Take the Fifth

Designated for publication

• U.S. Fire Insurance Co. v. Unified Life Insurance Co., 24-10392, appeal from N.D. Tex.
  • Jones, J. (Elrod, Jones, Stewart), Stewart, J., concurring in judgment only; insurance
  • Reversing judgment in favor of insurer in claim brought by re-insurer, on basis that insurer’s delay in providing notice to re-insurer of claims was objectively unreasonable and material.
  • The Fifth Circuit reversed a district court ruling and held that United States Fire Insurance Company (“U.S. Fire”) was not obligated to indemnify Unified Life Insurance Company (“Unified”) under their quota share reinsurance treaty. The Treaty required Unified to give prompt notice of any claims that, in its opinion, might materially affect U.S. Fire’s position. Unified, however, delayed notifying U.S. Fire about the Butler litigation in Montana until after a district court judgment for the individual plaintiffs, class certification, and denial of interlocutory appeal. The appellate court concluded that the “in the opinion of” language did not create a purely subjective standard and that an objective standard—what a reasonable reinsured would recognize—governed the duty to notify. Under this standard, Unified’s notice was unreasonably late.
  • The Butler litigation began in 2017 with allegations that Unified systematically underpaid claims for medical treatment, and escalated into a certified class action after revelations about Unified’s use of Data iSight software. Multiple litigation milestones—including the initial complaint, class allegations, partial summary judgment for the plaintiffs, and class certification—would have alerted a reasonable reinsured to potential reinsurance exposure. Yet Unified waited until December 2019 to inform U.S. Fire. The court found that under Texas law, such delay was objectively unreasonable given the accruing litigation costs and heightened risks.
  • The appellate court emphasized that reinsurance notice provisions serve the critical function of allowing the reinsurer to assess exposure, participate in the defense, and protect its financial interests from the earliest stages of litigation. In quota share arrangements, the reinsurer shares “first dollar” loss exposure, making timely notice especially important. Both Texas precedent and the near-uniform approach in other jurisdictions favor an objective standard for such clauses, even where the insured’s “opinion” is referenced. Applying that standard, the court determined that Unified’s breach of the notice requirement was clear as a matter of law.
  • The court next addressed prejudice, which Texas law requires for a late-notice breach to relieve the insurer of liability. U.S. Fire showed it was deprived of the contractual benefit of assisting in the defense. Receiving notice only after adverse summary judgment, class certification, and failed appellate review left U.S. Fire unable to influence key litigation stages, introduce timely expert testimony, or shape settlement strategy. Although U.S. Fire recommended new experts and reconsideration motions once it was informed, these efforts were rejected as untimely, underscoring the prejudice caused by the delay.
  • Ultimately, the Fifth Circuit held that Unified’s breach was material and prejudicial because it deprived U.S. Fire of its bargained-for rights and impaired its ability to mitigate exposure. By notifying U.S. Fire only after major adverse rulings, Unified not only missed multiple earlier opportunities for prompt notice but also signaled it viewed notice as unnecessary until defeat seemed inevitable. The late notice impaired defense strategy, settlement leverage, and appellate positioning, satisfying Texas’s prejudice standard. Accordingly, the appellate court reversed the district court’s judgment and absolved U.S. Fire from its duty to indemnify Unified for the Butler litigation.

