Court Opinion

ID: 9405723
Source: CourtListenerOpinion
Date Created: 2023-06-29 00:00:34.310727+00
Date Added: 2024-06-11T17:20:23.945771
License: Public Domain

Case: 20-50750         Document: 00516803405             Page: 1      Date Filed: 06/28/2023

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

                                                                                             FILED
                                       No. 20-50750                                      June 28, 2023
                                      ____________                                      Lyle W. Cayce
                                                                                             Clerk
   IAS Services Group, L.L.C.,

                                                                    Plaintiff—Appellant,

                                             versus

   Jim Buckley & Associates, Incorporated; James Buckley,
   Individually, and as Co-Trustee of the Buckley Family Trust
   Dated 06/21/01; Barbara Buckley, Individually, and as Co-Trustee
   of the Buckley Family Trust dated 06/21/01,

                                               Defendants—Appellees.
                      ______________________________

                      Appeal from the United States District Court
                           for the Western District of Texas
                                USDC No. 5:14-CV-180
                      ______________________________

   Before Richman, Chief Judge, and Smith and Graves, Circuit Judges.
   Priscilla Richman, Chief Judge:*
          IAS Services Group, L.L.C. (IAS) acquired Jim Buckley & Associates,
   Inc. (JBA) via an asset purchase agreement. Several years later, IAS filed suit
   against JBA, as well as Jim and Barbara Buckley, alleging, among other things,
   fraudulent inducement and breach of the asset purchase agreement. JBA and

          _____________________
          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
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   the Buckleys counterclaimed, alleging breach of other relevant contracts.
   After two bench trials and an appeal, IAS appeals the district court’s
   judgment in the second trial in favor of JBA and the Buckleys.
                                         I
          IAS is an independent loss adjusting firm for property casualty
   insurance carriers. In 2011, the then-president of IAS, Larry Cochran, sought
   to expand IAS’s business through the acquisition of another adjusting firm.
   IAS retained an investment firm specializing in acquisitions within the
   insurance industry, StoneRidge Advisors, LLC (“StoneRidge”), which
   suggested that IAS consider the acquisition of JBA, an insurance adjusting
   firm based in California and owned by Jim Buckley (Buckley) and Barbara
   Buckley (collectively, the Buckleys). In early 2011, before any offers were
   exchanged between IAS and JBA, the parties then executed a Confidentiality
   and Nondisclosure Agreement (the NDA) that prohibited either side from
   discussing the potential transaction with third parties, including JBA’s
   clients. StoneRidge then conducted preliminary due diligence on JBA’s
   financial records.
          JBA rejected IAS’s initial offer and proposed a higher cash payment
   plus a $1.5 million earn-out payable over three years in which Buckley, rather
   than IAS, would bear the risk of lost clients and revenue. IAS submitted a
   counteroffer with a $3.6 million purchase price, consisting of a $2.4 million
   cash payment and a $1.2 million seller note payable over five equal, annual
   installments (“Seller Note”), as well as a five-year employment agreement
   between IAS and Buckley, including an annual salary of $250,000
   (“Employment Agreement”). JBA accepted the offer, and in June 2011, IAS
   and JBA signed a non-binding letter of intent reflecting as such. The parties
   agreed the transaction would not be consummated until “the satisfactory

