Court Opinion

ID: 57644
Source: CourtListenerOpinion
Date Created: 2010-04-26 02:11:27+00
Date Added: 2024-06-11T17:19:39.894601
License: Public Domain

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

                                                           FILED
                                                       January 15, 2008
                          No. 06-20994
                          c/w 06-20344               Charles R. Fulbruge III
                        Summary Calendar                     Clerk

ELLISON STEEL INC

                              Plaintiff-Counter Defendant-Appellee
v.

GREYSTAR CONSTRUCTION WEST LLC

                              Defendant-Counter Claimant-Appellant

SHERMAN & HOWARD LLC

                              Respondent-Appellant

-----------------------------------------------------------

ELLISON STEEL INC

                              Plaintiff-Appellee

v.

GREYSTAR CONSTRUCTION WEST LLC

                              Defendant-Appellant

           Appeals from the United States District Court
                for the Southern District of Texas
                      USDC No. 4:04-CV-629
                               Nos. 06-20994 & 06-20344

Before DeMOSS, BENAVIDES, and PRADO, Circuit Judges.
PER CURIAM:*
       In case number 06-20994 Appellant Greystar Construction West, LLC
(“Greystar”) appeals the district court’s November 30, 2006 judgment in which
the court affirmed its prior judgment against Greystar and awarded Ellison
Steel, Inc. (“Ellison”) additional attorney’s fees. In case number 06-20344,
Greystar and Sherman & Howard LLC (“Sherman”) appeal the district court’s
Memorandum and Order dated February 15, 2006. The Memorandum and
Order enjoined Greystar and its counsel (including Sherman) from proceeding
against Ellison in a related Colorado lawsuit and ordered them to join in a
motion for reconsideration filed by Ellison before that court.                    We have
consolidated these appeals.
       A short history of the case is warranted: Greystar was the general
contractor on a Colorado construction project and it hired Ellison as a
subcontractor. A dispute arose prompting H&E Equipment Services, LLC,
another subcontractor, to bring suit against both Greystar and Ellison in
Colorado state court (the “Colorado lawsuit”) to recover amounts allegedly owed
by Ellison for work performed on the construction project. In December 2003,
Greystar initiated arbitration against Ellison in Colorado pursuant to the
arbitration clause in their subcontract. Greystar sought to recover amounts
allegedly owed by Ellison under the subcontract.
       In January 2004, Ellison brought suit against Greystar under the
subcontract in Texas state court. Greystar removed to federal district court on
diversity grounds and then requested that the district court stay the suit
pending the outcome of the arbitration. The district court stayed the case and

       *
         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.

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                           Nos. 06-20994 & 06-20344

the arbitration proceeded. The arbitrator ultimately awarded Ellison $47,528.49
in damages and $6,812.25 in pre-award interest; ordered each party to bear its
own costs, finding that neither party was the prevailing party for purposes of the
contractual fee/cost-shifting clause in the arbitration agreement; and decided
that it did not have jurisdiction to make an award of attorney’s fees nor to make
an express finding regarding who was the prevailing party with respect to
attorney’s fees.
      Post-arbitration, Ellison filed a motion to reopen with the district court,
requesting that the court confirm the arbitration award and award it attorney’s
fees as the prevailing party. In August 2005, the court confirmed the arbitration
award and awarded Ellison $123,735.00 in attorney’s fees. Greystar appealed
the district court’s final judgment on various grounds. We vacated the district
court’s judgment and remanded because it was not clear from the record whether
the district court had subject matter jurisdiction over the case; that is, we could
not determine whether all parties to the case were diverse. Ellison Steel, Inc. v.
Greystar Constr. LP, 199 F. App’x 324 (5th Cir. 2006).
      On remand, the district court dismissed one defendant, finding that it was
not diverse. By order dated November 30, 2006, the district court also affirmed
its August 2005 confirmation of the arbitration award and award of attorney’s
fees to Ellison. The court further awarded Ellison $23,310.00 in additional
attorney’s fees.
      Meanwhile, proceedings had recommenced in the Colorado lawsuit. On
July 11, 2006, approximately one month after Ellison filed its motion to reopen
with the district court in Texas, Greystar filed a motion with the Colorado state
court requesting that court to confirm the arbitration award and award it
statutory attorney’s fees pursuant to a finding by the arbitrator that Ellison had
filed an excessive lien under Colorado law. The Colorado court subsequently
confirmed the arbitration award and awarded Greystar statutory attorney’s fees

