D2 Excavating, Inc. v. Thompson Thrift Constr.

1

D2 Excavating, Incorporated, Plaintiff-Appellee, v. Thompson Thrift Construction, Incorporated; Fidelity & Deposit Company of Maryland, Defendants-Appellants.

No. 21-40629

United States Court of Appeals, Fifth Circuit

May 19, 2023

Appeal from the United States District Court for the Southern District of Texas USDC No. 2:16-CV-538

Before KING, STEWART, and HAYNES, Circuit Judges.

PER CURIAM:^[*]

This is the second appeal in this contract dispute between D2 Excavating Company ("D2") and Thompson Thrift Construction ("Thompson"). D2 sued Thompson for breach of contract after Thompson refused to pay D2 for removing dirt from a construction worksite in excess of the amount Thompson represented was at the site. A prior panel of this court affirmed in part and reversed in part the district court's judgment for D2 and remanded the case for modification of the judgment consistent with its opinion. D2 Excavating, Inc. v. Thompson Thrift Constr Inc., 973 F.3d 430, 438 (5th Cir. 2020). Thompson now appeals the district court's modified judgment, arguing that the prior panel's decision was clearly erroneous because it relied on a breach-of-contract claim that was never pleaded or proven. Thompson thus contends that the district court erred in implementing the prior panel's mandate. Thompson also argues that the district court erred in awarding trial and appellate attorney's fees to D2 by failing to apply the "main issue" test that Texas law requires.

Finding no error in the district court's adherence to the prior panel's mandate and no error in its award of attorney's fees, we AFFIRM.

I. Facts &Procedural History^[1]

Thompson subcontracted with D2 to provide excavation services on its worksite. The site was understood by both parties to be "balanced," meaning no dirt had to be added or removed from the site, and D2 would only need to shift existing dirt around to meet the site plan's specifications. This turned out to be untrue, and D2 encountered dirt far in excess of what the specifications called for. Because of this, D2's expenses increased significantly and it began requesting additional payment from Thompson. Thompson assured D2 that it would be compensated for the extra work and stated that it would issue a written change order once the work was finished and the entire cost was determined. As D2 continued to work, Thompson repeatedly requested that D2 regrade areas that other subcontractors disturbed by leaving debris-work that was outside the scope of the Subcontract. This interfered with D2's ability to access certain areas to complete performance of the Subcontract requirements. Thereafter, D2 again requested compensation for handling excess dirt and for all completed labor and materials under the Subcontract, minus the payment for the work that could not be accomplished due to the debris. Thompson refused to pay. As a result, D2 ceased performing work.

D2 filed suit against Thompson and pursued multiple breach-of-contract claims including (1) unpaid materials and labor and (2) costs generated by the removal of excess dirt. D2 also sued for quantum meruit, violations of the Texas prompt pay statute, and to foreclose on a statutory and constitutional lien. Thompson counterclaimed, alleging that D2 breached the contract when it ceased performance prior to completion. Its countersuit also included claims for breach of warranty, indemnification, and a declaration that D2's lien was unenforceable. The district court held a bench trial and later issued a memorandum of findings of fact and conclusions of law which rejected all of Thompson's counterclaims. It also ruled in favor of D2 on both breach-of-contract claims and the quantum meruit claim. It thus awarded damages in the amounts of $81,068.00 for the unpaid materials and labor and $257,588.53 for the costs generated by the excess dirt. Also included in the judgment was an award of attorney's fees in favor of D2 for $356,080.91.

Thompson timely appealed and a previous panel of this court affirmed in part and reversed in part. D2 Excavating, Inc., 973 F.3d at 438. The prior panel determined that, because of the interference of the debris on the construction site, D2 was entitled to cease performing before it completed the work and was fairly owed the $81,068.00 outstanding balance on the contract. Id. at 437. In doing so, it also affirmed the denial of Thompson's counterclaims. Id. It, however, reversed the portion of the district court's judgment concerning the excess dirt, holding that "[n]either breach of contract nor quantum meruit allow[ed] D2 to recover for 'excavation of unanticipated excess soil.'" Id. As a result, it remanded the case with instructions to modify the judgment consistent with its opinion. Id. at 438.