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   outcome of [their] due diligence,” which was expressly to include “a
   particular focus on JBA’s customers.”
         Between June and October 2011, the parties negotiated the terms of
   the Asset Purchase Agreement (“APA”) and related documents and
   continued the due diligence process. The materials that JBA provided to IAS
   during the process showed that a substantial portion of JBA’s revenue and
   billings came from “one huge client”—QBE First Insurance Agency, Inc.
   (“QBE”)—although IAS could not discern QBE’s identity at the time
   because JBA’s clients were coded in JBA’s records.
          In July 2011, Cochran of IAS and Jay Poorman of StoneRidge met
   Buckley in JBA’s office in Anaheim, California, to acquire more due diligence
   information regarding JBA’s employees and its relationships with its clients.
   Though the meeting occurred in JBA’s office, Buckley did not permit
   Cochran or Poorman to speak with any JBA employees other than himself
   and Barbara Buckley. During the meeting, Cochran asked Buckley about the
   strength of JBA’s relationship with QBE. In response, Buckley volunteered
   that JBA was the “number one vendor” on QBE’s vendor panel. Buckley
   testified at trial that he remembered stating that JBA was “number one” to
   QBE “in California in [JBA’s] market or number one where [JBA] serviced.”
   Cochran and StoneRidge considered the ranking important, as an adjusting
   firm’s position at the top of a vendor panel can be difficult to gain and
   dislodge. Cochran then asked whether Buckley would permit IAS to speak
   to QBE. Buckley refused, stating that it would be better if he handled
   conversations with JBA’s clients himself. Buckley did not disclose, in the
   July 2011 meeting or at any time before the execution of the APA, that JBA
   had not ranked first on any of QBE’s self-produced and circulated vendor
   rankings since June 2009.

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          In October 2011, a few days before the execution of the APA (“the
   Closing”), Buckley sent a text message and an email to Cochran discussing
   QBE and the “merge of claims.” Cochran interpreted that correspondence
   as confirmation that Buckley had discussed IAS’s acquisition of JBA with
   QBE and obtained QBE’s consent to assign the contract between JBA and
   QBE (“QBE Contract”), which was not assignable without QBE’s prior
   written consent. But neither Buckley nor JBA had obtained QBE’s consent.
   IAS and JBA eventually executed the APA, with Paragraph 2.3 providing that
   the execution would not “result in a breach of, constitute a default
   under, . . . [or] create in any party the right to accelerate, terminate, modify,
   or cancel . . . any Contract . . . to which the Seller, the Owner or the
   Beneficial Owners is a party . . . .” The parties also executed the Seller Note;
   the Employment Agreement; and the Assignment of Contracts, which
   assigned all of JBA’s contracts with its clients (including QBE) to IAS.
   Within days of the Closing, QBE discontinued all assignments of new
   business to IAS and refused to consent to the transfer of its contract to IAS,
   with IAS receiving nothing more than a few “tail claims” sent prior to the
   Closing. QBE officially terminated the QBE Contract in December 2011.
          In early 2014, IAS terminated Buckley and filed suit against JBA and
   the Buckleys, asserting claims for fraud, fraudulent inducement, fraud by
   nondisclosure, and breach of contract (i.e., breach of the APA). JBA and the
   Buckleys moved to dismiss all claims. The district court dismissed all of
   IAS’s fraud-related claims, leaving IAS with a single claim for breach of
   contract.   JBA and the Buckleys filed counterclaims alleging that IAS
   breached the Seller Note by refusing to pay what IAS owed under the
   promissory note and the Employment Agreement by wrongfully terminating
   Buckley “without cause.” After a bench trial, the district court ruled for JBA
   and the Buckleys on all claims (adopting their proposed findings of fact and
   conclusions of law in their entirety), awarded JBA damages on its claim for

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   breach of the Seller Note and unsegregated attorneys’ fees and expenses, and
   awarded Buckley damages on his claim for breach of the Employment
   Agreement (“EA-Breach Claim”). IAS appealed. This court reversed the
   district court’s dismissal of IAS’s fraudulent inducement claim, affirmed the
   district court’s judgment in favor of JBA and the Buckleys on IAS’s breach
   of the APA claim, vacated the district court’s award of severance pay to
   Buckley through the EA-Breach Claim, and remanded for further
   proceedings consistent with the opinion.
          After the second bench trial, the district court issued an Order
   Regarding Entry of Judgment Following Remand, adopting JBA and the
   Buckleys’ proposed findings of fact and conclusions of law with no material
   changes and holding in favor of JBA and the Buckleys on IAS’s fraudulent
   inducement claim. JBA and the Buckleys then filed a motion seeking all of
   their attorneys’ fees and expenses associated with the first appeal and the
   second trial on remand. IAS opposed the motion, arguing that JBA’s and the
   Buckleys’ fees must be reduced by amounts associated with the vacated
   severance pay award, as IAS was the prevailing party on that claim, and that
   JBA and the Buckleys were not entitled to any of their attorneys’ fees and
   expenses for the second trial on remand, as that trial exclusively concerned
   fraud claims for which attorneys’ fees cannot be awarded under Texas law.
   IAS also submitted its own motion seeking attorneys’ fees associated with
   the defense of Buckley’s EA-Breach Claim. The district court awarded JBA
   and the Buckleys all of their attorneys’ fees and expenses for the first appeal
   and the second trial. The court then awarded IAS attorneys’ fees for its
   successful defense of Buckley’s EA-Breach Claim, recognizing that IAS was
   the “prevailing party on appeal,” but refused to order JBA and the Buckleys
   to segregate their fees on that issue. After the district court entered its
   Amended Final Judgment, and denied several post-judgment motions, IAS
   timely filed its second appeal.

