Court Opinion

ID: 9910184
Source: CourtListenerOpinion
Date Created: 2023-12-15 01:00:39.087853+00
Date Added: 2024-06-11T12:51:22.147285
License: Public Domain

Case: 23-10192            Document: 00517002388             Page: 1      Date Filed: 12/14/2023

                 United States Court of Appeals
                      for the Fifth Circuit                                              United States Court of Appeals
                                                                                                  Fifth Circuit
                                         ____________                                           FILED
                                                                                     December 14, 2023
                                           No. 23-10192
                                                                                           Lyle W. Cayce
                                         ____________
                                                                                                Clerk

   Partners & Friends Holding Corporation,

                                                                        Plaintiff—Appellant,

                                                versus

   Cottonwood Minerals, L.L.C.; Longboat Energy, L.L.C.,

                                                  Defendants—Appellees.
                         ______________________________

                         Appeal from the United States District Court
                             for the Northern District of Texas
                                  USDC No. 3:22-CV-2502
                         ______________________________

   Before Davis, Engelhardt, and Oldham, Circuit Judges.
   Per Curiam:*
             Partners & Friends sued to recover some of the $850,000 Cottonwood
   obtained in a title dispute related to oil and gas leases. The district court
   dismissed Partners’ claims with prejudice and awarded fees to Longboat. We
   affirm.

             _____________________
             *
                 This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-10192      Document: 00517002388          Page: 2   Date Filed: 12/14/2023

                                    No. 23-10192

                                         I.
          Longboat Energy, LLC, owns working interests in certain oil and gas
   leases (“the Disputed Acreage”). Longboat’s rights in the Disputed Acreage
   were clouded by a 2017 agreement with CCCB Energy Partners, LLC, so
   Longboat entered into a joint participation agreement with Partners &
   Friends (“Partners”) and two other entities. Partners agreed to fund 70% of
   the costs Longboat incurred resolving its title dispute with CCCB. In
   exchange, Longboat promised to make a good faith attempt to obtain clear
   title to the Disputed Acreage, to share with Partners a portion of its working
   interests in some of the wells, and to use part of any monetary recovery to
   pay down Partners’ share of the dispute resolution costs.
          Longboat then filed a lawsuit against CCCB, and the parties settled in
   August 2020. The settlement agreement provided Longboat and CCCB
   would cancel their 2017 agreement, freeing Longboat from any limitations on
   its rights in the Disputed Acreage. CCCB did not agree to pay Longboat any
   money.
          In the same 2020 settlement agreement, Cottonwood, LLC, a
   Longboat affiliate, resolved a separate dispute related to its interests in oil
   and gas leases owned by CCCB. Through the settlement, Cottonwood
   relinquished those interests to CCCB in exchange for $850,000. Partners
   apparently thought the settlement agreement obligated CCCB to pay
   $850,000 to Longboat (as opposed to Cottonwood), so it demanded
   Longboat turn over a portion of the payment in accordance with the joint
   participation agreement. Longboat refused, maintaining it received no money
   in the settlement and so had nothing to share.
          That answer did not satisfy Partners, so it filed this lawsuit. Partners
   presses three theories. First, Partners claims Longboat breached the joint
   participation agreement by withholding Partners’ share of CCCB’s

