoverable claim as well.40 IWS “did not have to keep separate time
   records” by claim, and Texas’s standard for fee segregation “does not
   require more precise proof for attorney’s fees than for any other claims or
   expenses.”41 To the extent the district court is inclined to reduce fees on
   work that did “double duty,” it can simply “allocat[e] as a percentage of total
   fees the amount that likely would have been incurred even if the
   unrecoverable claims were not in the case,” “instead of requiring
   burdensome retrospective itemizations by claim.”42
       B. Transverse’s Fees Under the Supply Contract
           IWS contends the district court erred by relying on Texas law,
   specifically Texas Civil Practice & Remedies Code § 38.001, to award

           40
             Tony Gullo Motors, 212 S.W.3d at 313 (“To the extent such services would have
   been incurred on a recoverable claim alone, they are not disallowed simply because they do
   double service.”).
           41
                Id. at 314.
           42
                Bear Ranch, LLC v. Heartbrand Beef, Inc., No. 6:12-CV-14, 2016 WL 1588312, at
   *4 (S.D. Tex. Apr. 20, 2016) (Costa, J. sitting by designation).

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   Transverse fees for the Supply Contract claim because the Supply Contract
   is governed by Iowa law, and Iowa law does not allow for fee recovery under
   the facts of this case. Alternatively, IWS contends that § 38.001 does not
   permit an award of fees against an unincorporated business entity, like an
   LLC. We leave for another day the question of § 38.001’s application to
   unincorporated business entities. For purposes of this appeal, it suffices to
   say that the district should have applied Iowa, not Texas, law when assessing
   whether Transverse is entitled to fees under the Supply Contract, in view of
   that agreement’s unambiguous Iowa choice-of-law provision.
           Transverse argues that we ought not reach the choice-of-law question
   because IWS has waived its argument by failing to effectively raise it in one
   of the prior appeals and because the law-of-the-case doctrine prevents us
   from revisiting the district court’s determination that Texas law applies.
   Transverse is incorrect that the law of the case affects the viability of IWS’s
   choice-of-law argument on appeal. Neither Transverse I nor Transverse II
   determined whether or not the Supply Contract was governed by Iowa law.43
   Absent such a determination, there is no law of the case controlling this

           43
              Transverse II, 753 F. App’x at 187 n.2 (“IWS again does not articulate or even
   identify a conflict between Texas or Iowa law, so our choice-of-law analysis necessarily
   stops. Accordingly, we will not reach this issue.”); Transverse I, 617 F. App’x at 275 n.3
   (“It is not entirely clear whether Texas or Iowa contract law governs the dispute, but the
   parties agree that the laws of the two states are essentially identical. Both parties cite cases
   from both states, as do we.”).

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   panel.44 The district court may decline to revisit its prior rulings, but those
   rulings do not bind this Court.45
           This leaves the matter of waiver. Assuming arguendo, that IWS failed
   to raise the choice-of-law issue adequately in the prior appeals, we may
   address it now under the plain error standard.46 Under plain-error review,
   IWS “must show (1) an error; (2) that is plain or obvious; (3) that affects his
   substantial rights.”47 Because this is a diversity case, we apply Texas’s
   choice-of-law principles.48
           The argument for Iowa law is based on § 25.7 of the Supply Contract,
   which states unambiguously that “[t]his Contract shall be governed and
   construed by the laws of the State of Iowa.” Texas honors such contractual
   choice-of-law clauses, provided “the law chosen by the parties (1) has a
   reasonable relationship to the parties and the chosen state and (2) is not

           44
              K.P. v. LeBlanc, 729 F.3d 427, 436 (5th Cir. 2013) (“The rule of the law of the
   case is a rule of practice . . . . [which] provides that an issue of law or fact decided on
   appeal may not be reexamined either by the district court on remand or by the appellate
   court on a subsequent appeal.”) (internal quotations omitted) (emphasis original).
           45
              The law of the case “operates on a horizonal plane—constricting a later panel
   vis-à-vis an earlier panel of the same court. It also operates on a vertical plane—constricting
   a lower court vis-à-vis a higher court.” In re Deepwater Horizon, 928 F.3d at 398 (internal
   citation omitted).
           46
              See Crawford v. Falcon Drilling Co., 131 F.3d 1120, 1123 (5th Cir. 1997) (“[O]ur
   Court has adopted the practice of reviewing unpreserved error in a civil case using
   the plain-error standard of review.”); see also Med. Ctr. Pharmacy v. Holder, 634 F.3d 830,
   836 (5th Cir. 2011) (“Only plain error justifies departure from the waiver doctrine.”)
   (internal quotations omitted).
           47
                Quinn v. Guerrero, 863 F.3d 353, 358 (5th Cir. 2017).
           48
              Weber v. PACT XPP Techs., AG, 811 F.3d 758, 770 (5th Cir. 2016) (“A federal
   court sitting in diversity applies the forum state's choice-of-law rules to determine which
   substantive law will apply.”).