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             On appeal, IAS contends that the district court erred in holding that
   two alleged misrepresentations by Jim Buckley and JBA, respectively, did not
   constitute fraudulent inducement, and that the district court abused its
   discretion in awarding attorneys’ fees to JBA and the Buckleys.
                                                   II
             IAS argues two alleged misrepresentations fraudulently induced IAS
   to enter into the APA: (1) Buckley’s representation in the July 2011 meeting
   that JBA was QBE’s “number one” vendor and (2) JBA’s representation in
   Paragraph 2.3 of the APA that the execution of the APA would not result in
   a breach, or constitute a default of, another agreement of JBA’s.
             “The standard of review for a bench trial is well established: findings
   of fact are reviewed for clear error and legal issues are reviewed de novo.” 1
   Mixed questions of law and fact are reviewed de novo. 2                             Because
   “[f]raudulent inducement ‘is a particular species of fraud that arises only in
   the context of a contract and requires the existence of a contract as part of its
   proof,’” 3 “the elements of fraud must be established as they relate to an
   agreement between the parties.” 4 To establish a fraudulent inducement
   claim under Texas law, a plaintiff must prove that:
             (1) the defendant made a material misrepresentation; (2) the
             defendant knew at the time that the representation was false or

             _____________________
             1
            Luwisch v. Am. Marine Corp., 956 F.3d 320, 326 (5th Cir. 2020) (per curiam)
   (quoting Barto v. Shore Constr., L.L.C., 801 F.3d 465, 471 (5th Cir. 2015)).
             2
            Eni US Operating Co. v. Transocean Offshore Deepwater Drilling, Inc., 919 F.3d 931,
   934 (5th Cir. 2019) (citing In re Luhr Bros., Inc., 325 F.3d 681, 684 (5th Cir. 2003)).
             3
            IAS Servs. Grp., L.L.C. v. Jim Buckley & Assocs., Inc., 900 F.3d 640, 647 (5th Cir.
   2018) (quoting Bohnsack v. Varco, L.P., 668 F.3d 262, 277 (5th Cir. 2012)).
             4
                 Bohnsack, 668 F.3d at 277 (quoting Haase v. Glazner, 62 S.W.3d 795, 798-99 (Tex.
   2001)).

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           lacked knowledge of its truth; (3) the defendant intended that
           the plaintiff should rely or act on the misrepresentation; (4) the
           plaintiff relied on the misrepresentation; and (5) the plaintiff’s
           reliance on the misrepresentation caused injury. 5
                                                A
           As for the first alleged misrepresentation, while no party disputes that
   during the July 2011 meeting Buckley made a representation to the effect that
   JBA was QBE’s “number one” vendor, the parties dispute whether the
   representation was geographically limited to California. The district court
   characterized Buckley’s representation as “the statement about JBA’s
   ‘number one’ relationship with QBE in the California market it served.”
   Regardless of whether the “number one” representation was geographically
   limited, the district court did not err in holding that IAS cannot establish that
   IAS’s alleged reliance on Buckley’s statement caused IAS injury, and
   therefore did not err in holding that IAS cannot establish all five elements of
   fraudulent inducement based on that representation.
           Because injury is a question of fact, we review for clear error. 6 “A
   finding is clearly erroneous if, after viewing the evidence in its entirety, we
   are ‘left with the definite and firm conviction that a mistake has been
   committed.’” 7 The Fourteenth Court of Appeals of Texas has held that