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                              Nos. 06-20994 & 06-20344

based on Ellison’s excessive lien. Ellison moved for reconsideration. The motion
was denied.
      After the Colorado court confirmed the arbitration award and awarded
Greystar statutory attorney’s fees, but before we decided Greystar’s first appeal,
Ellison moved for sanctions in district court. The district court subsequently
issued an injunction enjoining Greystar and its counsel (including Sherman)
from proceeding against Ellison in the Colorado lawsuit and ordering them to
join in Ellison’s motion for reconsideration before the Colorado court. The court
did all of this under its “inherent powers” under the Constitution and 28 U.S.C.
§ 2283, citing the need to protect its judgment and the jurisdiction of the Fifth
Circuit to review its judgment.
      Regarding the appeal in case number 06-20994, we have reviewed the
parties’ briefs and relevant portions of the record and have found no reversible
error in the district court’s confirmation of the arbitration award and award of
attorney’s fees to Ellison.
      As previously discussed, we remanded this case so that the district court
could determine whether the parties were diverse. Greystar argued in the court
below, as it does here, that it is a corporation for purposes of diversity of
citizenship. However, it is undisputed that Greystar is a limited liability
company. After conducting a hearing, the district court determined that it
possessed subject matter jurisdiction at all relevant times. Specifically, the
district court found that it had diversity jurisdiction because Greystar and
Greystar Development and Construction, LP (“GDC”) were not citizens of Texas.
Greystar, a limited liability company, is a partner of GDC, a limited partnership.
GDC is a Delaware entity with a Houston office. In determining the citizenship
of GDC, the district court necessarily had to analyze the citizenship of GDC’s
partners, including Greystar. The district court stated:

                                         4
                           Nos. 06-20994 & 06-20344

      The record reflects that at all times the partners of GDC were
      organized under the laws of the state of Delaware. . . . There is no
      evidence presented that indicates who the owners of the various
      partnership entities are. . . . Moreover, the fact that the principal
      office of GDC is located in Texas, and perhaps does business in this
      state through its foreign partners, does not ipso facto establish
      domicile for purposes of determining diversity jurisdiction.

In other words, the district court ruled that GDC was not a citizen of Texas, even
though Greystar, one of its limited partners, has its principal place of business
in Texas. The district court found that Greystar’s argument to the contrary was
frivolous because Supreme Court precedent establishes that corporations are
treated differently than unincorporated associations for purposes of determining
citizenship under 28 U.S.C. § 1332. See Carden v. Arkoma Assocs., 494 U.S. 185,
195 (1990) (holding that the citizenship of an unincorporated association is based
upon the citizenship of each of its members).        Therefore, by order dated
November 30, 2006, the district court affirmed the arbitration award, affirmed
Ellison’s original $123,725.00 attorney’s fees award, and awarded Ellison
supplemental attorney’s fees of $23,310.00 with interest. Greystar now appeals
the award of supplemental attorney’s fees.
      This Court reviews an award of attorney’s fees for abuse of discretion.
Hobbs v. Aloca, Inc., 501 F.3d 395, 398 (5th Cir. 2007). A frivolous appeal occurs
when “the result is obvious or the arguments of error are wholly without merit.”
Montgomery v. United States, 933 F.2d 348, 350 (5th Cir. 1991) (internal
quotations and citation omitted). Here, the district court awarded supplemental
attorney’s fees based upon its finding that Greystar presented a frivolous claim.
After reviewing the detailed findings of the district court, we agree with the
district court’s determination and hold that awarding supplemental attorney’s
fees was not an abuse of discretion. Thus, we AFFIRM the district court’s
Judgment dated November 30, 2006.

                                        5
                         Nos. 06-20994 & 06-20344

     Regarding the appeal in case number 06-203344, we find the injunction
created by the district court’s February 15, 2006 Memorandum and Order is no
longer necessary to protect the court’s judgment. See 28 U.S.C. § 2283. Thus,
the injunction is VACATED.

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