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                                            No. 20-50271

   contrary to a fundamental policy of the state.”49 IWS’s headquarters in Iowa
   provide the requisite reasonable relationship, and no fundamental policy of
   Texas is contravened when the law of a reasonably-related state is used to
   assess attorneys’ fees.50
            Transverse argues that another section of the Supply Contract, § 19.6,
   allows for application of Texas law or at least makes the import of § 25.7
   ambiguous. Section 19.6 concerns the parties’ agreement to submit to
   mediation before commencing litigation and the venue for that mediation; it
   specifies that mediation will occur “within the county of Travis, by or
   recommended by, Austin Dispute Resolution Center, according to its
   mediation rules, and any ensuing litigation shall be conducted within said
   county, according to Texas law.” This last clause is the basis for
   Transverse’s argument that the Supply Contract is actually governed by
   Texas law. But reading this provision in the manner that Transverse
   advocates would nullify the separate choice-of-law provision in § 25.7, which
   is contrary to the manner in which Texas courts interpret a contract.51
   Transverse attempts to resolve the contradiction by interpreting § 25.7 to
   provide the law governing only non-contractual disputes such as “personal
   injury, defamation, and other [cases] unrelated” to “the meaning,
   performance, or enforcement of [the] Contract.” This is a plainly
   unreasonable interpretation of § 25.7, which states that the “Contract” will
   be governed by Iowa law. By contrast, IWS’s interpretation—that the Texas

            49
                 Provident Fin. Inc. v. Strategic Energy L.L.C., 404 F. App’x 835, 839 (5th Cir.
   2010).
            50
                 Id.
            51
            Under Texas law, courts “consider the entire writing in an effort to harmonize
   and give effect to all the provisions of the contract so that none will be rendered
   meaningless.” Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 889
   (Tex. 2019).

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                                         No. 20-50271

   law clause refers to Texas procedural law and choice of law principles—is not
   unreasonable and it avoids creating surplusage.52
             Thus, it is clear that the district court should have applied Iowa law to
   assess the breach of the Supply Contract and any entitlement to attorneys’
   fees under that agreement. On the question of breach, the failure to do so was
   likely harmless because both states require proof of the same claim elements,
   but on the question of fees, it was outcome-determinative. Iowa, like Texas,
   requires that any fee award be authorized by either statute or contract. But
   unlike Texas, Iowa does not have a statute authorizing a fee award in breach-
   of-contract cases. Because the Supply Contract itself does not authorize
   attorneys’ fees, under Iowa law, the district court lacked a basis on which to
   award Transverse attorney’s fees for IWS’s breach of this agreement. IWS
   has made the showing necessary to prevail under plain-error review, and we
   reverse the fee award to Transverse on the Supply-Contract claim.
       C. Transverse’s Fees Under the Non-Disclosure Agreement
             Finally, Transverse contends that the district court erred by failing to
   recognize it as the prevailing party on the NDA claim and refusing to award
   Transverse the related fees. Unlike the Supply Contract, the NDA includes
   a provision expressly authorizing an award of attorney’s fees to the
   “substantially prevailing party.” Transverse did not invoke this provision in
   its pleadings and now seeks leave to amend to do so. We need not address
   this request because such an amendment would be futile; Transverse did not
   prevail, substantially or otherwise, on its NDA claim. Finding no error, we
   affirm.

             52
             “If we determine that only one party’s interpretation of the insurance policy is
   reasonable, then the policy is unambiguous and the reasonable interpretation should be
   adopted.” Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 258 (Tex. 2017).