           _____________________
           5
             Int’l Bus. Machs. Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224, 228 (Tex. 2019)
   (citing Anderson v. Durant, 550 S.W.3d 605, 614 (Tex. 2018)).
           6
             Cf. Jacked Up, L.L.C. v. Sara Lee Corp., 854 F.3d 797, 811 (5th Cir. 2017) (“The
   issue of justifiable reliance is generally a question of fact.”) (cleaned up); United Tchr.
   Assocs. Ins. Co. v. Union Lab. Life Ins. Co., 414 F.3d 558, 568 (5th Cir. 2005) (treating
   fraudulent intent in a non-disclosure claim as a question of fact).
           7
              IAS Servs. Grp., 900 F.3d at 652 (quoting Bertucci Contracting Corp. v. M/V
   ANTWERPEN, 465 F.3d 254, 258-59 (5th Cir. 2006)); see also Ali v. Stephens, 822 F.3d
   776, 783-84 (5th Cir. 2016) (holding that we must accept the district court’s factual findings
   if they are “plausible in light of the record viewed in its entirety,” and we “may not second-

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   injury or “‘damage’ should not be restricted to a monetary loss,” and “it is
   sufficient if the defrauded party has been induced to incur legal liabilities or
   obligations different from that represented or contracted for.” 8
           IAS contends its reliance on Buckley’s “number one” statement
   injured IAS by inducing IAS to overpay for JBA in the APA. But as the
   district court correctly noted, Buckley did not state that JBA was QBE’s
   “number one” vendor “until after JBA had disclosed the identities of its
   clients to IAS, and the parties had agreed upon a purchase price IAS offered
   that was solely based on undisputedly[ ]accurate financial due diligence
   information.” Thus, “Buckley’s after-the-fact statement could not have
   induced IAS to purchase JBA for a price that it had already offered to pay
   [months before] based upon the specific, admittedly accurate information
   IAS had requested.”
           Because we are not left with the definite and firm conviction that a
   mistake has been committed, the district court did not clearly err in holding
   that IAS cannot establish that its alleged reliance on Buckley’s “number
   one” vendor representation caused IAS injury. Accordingly, the district
   court did not err in holding that IAS cannot establish fraudulent inducement
   based on that representation.

           _____________________
   guess the district court’s resolution of conflicting testimony or its choice of which experts
   to believe.”) (first quoting Anderson v. Sch. Bd. of Madison Cnty., 517 F.3d 292, 296 (5th
   Cir. 2008); and then quoting Grilletta v. Lexington Ins. Co., 558 F.3d 359, 365 (5th Cir. 2009)
   (per curiam))).
           8
             Anderson, Greenwood & Co. v. Martin, 44 S.W.3d 200, 212 (Tex. App.—Houston
   [14th Dist.] 2001, pet. denied) (citing Russell v. Indus. Transp. Co., 258 S.W. 462, 464 (Tex.
   1924)); cf. Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41,
   49 (Tex. 1998) (describing the two measures Texas recognizes for calculating direct
   damages in common-law fraud claims, the out-of-pocket measure and the benefit-of-the-
   bargain measure).

