Court Opinion

ID: 19063
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:21:11+00
Date Added: 2024-06-11T15:04:43.704878
License: Public Domain

UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT

                           No. 98-10564

                     C & H Nationwide, Inc.,

                                               Plaintiff-Counter
                                               Defendant-Appellee,

                              VERSUS

                     FLOYD R. ADAMS, ET AL.,

                                                         Defendants,

FLOYD R. ADAMS; RAYMOND BILLINGTON; NOELINE BILLINGTON; DAVID B.
BOLES; RALPH BOSTON; CHARLOTTE BOSTON; JUANITA BULLOCK; JOHN T.
CLARK; CURLEY HOE TRUCKING, INC.; DAVID DOTTERWEICH; G.R. ELLISTON;
LEON FLOWERS, JR.; J.L. FOWLER; HAROLD GAINES; HOWARD L. GARDNER;
JOHN HECKS; JAMES KILPATRICK; JACKIE KILPATRICK; DELVIN LA DUKE;
VONDA LAMB; ROBERT E. LAND, JR.; VIRGINIA MARTIN; RICHARD G.
MCKENNEY; JOYCE MCLEMORE; BARBARA JEAN MILLER; WILBUR NEWSOME;
CHARLES P. PORTER; RICHARD PUCKETT; LEON S. RABY; ANDREW RACHOY;
ROBERT READ; ADELA READ; DONALD ROTH; LOU J. SMITH; LEE A. TRACY;
SHIRLEY S. TRAVIS; BETTY E. WILLIAMS, Estate of; JAMES E. WINSLOW;
THOMAS YORK; JAMES LAMB; GEORGE MARTIN,

                                            Defendants-Appellants,

JAY MCDONALD; JOHN F. BONANNO; JIMMY BRADDOCK; KARIN BRADDOCK;
RODERICK A. FONTANELLA; WESLEY KENNEMER; WILLIAM R. MULLEN; KEITH
S. MUNDWILLER; ALBERT PEABODY; THOMAS SHROPSHIRE; ROBERT KELVIN
SMITH; FRED W. VOSS,

                                                 Defendants-Counter
                                               Claimants-Appellants.

          Appeal from the United States District Court
               for the Northern District of Texas
                         (3:90-CV-1510-D)

                         November 2, 1999

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Before DeMOSS and PARKER, Circuit Judges and LAKE, District Judge.*

ROBERT M. PARKER, Circuit Judge:**

     Defendants/counter-claimants appeal various aspects of the

judgment in this declaratory judgment and breach of contract

action.    We affirm in part, reverse in part and remand.

                    FACTS AND PROCEDURAL HISTORY

     C & H Nationwide, Inc. (“C&H”) was a motor carrier operating

more than 850 tractors and 4,500 trailers. Appellants (referred to

collectively as “owner-operators”) leased trucking equipment and

drivers to C&H.    The owner-operators contracted separately with

C&H, but entered into substantially identical written contracts

that provided:

     1.     Owner-operators would receive 67% of the truck’s
            revenue;
     2.     C&H would make every reasonable effort to make
            freight available; and
     3.     Either party could cancel the contract on thirty
            days’ written notice.

In 1987, C&H’s parent company attempted to sell C&H as a going

concern.    Those attempts failed and C&H was shut down on December

27, 1988 without prior notice to the owner-operators.

     During the late 1980s, many of C&H’s shipments were billed at

negotiated rates rather than the higher “tariff rates” with the

blessing of the ICC.   After the shutdown, the Fifth Circuit ruled

that motor carriers must use tariff rates instead of negotiated

    *
     District Judge of the Southern District of Texas, sitting by
designation.
     **
      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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rates.    See Supreme Beef Processors v. Yaquinto, 864 F.2d 388 (5th

Cir. 1989).          Accordingly, after the shutdown, C&H conducted an

audit of its past freight bills and sent out undercharge claims.

Some     of    the    charges   were   paid,   some   settled,   some   were

uncollectible, some determined invalid and some were disallowed by

courts.       A group of owner-operators made demand upon C&H, pursuant

to their contracts, for 67% of the total undercharge claims,

approximately $4.7 million, arguing that the risk of loss on

uncollected accounts receivable, as well as collection costs had

never before been deducted from their percentage of revenues.            C&H

refused the demand, calculating the payment due to owner-operators

on the undercharge claims at 67% of the net collected revenues,

i.e., collected revenues minus collection costs.