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                                             No. 20-50271

            In Transverse I, we held that “the district court should have awarded
   judgment to Transverse on Transverse’s claim that IWS breached the
   NDA.”53 Nonetheless, on remand, the district court determined that
   Transverse should “TAKE NOTHING on its claims against Iowa Wireless
   Services . . . for breach of the NDA.” In Transverse II, we “affirm[ed] the
   district court’s take-nothing judgment for Transverse.”54 Based on its earlier
   take-nothing judgment, the district court determined that Transverse was
   not entitled to fees on the NDA claim.
            Transverse contends that damages are not a prerequisite to prevailing
   party status because the Transverse I ruling “provided actual relief to
   Transverse . . . by resolving in Transverse’s favor several major disputed
   issues . . . [and] materially alter[ing] the legal relationships between the
   parties.” “Whether a party prevails turns on whether the party prevails upon
   the court to award it something, either monetary or equitable.” 55 A finding
   that one party violated a contract, without more, will not suffice.56 Although
   Transverse contends that the Transverse I holding provided “an enforceable
   judgment that materially alters the legal relationships between the parties,”
   it identifies no equitable relief awarded in the district court’s actual
   judgment. This is unsurprising given that Transverse requested no specific
   equitable or declaratory relief in its operative pleadings.
            Transverse cites several cases for the proposition that a judgment
   materially altering the legal relationship between the parties confers

            53
                 Transverse I, 617 F. App’x at 282.
            54
                 Transverse II, 753 F. App’x at 189.
            55
                 Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 655 (Tex.
   2009).
            56
                 Id.

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                                           No. 20-50271

   prevailing party status, but these cases are inapposite because they concern
   claims under a variety of federal laws—§ 1983, the Clean Water Act, the Fair
   Housing Amendments Act, and the Americans with Disabilities Act—not a
   claim for breach of contract under Texas law.57 Under Texas law, “[n]either
   law nor logic favors a rule that bestows ‘prevailing party’ status” on a party
   that receives only a take-nothing judgment, as Transverse has.58 And in the
   absence of equitable relief, “[a] zero on damages necessarily zeros out
   ‘prevailing party’ status,” a fact unaffected by this Court’s earlier holding
   that IWS breached the NDA.59
           This conclusion is not altered by the NDA’s language allowing for an
   award of attorneys’ fees to a “substantially prevailing party.” This Court has
   explained that this phrase still “retains the need to prevail” and held that a
   plaintiff does not prevail in any meaningful sense where it obtains “no court-
   ordered relief modifying the [defendant’s] behavior.”60 Texas courts are in
   accord. Even in cases where a plaintiff need only “substantially prevail,”
   Texas courts hew to the reasoning of KB Homes, which requires a plaintiff to
   obtain actual relief in the form of damages or equitable relief before fees can
   be awarded.61 Where all of a plaintiff’s “requested relief was either expressly

           57
             See Buckhannon Bd. & Care Home v. W. Va. Dep’t of Health & Human Res., 532
   U.S. 598 (2001); Farrar v. Hobby, 506 U.S. 103, 111–12 (1992); Env’t Conservation Org. v.
   City of Dallas, 307 F. App’x 781, 783 (5th Cir. 2008).
           58
                KB Home, 295 S.W.3d at 656.
           59
             Merritt Hawkins & Assocs., 861 F.3d at 156 (quoting KB Home, 295 S.W.3d at 655–
   56) (Plaintiff was not the prevailing party where the court found breach but awarded no
   damages or equitable relief.).
           60
                Env’t Conservation Org., 307 F. App’x at 784.
           61
             Nehls v. Hartman Newspapers, LP, 522 S.W.3d 23, 31 (Tex. App. 2017) (applying
   the “‘prevailing party’ test articulated in KB Home” “when deciding whether a party has
   ‘substantially prevailed’”).

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                                         No. 20-50271

   or impliedly denied” the plaintiff has not “substantially” prevailed in the
   eyes of Texas courts.62 Thus, to the extent the word “substantially” modifies
   the standard for prevailing, it does not obviate the need to obtain some relief.
   Consequently, the district court did not err in denying Transverse fees on the
   NDA claim because Transverse’s failure to obtain any cognizable relief on
   that claim prevents it from attaining prevailing-party status.
                                              III.
           We reverse the district court’s order denying IWS attorney’s fees for
   the TTLA claim and remand for consideration of the proper amount. We also
   reverse the district court’s fee award to Transverse on the Supply-Contract
   claim. Finally, we affirm the district court’s denial of fees to Transverse for
   the NDA claim.

           62
              Dallas Morning News, Inc. v. City of Arlington, 2011 WL 182886, at *4 (Tex. App.
   Jan. 21, 2011).

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