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                                              B
           As for the second alleged misrepresentation, IAS contends that JBA
   fraudulently induced IAS into entering the APA by misrepresenting that JBA
   had secured QBE’s consent to assign the QBE Contract prior to Closing by
   providing in Paragraph 2.3 of the APA that execution of the APA would not
   “result in a breach of, constitute a default under, . . . [or] create in any party
   the right to accelerate, terminate, modify, or cancel . . . any Contract . . . to
   which the Seller, the Owner or the Beneficial Owners is a party . . . .”
           It is undisputed that: IAS and JBA executed an NDA which provided
   that neither IAS nor JBA would contact any third parties, such as QBE, and
   inform them of the transaction for two years or until after Closing 9; the
   Assignment of Contracts required JBA to assign its contracts “as the same
   exist as of the execution of this Assignment”; the QBE Contract was not
   assignable without QBE’s prior written consent; Paragraph 4.2 of the APA,
   titled “Non-Assignable Contracts,” required JBA to use “commercially
   reasonable efforts” to obtain “valid and effective assignment” not obtained
   by Closing; and IAS and JBA’s execution of the APA breached the QBE
   Contract, as JBA did not secure QBE’s prior written consent to assign the
   QBE Contract to IAS. Given that Paragraph 2.3 provides that execution of
   the APA would not result in the breach of another agreement of JBA’s, and
   the QBE Contract did not allow assignment without QBE’s prior written
   consent (which was not obtained), it is likely that Paragraph 2.3 was a
   misrepresentation. Regardless, IAS cannot establish that the representation

           _____________________
           9
            IAS points out that the NDA only forbids IAS and JBA from contacting third
   parties “without prior written approval of the other.” This does not change our analysis,
   as IAS does not contend that JBA asked for or received such approval.

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   was material, and therefore cannot establish fraudulent inducement based on
   that representation.
           Because materiality is a mixed question of law and fact, we review the
   district court’s findings and conclusions de novo. 10 A representation is
   material if “a reasonable person would attach importance to and would be
   induced to act on the information in determining his choice of actions in the
   transaction in question.” 11           Cochran of IAS testified that he read and
   understood the QBE Contract before Closing, which stated that it was not
   assignable without prior written consent. He testified that he understood
   that the NDA prohibited client contact regarding the transaction, but simply
   assumed and expected that Buckley would approach clients, such as QBE, in
   breach of the NDA to obtain their consent based on the advice of Cochran’s
   advisors that “it was very customary, more often than not, for companies to
   ignore that part of the NDA when you’re in the transaction” because “[i]t’s
   all really for the benefit of both parties to ignore that NDA at that point.”
   Cochran also testified that he and IAS understood that there was no
   guarantee that QBE would continue its relationship with JBA/IAS after
   Closing, and he also acknowledged that he understood the risk that QBE
   could have consented and then never assigned another claim to JBA/IAS.
           Given Cochran’s knowledge that the QBE Contract was not
   assignable without QBE’s prior written consent, the NDA’s prohibition of
   contact with QBE regarding the transaction between IAS and JBA, and IAS’s
   decision to enter into the APA with full knowledge of the risk that QBE could
   discontinue sending JBA or IAS business and revenue at any time, with or
           _____________________
           10
                In re Westcap Enters., 230 F.3d 717, 725 (5th Cir. 2000).
           11
             Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337
   (Tex. 2011) (quoting Smith v. KNC Optical, Inc., 296 S.W.3d 807, 812 (Tex. App.—Dallas
   2009, no pet.)).

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   without an assignment of the QBE Contract, a reasonable person would not
   attach importance to and be induced to act on Paragraph 2.3, specifically, in
   determining his choice of actions regarding the APA.                         Thus, the
   representation was immaterial, and the district court did not err in holding
   that IAS cannot establish fraudulent inducement based on it.
           Accordingly, we affirm the district court’s judgment regarding IAS’s
   fraudulent inducement claim.
                                              III
           IAS also contends that the district court improperly awarded
   attorneys’ fees to JBA and the Buckleys. Generally, “a claimant must
   segregate legal fees accrued for those claims for which attorneys[’] fees are
   recoverable from those that are not.” 12 IAS argues that the district court
   failed to segregate JBA’s and the Buckleys’ unrecoverable attorneys’ fees
   related to Buckley’s “severance claim” under his Employment Agreement
   and IAS’s fraudulent inducement claim. We review a district court’s award
   of attorneys’ fees for an abuse of discretion. 13
                                               A
           After the district court determined in the first trial that IAS breached
   its Employment Agreement with Buckley, this court vacated the district
   court’s award of severance pay to Buckley from that agreement because
   Buckley “failed to satisfy the second condition precedent to his receipt of