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   settlement payment. Second, Partners alleges Longboat fraudulently induced
   it to enter into the joint participation agreement by disingenuously promising
   to share monetary settlement proceeds. Lastly, Partners contends even if
   Longboat did not breach the agreement, Cottonwood is obligated to disgorge
   a portion of CCCB’s payment under the money had and received doctrine.
          Longboat and Cottonwood filed a motion to dismiss all three claims
   and attached the settlement agreement. The district court granted the
   motion in full. First, it held Partners’ breach of contract claim against
   Longboat failed because the agreement made clear Longboat did not recover
   any money in the settlement. Second, it held Partners’ fraudulent
   inducement claim against Longboat failed because Partners did not allege
   with particularity any fraudulent statement made by Longboat. Third, it held
   Partners’ equitable money had and received claim against Cottonwood failed
   because express contracts governed the relationships between all the relevant
   parties. Partners requested leave to amend its complaint in its response to
   defendants’ motion to dismiss, but the district court disregarded the request
   and dismissed Partners’ claims with prejudice.
          After the dismissal, Longboat moved for $115,475.50 in attorneys’
   fees pursuant to a fee-shifting provision in the joint participation agreement.
   Partners conceded Longboat was entitled to a fee award, but it lodged various
   objections to the size of Longboat’s fee request. The district court generally
   rejected Partners’ challenges. But the district court agreed that Longboat
   impermissibly requested fees its attorneys incurred solely to defend
   Cottonwood, who was not a party to the joint participation agreement and so
   was not entitled to fee shifting. The district court reduced Longboat’s fees
   by 5% and entered an award for $109,701.72.
          Partners timely appealed the district court’s dismissal of its claims, its
   denial of Partners’ motion for leave to amend its complaint, and its fee award.

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                                     No. 23-10192

                                          II.
          As always, jurisdiction is first. Partners appeals from the final decision
   of a district court, so we have jurisdiction under 28 U.S.C. § 1291. Two other
   jurisdictional issues merit discussion.
          First, because this case involves one or more LLCs and 28 U.S.C.
   § 1332, we must ensure the parties properly established diversity jurisdiction
   in the district court. This is an evergreen problem in our circuit. See, e.g.,
   MidCap Media Fin., LLC v. Pathway Data, Inc., 929 F.3d 310, 314 (5th Cir.
   2019) (quoting Settlement Funding, LLC v. Rapid Settlements, Ltd., 851 F.3d
   530, 536 (5th Cir. 2017) (emphasis added) (“[T]o establish diversity
   jurisdiction, a party ‘must specifically allege the citizenship of every member
   of every LLC.’”)); see also Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th
   Cir. 2001) (“[T]he party asserting federal jurisdiction must distinctly and
   affirmatively allege the citizenship of the parties.”) (quotations and
   alterations omitted). But here, Longboat and Cottonwood properly removed
   to federal court by alleging the citizenship of each of the LLCs’ members.
   Longboat and Cottonwood are Oklahoma citizens and Partners is a citizen of
   Wyoming and Florida. Defendants therefore established complete diversity.
   See In re Levy, 52 F.4th 244, 246 (5th Cir. 2022) (per curiam).
          Second, Partners filed only one notice of appeal, and that notice pre-
   dated the district court’s fee-shifting order. Ordinarily, that would leave us
   without jurisdiction to consider its objections to the fee award. See Quave v.
   Progress Marine, 912 F.2d 798, 801 (5th Cir.), on reh’g, 918 F.2d 33 (5th Cir.
   1990). But Partners filed a docketing statement that clearly noticed its intent
   to appeal the fee order, and that served as the “functional equivalent” of a
   notice of appeal. Torres v. Oakland Scavenger Co., 487 U.S. 312, 316–17
   (1988); see Cobb v. Lewis, 488 F.2d 41, 45 (5th Cir. 1974) (“[T]he notice of
   appeal requirement may be satisfied by any statement, made either to the

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                                     No. 23-10192