• Penthol, L.L.C. v. Vertex Energy Operating, L.L.C., 24-20329, appeal from S.D. Tex.
  • Graves, J. (Elrod, King, Graves), breach of contract, attorneys’ fees
  • Affirming judgment that sales agreement between parties was mutually terminated and that defendant did not breach, vacating award of fees to defendant on ground that plaintiff had breached, affirming denial of fees to defendant on prevailing-party grounds, and remanding for further proceedings.
  • This Fifth Circuit appeal arose from a dispute between Vertex Energy Operating, L.L.C. and Penthol, L.L.C. over the early termination of a sales agreement for the distribution of ADbase, a Group III base oil. Vertex claimed Penthol anticipatorily repudiated the agreement by demanding that Vertex cease selling VTX-6—a Group II base oil—after receiving a batch with viscosity measurements matching Group III specifications. Penthol asserted that this breached the agreement’s noncompete clause and issued a cure-or-terminate notice under Section 7.1(b). A series of letters followed, culminating in Vertex declaring the agreement terminated (Letter 3) before the contractual 30-day cure period expired, and Penthol concurring. The district court found no anticipatory repudiation by Penthol, instead concluding that the termination was mutual, though Vertex prevailed on its breach of contract and trade secret claims and was awarded $1.39 million in damages for unpaid commissions and incentives.
  • On appeal, the Fifth Circuit agreed with the district court that Letter 1 was not an “absolute and unconditional” refusal to perform because the termination threat was conditional and prospective under the contract’s cure provisions. The court rejected Vertex’s theory that Penthol’s failure to retract its notice amounted to repudiation, noting this would improperly let a non-breaching party dictate when repudiation occurs. The panel emphasized that Penthol acted within its contractual rights and procedures, and that the earliest possible date for repudiation under the agreement was after the cure period—by which time Vertex had already preemptively terminated via Letter 3. The court upheld the finding that termination was mutual, resulting from both parties’ correspondence and actions.
  • The court then addressed Vertex’s challenge to the denial of attorneys’ fees and litigation costs. It found that the district court erred in concluding that mutual termination meant there could be no “defaulting” or “non-defaulting” party under Section 7.2. The Fifth Circuit held that “default” should be given its plain meaning—failure to perform a contractual obligation—and that the district court’s own findings established Penthol had defaulted by failing to pay commissions and incentives. Because Section 7.2 applied to all forms of termination under Section 7.1, including mutual termination, the panel vacated the denial of attorneys’ fees under that provision and remanded for further proceedings on the fee issue.
  • Finally, the Fifth Circuit affirmed the district court’s denial of prevailing-party costs under Rule 54(d), noting the court’s well-reasoned explanation that the case involved complex and difficult issues, both parties had partial success and fault in the termination process, and Penthol had litigated in good faith. In sum, the panel affirmed the no-repudiation finding and the denial of Rule 54(d) costs, but vacated and remanded the denial of contractual attorneys’ fees for reconsideration in light of its interpretation of Section 7.2.

• Nairne v. Landry, 24-30115, appeal from M.D. La.
  • per curiam (Dennis, Haynes, Ramirez), Haynes, J., concurring in judgment only; Voting Rights Act, jurisdiction, standing
  • Affirming judgment that Louisiana Congressional redistricting maps violated the Voting Rights Act “by ‘packing’ Black voters into a small number of majority-Black districts and ‘cracking’ other Black communities across multiple districts, thereby depriving them of the opportunity to form effective voting blocs.”
  • In 2022, Louisiana enacted new legislative maps—S.B. 1 for the Senate and H.B. 14 for the House—under redistricting rules requiring compliance with § 2 of the Voting Rights Act (VRA). Plaintiffs, including individual Black voters, the NAACP, and Black Voters Matter, sued the state’s officials alleging these maps diluted Black voting strength by “packing” Black voters into a few districts and “cracking” others across several districts, depriving them of equal electoral opportunity. After a stay pending Supreme Court and Fifth Circuit rulings in related cases, the district court held a seven-day bench trial in November 2023. Plaintiffs presented extensive fact and expert testimony; defendants offered fewer witnesses but multiple experts. In February 2024, the district court ruled that both maps violated § 2, enjoined their use, and gave the state time to enact compliant maps.
  • On appeal, Louisiana challenged jurisdiction, standing, trial scheduling, the court’s Gingles analysis, and § 2’s constitutionality. The Fifth Circuit first rejected jurisdictional objections, holding that 28 U.S.C. § 2284’s three-judge panel requirement applies only to constitutional challenges to apportionment—not pure statutory VRA claims. The court also affirmed the district court’s findings that the individual plaintiffs had standing, and that both the NAACP and BVM had organizational standing due to resource diversion impairing their core voter engagement work. The court dismissed the state’s argument that the injunction improperly rested on a “statewide injury” theory, noting the district court’s findings were limited to identified districts where dilution occurred.
  • The Fifth Circuit next upheld the trial court’s decision to expedite the trial after lifting the stay. The court noted that district courts have broad docket-management discretion, that the plaintiffs had originally sought earlier relief, and that expediting trial preserved the possibility of full remedies such as special elections. It rejected complaints about insufficient expert preparation time and about the exclusion of 2023 election results, noting that experts had abundant relevant endogenous election data.
  • Turning to the merits, the court reviewed the three Gingles preconditions. On Gingles I (numerosity and compactness), the plaintiffs’ expert William Cooper produced illustrative maps adding six majority-Black House districts and three Senate districts, all exceeding 50% BVAP and satisfying traditional districting criteria. The district court found these districts visually compact, contiguous, respectful of communities of interest, and equal or superior in statistical compactness to the enacted districts. It credited Cooper’s and Dr. Colten’s testimony over the defendants’ expert, Dr. Trende, whose novel “moment of inertia” method ignored traditional criteria and was deemed unreliable. The court also found no racial predominance in Cooper’s map-drawing, distinguishing permissible racial awareness from impermissible predominance.
  • On Gingles II and III, the court upheld findings of strong political cohesion among Black voters and consistent bloc voting by white voters sufficient to usually defeat Black-preferred candidates. Dr. Handley’s ecological inference and related analyses, covering 16 elections with Black candidates, showed stark polarization—Black voters supported Black-preferred candidates at over 80% on average, while white voters supported them at roughly 12%. The court rejected challenges to her data disaggregation method and dismissed the state’s “white crossover voting” argument as inconsistent with precedent. The district court properly excluded the defendants’ rebuttal expert, Dr. Solanky, for methodological flaws and insufficient data under Rule 702.
  • The court then examined the “totality of circumstances” using the Senate Factors. Proportionality favored plaintiffs: Black residents comprise 33.13% of Louisiana’s voting-age population, but only 27.6% of House districts and 28.2% of Senate districts were majority-Black. The court rejected the argument that substantial proportionality forecloses § 2 claims, citing LULAC and Johnson. It found Senate Factor One (history of discrimination) weighed heavily for plaintiffs, supported by extensive historical and contemporary evidence of suppression tactics. Senate Factor Two (racially polarized voting) also favored plaintiffs, crediting Dr. King’s and Dr. Handley’s data over Dr. Alford’s view that polarization was partisan.
  • Other Senate Factors reinforced the § 2 violation. Factor Three (voting practices enhancing discrimination) weighed in plaintiffs’ favor due to Louisiana’s majority-vote requirements and frequent elections, which create voter fatigue and confusion. Factor Five (effects of discrimination) was supported by expert and fact testimony about educational, economic, health, and incarceration disparities impeding Black political participation. Factor Six (racial appeals in campaigns) cited overt and subtle racial messaging in recent political ads. Factor Seven (minority electoral success) noted low numbers of Black officeholders, especially in statewide positions. Factor Eight (lack of responsiveness) relied on evidence that legislative leaders ignored calls for more representative maps. Factor Nine (tenuous policy justifications) was also found to favor plaintiffs.
  • After concluding that all applicable Senate Factors favored the plaintiffs, the court affirmed the district court’s finding of a § 2 violation. The evidence showed that the political process in Louisiana was not equally open to Black voters and that they had less opportunity to elect candidates of their choice under the enacted maps.
  • Finally, the Fifth Circuit rejected Louisiana’s constitutional challenge to § 2, holding it is foreclosed by Supreme Court and circuit precedent upholding Congress’s enforcement authority under the Fifteenth Amendment. The court emphasized that the Supreme Court in Allen v. Milligan recently reaffirmed § 2’s validity in redistricting contexts. It dismissed arguments that Congress must periodically re-justify § 2, distinguishing Shelby County v. Holder as applying only to the now-expired preclearance formula in § 4(b), not § 2’s permanent, nationwide ban on racial discrimination in voting.
  • The panel concluded that the district court committed no reversible error in jurisdiction, standing, trial management, Gingles analysis, or constitutional interpretation. It therefore affirmed the injunction against Louisiana’s S.B. 1 and H.B. 14 and the order requiring the state to enact § 2-compliant legislative maps.