           _____________________
           12
              Kinsel v. Lindsey, 526 S.W.3d 411, 427 (Tex. 2017) (citing Tony Gullo Motors I,
   L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006)); see also ATOM Instrument Corp. v.
   Petroleum Analyzer Co. (In re ATOM Instrument Corp.), 969 F.3d 210, 216-17 (5th Cir.
   2020), as revised (Sept. 17, 2020).
           13
             Iscavo Avocados USA, L.L.C. v. Pryor, 953 F.3d 316, 319 (5th Cir. 2020); see also
   Mathis v. Exxon Corp., 302 F.3d 448, 461-62 (5th Cir. 2002).

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   severance pay: execution of the required release and waiver.” 14 In the second
   trial, deeming IAS “the prevailing party on appeal,” the district court
   awarded IAS its fees related to the severance pay award from the first trial
   and appeal, but did not alter JBA’s and the Buckleys’ award of fees related to
   that same issue.
                                                    1
            In the second trial, the district court determined that the waiver
   doctrine and the mandate rule preclude IAS from arguing that JBA and the
   Buckleys must segregate their attorneys’ fees related to the severance pay
   issue in the first trial because IAS did not raise that issue in the first appeal.
   We review de novo whether the waiver doctrine or the mandate rule
   forecloses any of the district court’s actions on remand. 15
            “The waiver doctrine ‘holds that an issue that could have been but
   was not raised on appeal is forfeited and may not be revisited by the district
   court on remand,’” and “prevents [this court] from considering such an
   issue during a second appeal.” 16                But “notices of appeal are liberally
   construed,” and we “require a showing of prejudice to preclude review of
   issues ‘fairly inferred’ from the notice and subsequent filings.” 17 During the
   first appeal, IAS included in its notice of appeal a general reference to the
   attorneys’ fee award from the first trial, argued in its briefs that “the

            _____________________
            14
                 IAS Servs. Grp., L.L.C. v. Jim Buckley & Assocs., Inc., 900 F.3d 640, 653 (5th Cir.
   2018).
            15
                 Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 453 (5th Cir. 2007).
            16
             Lindquist v. City of Pasadena, 669 F.3d 225, 239 (5th Cir. 2012) (quoting Med.
   Ctr. Pharm. v. Holder, 634 F.3d 830, 834 (5th Cir. 2011)).
            17
              Williams v. Henagan, 595 F.3d 610, 616 (5th Cir. 2010) (per curiam) (first quoting
   S.E.C. v. Van Waeyenberghe, 990 F.2d 845, 847 n.3 (5th Cir. 1993); and then quoting Morin
   v. Moore, 309 F.3d 316, 321 (5th Cir. 2002)).

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   judgment awarding severance pay must be reversed and rendered against Mr.
   Buckley,” and requested in the “Summary of the Arguments” section of its
   opening brief that this court “remand[] to the district court for a
   determination of damages, attorney’s fees and costs for IAS.” Unlike the
   cases JBA and the Buckleys cite to support application of the waiver rule, the
   issue of JBA’s and the Buckleys’ attorneys’ fees related to the severance pay
   award could be fairly inferred from the liberally construed notice of appeal
   and subsequent filings. Moreover, JBA has made no showing of prejudice to
   preclude review.
            “The mandate rule requires a district court on remand to effect our
   mandate and to do nothing else.” 18 “A remand made without deciding
   anything, apart from directing further proceedings, determines only that the
   further proceedings must be had.” 19 This court’s opinion and broad mandate
   remanding “for further proceedings consistent with [the] opinion” 20 did not
   prevent the district court from revisiting its award of fees to IAS for the
   severance pay issue, and therefore it should not prevent the district court
   from revisiting its award of fees to JBA and the Buckleys for the same issue.
            The waiver doctrine and mandate rule did not preclude the district
   court from addressing IAS’s argument regarding the EA-Breach Claim on
   remand.