       In March 1990, Appellants filed suit in Texas court seeking

damages for C&H’s breach of the contract provision requiring 30

days notice of closing and for failure to pay them 67% of the total

undercharge claims.        Appellants agreed to dismiss that lawsuit to

pursue settlement negotiations on the condition that C&H would give

owner-operators ten days to refile it if settlement negotiations

were unsuccessful.         Settlement negotiations broke down and C&H

filed this action seeking a declaration of the parties’ rights and

liabilities under the contracts, including a determination of what

portion of the undercharge claims were due the owner-operators.

The owner-operators counterclaimed against C&H for, inter alia,

breach of contract.         After a bench trial, the magistrate judge

entered a declaratory judgment awarding the owner-operators damages

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and post judgment interest and awarding C&H costs and attorney fees

in the amount of $105,884.05.

                                   DISCUSSION

     The owners-operators appeal, challenging the attorney fee

award in favor of C&H, seeking to increase their recovery by

increasing the damages awarded and adding prejudgment interest and

challenging    the   sanctions      imposed   by    the   district     court   for

discovery abuse.

     Owner-operators       begin    with    the    contention     that   the   two

judgments are not final because they are ambiguous.                   We find no

merit in this contention.          The errors in the judgments identified

on appeal are clearly clerical errors susceptible to correction

pursuant to Federal Rule of Civil Procedure 60(a).

     Owner-operators have identified no error by the district court

that merits reversal of the amount of damages awarded on their

breach   of   contract    claims,    undercharge      claims     or   prejudgment

interest claims.         Further, we find no basis for reversing or

modifying the sanctions imposed due to discovery abuses.

     Finally,    the   owner-operators        challenge    the    attorney     fees

awarded C&H.    There is no authority for an award of attorney fees

in 28 U.S.C. § 2202, the federal declaratory judgment statute.                 See

Self-Insurance Inst. of Am., Inc. v. Korioth, 53 F.3d 694, 697 (5th

Cir. 1995).     However, C&H also pleaded for declaratory relief

pursuant to Texas’s Declaratory Judgements Act, TEX. CIV. PRAC. & REM.

CODE ANN. §§ 37.001 - 37.011 (Vernon 1997), which specifically

allows for the award of costs and attorney fees.                  See § 37.009.

                                        4
The grant of attorney fees in a Texas declaratory judgment action

is reviewed for clear abuse of discretion.                See Hasty Inc. v.

Inwood Buckhorn Joint Venture, 908 S.W.2d 494, 502 (Tex. App.-

Dallas 1995, writ denied).

      Owner-operators     argue    that     C&H   did   not    bring   a   proper

declaratory judgment action under Texas law because all parties

were not joined.       The Texas declaratory judgment statute requires

that “all persons who have or claim any interest that would be

affected by the declaration must be made parties.”               § 37.006.    The

requirement to join all parties affected is mandatory.                 See Clear

Lake City Water Auth. v. Clear Lake Utilities Co., 549 S.W.2d 385,

389 (Tex. 1977).       “This is the clear import of the language, the

construction supported by the great weight of authority, and the

apparent intent of the drafters.”           Id.   It is undisputed that all

850 former C&H drivers had similar interests in the proceeds of the

undercharge claims.       Rather than joining all similarly situated

parties, C&H sued only those owner-operators that had previously

filed suit in state court, calling into question the validity of

characterizing this suit as a Texas declaratory judgment action.

      C&H responds that they have complied with the mandatory

joinder requirement of the Texas statute because each truck was

under separate contract and they sought a declaration of rights as

to   each   of   the   “handful”   of   individuals      who   disputed    their

contractual rights by bringing suit in state court.

      C&H’s distinction does not comport with the plain language of

the statute.     The statute is not limited to those who have claimed

                                        5
a disputed interest, but specifically includes any who have such an

interest whether or not they have made a claim.   We conclude that

the suit was not validly brought under the Texas Declaratory

Judgments Act and C&H is not entitled to recover its attorney fees

under that statute.   Finding no other basis to support the award,

we hold that the magistrate judge abused his discretion in awarding

attorney fees to C&H.

                            CONCLUSION

     Based on the foregoing, we reverse the award of attorneys fees

and affirm the judgment in all other respects.

     AFFIRMED in part, REVERSED in part.

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