• U.S. v. Larremore, 24-50431, appeal from W.D. Tex.
  • Guidry J. (Elrod, Engelhardt, Guidry, by designation), Elrod, C.J., dissenting in part; criminal, search and seizure
  • Affirming conviction arising from secreting undocumented immigrants in a locked horse trailer, upholding denial of motion to suppress.
  • Deputy Christopher Colona first encountered Larremore on July 9, 2023, near a remote and intermittently staffed border patrol checkpoint along U.S. Highway 385. Having received a tip linking Larremore to possible smuggling and noting the timing of a border patrol shift change—when smugglers often operate—Colona followed Larremore’s truck and horse trailer for just over a minute before Larremore voluntarily pulled to the shoulder. The deputy did not activate lights or sirens, and the initial interaction appeared consensual. During a casual exchange, Colona noticed an open alcohol container inside the vehicle and saw that the trailer’s enclosed compartment was padlocked, prompting suspicion given Larremore’s inconsistent explanations about its contents and ownership.
  • As the encounter progressed, Larremore’s shifting answers deepened Colona’s suspicions. Larremore claimed the compartment contained saddles but lacked a key, struggled to remember his girlfriend’s name (who supposedly locked it), and gave implausible details about recent travels and ownership of the trailer. Colona expressed concern about possible smuggling and sought permission to cut the lock, at first receiving ambiguous consent, then equivocation, and finally outright refusal after a lengthy back-and-forth. Eventually, when faced with the possibility of a search based on probable cause from the open alcohol container, Larremore admitted that three of his cousins were hidden inside the trailer and produced the concealed key. Colona discovered three undocumented migrants inside, and the entire encounter was recorded on camera.
  • Charged under 8 U.S.C. § 1324 for transporting illegal aliens, Larremore moved to suppress the evidence, arguing he had been seized without reasonable suspicion and that Colona committed a trespassory search when leaning on his truck. The district court denied suppression, holding that Larremore’s consent, coupled with Colona’s observations, attenuated any potential violation. Larremore pled guilty to one count, reserving the suppression issue for appeal, and received a 37-month sentence. On review, the Fifth Circuit applied de novo review to the constitutional questions while giving deference to factual findings unless clearly erroneous, especially where video evidence was consistent with testimony.
  • The appellate court rejected Larremore’s seizure arguments, holding that his decision to pull over was voluntary, that Colona’s incidental hand contact was not a restraint, and that the statement “hang on a sec” was conversational rather than a command. Seizure occurred later, when Colona explicitly linked Larremore to suspected smuggling and expressed intent to look inside the trailer. At that point, reasonable suspicion existed, supported by the location, timing, and Larremore’s inconsistent answers. The Terry stop was lawful in both inception and scope, and Larremore’s delay tactics extended the encounter rather than any impermissible police conduct. Finally, the court concluded that resting an arm on the truck did not amount to a trespassory search, meaning the plain-view discovery of the alcohol container was lawful. Accordingly, the denial of the motion to suppress and Larremore’s conviction were affirmed.
  • Chief Judge Elrod dissented in part. She agrees that Deputy Colona did not commit a trespassory search of Larremore’s truck but finds that Larremore was unlawfully seized under the Fourth Amendment. Chief Judge Elrod emphasizes that Colona, lacking reasonable suspicion, pursued Larremore at high speed, closely tailed him, and then positioned himself in a way that made leaving unsafe before directing Larremore to “hang on one sec for me.” Under established precedent, this constituted a seizure because a reasonable person would not have felt free to leave. Dashcam and bodycam footage confirmed Colona’s pursuit, physical intrusion into Larremore’s truck and trailer, and immediate questioning about contraband. The dissent stresses that Colona himself admitted a person in Larremore’s position would not have felt free to go. Because the seizure occurred without reasonable suspicion, Larremore’s confession and all evidence obtained thereafter should have been suppressed as fruit of the poisonous tree. Thus, while concurring in part, the judge respectfully dissents from the majority’s conclusion on the seizure issue.