            _____________________
            18
              HAL, Inc., 500 F.3d at 453 (quoting United States v. Castillo, 179 F.3d 321, 329
   (5th Cir. 1999), rev’d on other grounds, 530 U.S. 120 (2000)); accord M.D. by Stukenberg v.
   Abbott, 977 F.3d 479, 482 (5th Cir. 2020) (“It is black-letter law that a district court must
   comply with a mandate issued by an appellate court.” (citing HAL, Inc., 500 F.3d at 453)).
            19
             Holder, 634 F.3d at 836 n.4 (quoting 18B Charles Alan Wright, Arthur
   R. Miller, & Edward H. Cooper, Federal Practice and Procedure
   § 4478.3 (2d ed. 2002)).
            20
                 IAS Servs. Grp., L.L.C. v. Jim Buckley & Assocs., Inc., 900 F.3d 640, 653 (5th Cir.
   2018).

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                                             2
           Whether the district court’s ultimate decision not to segregate JBA’s
   and the Buckleys’ attorneys’ fees for Buckley’s EA-Breach Claim in the first
   trial and appeal was an abuse of discretion depends on whether Buckley’s
   Employment Agreement contains a specific attorneys’ fees provision
   allowing for the recovery of fees related to the EA-Breach Claim. 21 The
   Employment Agreement provides that “[i]f any party to this Agreement
   brings any action . . . to enforce or interpret the terms of this Agreement, the
   substantially prevailing party will be entitled to recover from the other party
   to this Agreement reasonable attorneys’ fees . . . associated with such
   action . . . .”
           Buckley’s EA-Breach Claim triggered the Employment Agreement’s
   fee-shifting provision because IAS refused to pay Buckley the severance pay
   that the Employment Agreement specified IAS pay if IAS terminated
   Buckley “without cause” before a certain date and Buckley brought his EA-
   Breach Claim “to enforce” the Employment Agreement accordingly.
   Because IAS—not JBA or the Buckleys—was the “substantially prevailing
   party” regarding the EA-Breach Claim in the first appeal, the district court
   abused its discretion by refusing to order that JBA and the Buckleys segregate
   all their attorneys’ fees related to Buckley’s EA-Breach Claim, as the
   Employment Agreement does not allow for JBA’s and the Buckleys’
   recovery of those fees. Accordingly, we reverse the district court’s award of
   attorneys’ fees to JBA and the Buckleys related to Buckley’s EA-Breach
   Claim in the first trial and appeal.

           _____________________
           21
             Cf. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310 (Tex. 2006) (“For
   more than a century, Texas law has not allowed recovery of attorney’s fees unless
   authorized by statute or contract.”).

                                             14
Case: 20-50750      Document: 00516803405              Page: 15   Date Filed: 06/28/2023

                                        No. 20-50750

                                             B
          Regarding the award of attorneys’ fees to JBA and the Buckleys
   related to IAS’s fraudulent inducement claim in the first appeal and second
   trial, under Texas law, “fees are [generally] not allowed for torts like
   fraud.” 22 Neither of the exceptions that JBA and the Buckleys cite to this
   general rule applies. Consequently, the district court abused its discretion in
   failing to segregate JBA’s and the Buckleys’ attorneys’ fees related to IAS’s
   fraudulent inducement claim in the first appeal and second trial, and we
   reverse and remand the district court’s award of attorneys’ fees to JBA and
   the Buckleys accordingly.
                                    *        *         *
          For the foregoing reasons, we AFFIRM the judgment as to IAS’s
   fraudulent inducement claim, REVERSE the award of attorneys’ fees to
   JBA and the Buckleys related to Buckley’s claim for breach of the
   Employment Agreement in the first trial and appeal, and REVERSE and
   REMAND the award of attorneys’ fees to JBA and the Buckleys related to
   IAS’s fraudulent inducement claim in the first appeal and second trial in
   accordance with this opinion.

          _____________________
          22
             MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 667 (Tex. 2009)
   (citing Chapa, 212 S.W.3d at 311-14).

                                             15