   district court or to the Court of Appeals, that clearly evinces the party’s
   intent to appeal.”); see also 1979 Advisory Committee Note, Fed. R. App.
   P. 3(c) (“[S]o long as the function of notice is met by the filing of a paper
   indicating an intention to appeal, the substance of the rule has been complied
   with.”). Accordingly, we may proceed to the merits of Partners’ objections
   to the fee award. See HCG Platinum, LLC v. Preferred Prod. Placement Corp.,
   873 F.3d 1191, 1199 n.8 (10th Cir. 2017) (“[O]ur jurisdiction [to consider a
   post-judgment fee award] will not be defeated if other papers (like a docketing
   statement) . . . filed within the thirty-day time period for filing the notice of
   appeal provide the functional equivalent of what Rule 3 requires.” (quotation
   and citation omitted)).
                                         III.
          We review de novo the district court’s Rule 12(b)(6) dismissal of
   Partners’ claims. See Scanlan v. Tex. A&M Univ., 343 F.3d 533, 536 (5th Cir.
   2003). Applying that standard, we (A) reject Partners’ breach of contract
   claim against Longboat. Then we (B) reject Partners’ fraudulent inducement
   claim against Longboat. Lastly, we (C) reject Partners’ money had and
   received claim against Cottonwood.
                                          A.
          Partners alleges Longboat breached the joint participation agreement
   by denying Partners a share of CCCB’s $850,000 settlement payment. But
   the settlement agreement makes clear CCCB agreed to pay Cottonwood, not
   Longboat. See ROA.184 (“CCCB shall pay Cottonwood the sum of Eight
   Hundred Fifty Thousand Dollars . . . .” (emphasis added)). The joint
   participation agreement obligated Longboat to remit to Partners a portion of
   any money Longboat recovered resolving its claims to the Disputed Acreage.
   Longboat did not breach by denying Partners a share of the money CCCB
   agreed to pay Cottonwood.

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          Partners presses three counterarguments. First, it contends we must
   accept its factual assertions about the contents of the settlement agreement.
   But the unambiguous text of the settlement agreement makes clear Partners’
   breach of contract claim is not “plausible on its face.” See Bell Atl. Corp. v.
   Twombly, 550 U.S. 544, 570 (2007). We are not bound by Partners’ assertion
   to the contrary.
          Second, Partners contends we may not consider the settlement
   agreement at this stage of the litigation. That argument fails for two reasons.
   First, Partners forfeited it by failing to object when Longboat attached the
   settlement agreement to its motion to dismiss. See Rollins v. Home Depot
   USA, 8 F.4th 393, 398 (5th Cir. 2021) (“We do not ordinarily consider issues
   that are forfeited because they are raised for the first time on appeal.”).
   Second, and in any event, the settlement agreement was properly before the
   district court (and ours) because it was referenced in Partners’ complaint and
   central to Partners’ claims. See In re Katrina Canal Breaches Litig., 495 F.3d
   191, 205 (5th Cir. 2007).
          Finally, Partners contends even if CCCB only agreed to pay
   Cottonwood, CCCB may have made extra-contractual payments to Longboat
   related to the settlement. But Partners made no such allegation in its
   complaint. Partners may not rely on allegations it did not make in its
   complaint to survive defendants’ motion to dismiss. See Moore v. Home Depot
   U.S.A., Inc., 2017 WL 5180431, at *3 (M.D. La. Nov. 8, 2017) (“[I]t is well-
   established that a party cannot rely on facts outside the complaint on a motion
   to dismiss.”) (citing Bustos v. Martini Club Inc., 599 F.3d 458, 461 (5th Cir.
   2010)).
                                         B.
          Partners next alleges Longboat fraudulently induced it to enter the
   joint participation agreement by disingenuously promising to share monetary

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                                          No. 23-10192

   settlement proceeds.1 But Partners pleaded no facts establishing injury from
   this alleged misrepresentation. See Int’l Bus. Machines Corp. v. Lufkin Indus.,
   LLC, 573 S.W.3d 224, 228 (Tex. 2019) (noting injury is an element of
   fraudulent inducement). As we have explained, Partners failed to state a
   claim that Longboat withheld settlement money. See supra Part III.A. Even
   assuming Longboat willfully misrepresented its intention to perform,
   Partners still got everything it bargained for under the joint participation
   agreement. Its fraudulent inducement claim accordingly fails.
                                                C.
           Lastly, Partners asserts a money had and received claim against
   Cottonwood. “An action for money had and received arises when the
   defendant obtains money which in equity and good conscience belongs to the
   plaintiff.” Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.—El
   Paso 1997). Partners alleges Longboat received $850,000 in the settlement
   and then transferred it to Cottonwood, so Cottonwood holds money that
   belongs to Partners. This claim falters on the same ground as the others;
   Partners has not plausibly alleged Longboat recovered money in the
   settlement. Thus, Partners cannot demonstrate an equitable entitlement to
   money obtained by Cottonwood.
                                               IV.
           Partners requested leave to amend its complaint in its response to
   Longboat’s motion to dismiss. See ROA.266 (“[S]hould the Court desire to
   grant the Motion, Plaintiff alternatively requests that it be given an
           _____________________
           1
             Partners’ fraudulent inducement claim sounds in breach of contract. But under
   Texas law, a party can state a claim for fraudulent inducement in addition to breach when
   the breach is “coupled with a showing that the promisor never intended to perform under
   the contract.” Kevin M. Ehringer Enters., Inc. v. McData Servs. Corp., 646 F.3d 321, 325 (5th
   Cir. 2011) (citing Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986)).