Thompson sought relief from the judgment through a Rule 60(b) motion. Specifically, Thompson argued that, because the previous panel reversed the "only breach-of-contract finding," the district court should revisit the attorney's fee award anew and hold that Thompson was the prevailing party. D2 then moved for an amended final judgment. The district court granted D2's motion in part and denied Thompson's. In granting D2's motion, the court removed the damages award for the excess dirt and left intact the portion affirmed by the prior panel. It also awarded D2 statutory interest, costs, and post-judgment interest. As for attorney's fees, the district court did not reduce the $356,080.91 in trial attorney's fees that was awarded to D2 before the appeal. It also added $111,159.25 in appellate attorney's fees to D2. Thompson appealed.

Thompson now seeks reversal of the district court's post-remand judgment for two reasons. First, Thompson argues that the district court erred in implementing the prior panel's mandate which, according to Thompson, resulted in a manifest injustice. Second, Thompson argues that the district court applied the wrong legal standard when it awarded attorney's fees to D2.

II. Standard of Review

"We review de novo a district court's interpretation of our remand order, including whether the law-of-the-case doctrine or mandate rule forecloses any of the district court's actions on remand." Deutsche Bank Nat'l Tr. Co. v. Burke, 902 F.3d 548, 551 (5th Cir. 2018) (quotation omitted). "The mandate rule requires a district court on remand to effect our mandate and to do nothing else." Id. (quotation omitted). We have, however, provided that the mandate rule can be overcome in three instances: "(i) the evidence on a subsequent trial was substantially different, (ii) controlling authority has since made a contrary decision on the law applicable to such issues, or (iii) the decision was clearly erroneous and would work a manifest injustice." Hopwood v. Tex., 236 F.3d 256, 272 (5th Cir. 2000).

An award of attorney's fees by the district court is generally reviewed for abuse of discretion, "bearing in mind that court's superior understanding of the litigation and of the costs and fees reasonably incurred in that litigation." Abner v. Kan. City S. Ry. Co., 541 F.3d 372, 37879 (5th Cir. 2008) (internal quotation marks and citation omitted). We review the legal conclusions supporting a fee award de novo. Volk v. Gonzalez, 262 F.3d 528, 534 (5th Cir. 2001).

III. Discussion

A. The Mandate Rule

Thompson argues that the district court should have disregarded the prior panel's mandate because its decision was clearly erroneous and amounted to a manifest injustice. We disagree.

We have said that the manifest injustice exception is to be applied narrowly, and that "mere doubts or disagreement about the wisdom of a prior decision of this or a lower court will not suffice." Hopwood, 236 F.3d at 272. "To be clearly erroneous, a decision must strike us as more than just maybe or probably wrong; it must be dead wrong." Id. at 272-73. Thompson claims this narrow exception applies here because D2 never pleaded nor prosecuted the breach- of- contract claim affirmed by the prior panel. Rather, the only claim D2 made, according to Thompson, is the excess- dirt claim that the panel reversed. Thus, Thompson argues that the $81,068.00 damages award for unpaid labor and materials was improper because Texas law does not allow for a "freestanding contractual damages award."

Thompson's "single claim for breach of contract" argument directly contradicts the record and the district court's rulings. From the very outset of the litigation, D2 pursued multiple breach-of-contract claims. Not only did D2 allege that Thompson failed to pay for the removal of excess dirt, but it also alleged that Thompson failed to pay for labor and materials pursuant to the terms of their agreement. Thompson has consistently refuted the unpaid-balance allegation throughout the litigation of this case-in its Answer and on summary judgment. The claim nevertheless survived summary judgment and the district court determined that Thompson was required to pay the unpaid balance.

When the prior panel reviewed the district court's decision on the unpaid-balance claim, Thompson contended that it was not required to pay the $81,068.00 because D2 stopped performing before it completed the work. However, the panel agreed with the district court that "Thompson's prior breach and its failure to manage the construction site excused D2's failure to perform." In other words, because D2 was unable to complete its work in certain parts of the site because of debris, Thompson prevented D2 from performing its part of the contract, which is an excuse for nonperformance. The panel therefore affirmed the district court on this ground and held that Thompson breached the contract when it failed to pay the unpaid balance for labor and materials thereby causing damage to D2 in the amount...