Unpublished decisions

• U.S. v. Castillo, 25-10195, appeal from N.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Davis, 25-10371, appeal from N.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez), criminal, sentencing
  • Affirming conviction and 12-month sentence on revocation of supervised release.

• U.S. v. Webb, 24-11093, appeal from N.D. Tex.
  • per curiam (Elrod, Jones, Smith), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Capizzo, 25-30014, appeal from E.D. La.
  • per curiam (Higginbotham, Engelhardt, Ramirez), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Cerdes, 24-30526, appeal from E.D. La.
  • per curiam (Jones, Graves, Rodriguez, by designation), criminal, coram nobis
  • Affirming denial of petition for writ of coram nobis.

• Glover v. Lafayette City-Parish Consolidated Government, 24-30525, appeal from W.D. La.
  • per curiam (Higginson, Ho, Wilson), Higginson, J., dissenting; employment discrimination
  • Affirming summary judgment in favor of municipal government on plaintiff’s claims that his discharge as police chief was racially discriminatory.
  • Judge Higginson dissented, and would find that there are genuine issues of material fact that should go to the trier of fact.

• U.S. v. Camacho, 25-40016, appeal from S.D. Tex.
  • per curiam (Jones, Richman, Willett), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Garcia-Perez v. Guerra, 24-40128, appeal from S.D. Tex.
  • per curiam (Jones, Smith, Higginson), prisoner suit
  • Affirming dismissal of Texas state prisoner’s sec. 1983 claims.

• Fountain v. Rupert, 24-40267, appeal from E.D. Tex.
  • Guidry, J. (Elrod, Engelhardt, Guidry, by designation), prisoner suit
  • Affirming dismissal of Texas state prisoner’s claims regarding the indigent mail system, vacating the dismissal of the plaintiff’s Eighth Amendment conditions-of-confinement claim, and remanding for further proceedings.

• Shaw v. State of Texas, 25-50134, appeal from W.D. Tex.
  • per curiam (Elrod, Jones, Higginson), prisoner suit
  • Dismissing for failure to pay appeal fee Texas state prisoner’s appeal from dismissal of sec. 1983 claims.

• Smith v. Saenz, 24-50975, appeal from W.D. Tex.
  • per curiam (Jones, Graves, Rodriguez, by designation), qualified immunity
  • Reversing denial of officer defendants’ summary judgment motion on qualified immunity grounds in claim arising from subdual of plaintiff with a pepperball during foot chase.