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                                      No. 23-10192

   opportunity to amend its complaint before dismissal.”). The district court
   did not squarely address the request but implicitly denied it by dismissing
   Partners’ claims with prejudice. We review for abuse of discretion. See United
   States, ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375, 379
   (5th Cir. 2003).
          The district court did not abuse its discretion. That is because
   Partners’ request for leave to amend was no more than a “bare request in an
   opposition to a motion to dismiss—without any indication of the particular
   grounds on which the amendment is sought.” Willard, 336 F.3d at 387 (5th
   Cir. 2003) (quotation and citation omitted). Such a request “does not
   constitute a motion within the contemplation of Rule 15(a),” so the district
   court had no obligation to justify its implicit denial. Id. (citation omitted).
                                          V.
          The joint participation agreement between Partners and Longboat
   provides the prevailing party in any suit brought to enforce the agreement or
   “obtain any other remedy in respect of any breach of [the] agreement” is
   entitled to costs and reasonable attorneys’ fees. ROA.43–44. Partners
   brought claims arising out of the agreement and Longboat prevailed, so the
   district court awarded Longboat costs totaling $402 and fees totaling
   $109,701.72. We review for abuse of discretion. See Merritt Hawkins &
   Assocs., LLC v. Gresham, 861 F.3d 143, 155 (5th Cir. 2017).
          Partners raises three objections to the fee award. First, it argues
   Longboat’s attorneys spent an unreasonable amount of time defending
   against the lawsuit. But Partners presents no evidence, and it is Partners’
   burden to provide “specific evidence to overcome the presumptive
   reasonableness of the base lodestar figure.” Rohrmoos Venture v. UTSW DVA
   Healthcare, LLP, 578 S.W.3d 469, 501 (Tex. 2019).

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          Second, Partners contends the district court erred by awarding
   Longboat fees it incurred defending against Partners’ fraudulent inducement
   claim. In Partners’ view, Longboat may not recover these fees because
   Partners brought the fraud claim to impugn the validity of the joint
   participation agreement rather than to enforce it. But the joint participation
   agreement shifts fees for all suits “in respect of any breach of [the]
   agreement.” ROA.44 (emphasis added). “In respect of” is synonymous
   with “in respect to,” which means “in relation to.” Respect, Webster’s
   New International Dictionary 2122–23 (2d ed. 1934; 1950).
   Partners’ fraud claim depends on its breach claim, so the former undoubtedly
   relates to the latter. Longboat’s fees related to the fraud claim are therefore
   recoverable.
          Lastly, Partners contends the district court erred by awarding
   Longboat fees its attorneys incurred defending Cottonwood. But that is not
   what the district court did. Instead, it determined Longboat’s attorneys
   would have incurred 95% of the fees they requested even if Partners had not
   sued Cottonwood at all.2 The court properly reduced Longboat’s fee request
   by 5% to ensure Partners was not forced to subsidize Cottonwood’s litigation
   costs. Any further reduction would have stripped Longboat of compensation
   it was otherwise entitled to recover under the joint participation agreement
   and Texas law. See Tony Gullo Motors I, LP v. Chapa, 212 S.W.3d 299, 313–14
   (Tex. 2006) (noting parties may recover fees incurred for two intertwined
   claims even if only one claim is eligible for fee shifting).
          AFFIRMED.

          _____________________
          2
              Partners does not argue this factual conclusion was clearly erroneous.

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