587 F. App'x 99
5th Cir.2014Background
- G & C Land, a Texas general partnership, leased over 5,000 acres in Yoakum County to Farmland under a five-year Agricultural Sublease that began in 2007 and ended after the 2011 crop season.
- At lease inception the irrigation system used diesel generators; Farmland had promised electricity would be available by the second year.
- Farmland’s agents engaged Lea County Electrical Cooperative to extend electrical service, but electricity was not provided until the fifth year.
- G & C sued Farmland in state court for common law fraud, negligent misrepresentation, and DTPA violations; Farmland removed to federal court and a default judgment was later set aside.
- G & C sought leave to amend to join non-diverse defendants; the district court denied, finding the amendment would destroy diversity and was dilatory.
- Farmland moved for summary judgment; the district court held misrepresentations were promises of future performance, and DTPA claims were time-barred; the district court granted summary judgment for Farmland.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the default judgment properly set aside? | G & C contends the district court erred in finding nonwillful excusable neglect. | Farmland argues the failure to answer was excusable and not willful, justifying setting aside. | No abuse of discretion; set aside due to excusable neglect. |
| Did the district court abuse its discretion in denying leave to amend to add non-diverse defendants? | G & C asserts it should be allowed to amend to preserve jurisdiction. | Farmland asserts amendment would destroy diversity and was dilatory. | No abuse; Hensgens factors supported denial. |
| Did the district court properly grant summary judgment on common law fraud and negligent misrepresentation? | G & C argues there were misrepresentations of existing fact and factual issues remain. | Farmland argues statements were promises of future performance, not present facts. | Yes; misrepresentations were future promises, lacking fraudulent intent or present-fact basis. |
| Are G & C's DTPA claims time-barred? | G & C contends misrepresentations were continuous and not time-barred. | Farmland contends DTPA claims are time-barred by a two-year statute. | District court judgment affirmed; argument raised for first time on appeal waived. |
Key Cases Cited
- Harrell v. DCS Equip. Leasing Corp., 951 F.2d 1458 (5th Cir.1992) (abuse of discretion standard for setting aside default judgments)
- CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60 (5th Cir.1992) (good cause to set aside default; factors including willfulness and prejudice)
- Lacy v. Sitel Corp., 227 F.3d 290 (5th Cir.2000) (clear error review for factual underpinnings; willfulness concept)
- Jenkens & Gilchrist v. Groia & Co., 542 F.3d 114 (5th Cir.2008) (deference to meritorious defense when setting aside default)
- Gen. Tel. Corp. v. Gen. Tel. Answering Serv., 277 F.2d 919 (5th Cir.1960) (quote on securing a trial on the merits; favoring resolution on the merits)
- In re Haber Oil Co., Inc., 12 F.3d 426 (5th Cir.1994) (promises of future performance actionable only with showing of intent not to perform)
- Stanfield v. O’Boyle, 462 S.W.2d 270 (Tex. 1971) (future-performance promises scrutiny standard)
- De Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x 200 (5th Cir.2012) (unpublished; negligent-misrepresentation limitations context)
- Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir.1987) (Hensgens factors for amendment to destroy diversity)
- Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667 (5th Cir.2013) (Rule 15(a) amendment discretion; factors for non-diverse joinder)
- French v. Allstate Indem. Co., 637 F.3d 571 (5th Cir.2011) (waiver of arguments not raised in district court)
- State Indus. Prod. Corp. v. Beta Tech., Inc., 575 F.3d 450 (5th Cir.2009) (considerations for continuing jurisdiction and related issues)