Petition for Writ of Certiorari — Sherman v. LaMothe

Supreme Court, U.S.

FILED

Ab 10-482 UCT 1 2 2010

No.

=RK

IN THE

Supreme Court of the United States

IN THE MATTER OF VELOCITA WORLDWIDE LOGISTICS,

INC..

Debtor.

DANIEL SHERMAN,

Petitioner,

V.

WILLIAM LAMOTHE, RAJAN SOBHANI, CHRIS BRACK,

DANIEL ESTRADA, SCOTT STUDEBAKER, JAMES MICHAEL

WALSH, BRANDON ROBINSON, AND PATRICK STRAYER

Respondents.

On Petition For A Writ of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

WM CHRIS WOLEFARTH CHARLES “CHAD” BARUCH

SHACKELFORD, MELTON & Counsel of Record

MCKINLEY THE LAW OFFICE OF CHAD

3333 Lee Parkway, BARUCH

Tenth Floor 3201 Main Street

Dallas, Texas 75219 Rowlett, Texas 75088

(214) 780-1400 (972) 412-7192

BaruchKsq@aol.com

Counsel for Petitioner

Daniel Sherman

LEGAL PRINTERS LUC, Washington DC e 202-747-2400 e legalprinters.com

QUESTION PRESENTED

The court of appeals decided this bankruptcy

appeal by resolving on policy grounds what if

deemed a question of first impression under Texas

law, without certifying that question to the Texas

Supreme Court. In doing so, the court disregarded

twe Texas Supreme Court decisions from the 1890's,

apparently deeming them too old to be instructive.

The question presented Is:

:. Whether a circult court acts

inconsistently with this Court's decision in LeAman

Bros. v. Schein, 416 U.S. 386 (1974), or otherwise

commits error, by deciding a state-law question

without certifying that question to the state's

supreme court where—

e the question presented is important to the

state’s jurisprudence,

e there is authority—old but not overruled

from the state’s supreme court resolving the

question contrary to the federal court's

resolution of it,

e the question is difficult enough that the three

federal courts to address it all resolve it on

different theories and grounds, and

e the federal court decides the issue on policy

erounds.

PARTIES TO THE PROCEEDING

Petitioner is Daniel Sherman, bankruptcy

trustee in /n re Velocita Worldwide Logistics, [ne

Respondents are Wilham LaMothe, Rajan Sobhani,

Chris Brack, Daniel Estrada, Scott Studebaker,

James Michael Walsh, Brandon Robinson, and

Patrick Stryer, who were defendants in the trustee's

adversary action in the bankruptcy court

Lil

TABLE OF CONTENTS

Page

Question Presented ................ a

Parties to the Proceeding. ai

Table of Contents ................... ereree i]

Table of Authorities ......... en 2 an

Opinions and Orders Below eaekaees

PUTISGICTION......0.00s00rsensceese ete ee | a

SCREWS LTAVOIVOG «.005.05000s00cnsi0eeases naan a yl ! umes ]

tahoe OF GIRS CGO ov necvac.cxsccatsuasvcsscaecescesasvevees oan

Reasons for Granting the Writ .....................0.s.cceceses: 6

I. The Fifth Circuit's Refusal to Certify This Case

Conflicts With This Court’s Reasoning in

Lehman Bros. and Violates Basic Tenets of

POE oss cicanzsessevecaciasininkaseidcstne cetera 7

II. This Case Presents an Ideal Vehicle to Refine

This Court’s Instructions on Certification

Without Limiting the Broad Discretion

Knunciated by Prior Decisions ....................... 8]

II. The Fifth Circuit Incorrectly Apphed Texas

Law and Policy Concerns in Rejecting Mr.

SS ENG) TERRES INN va isn con xiccsvacncideuscacsassecstaetens 13

IV. Mr. Sherman Properly Requested

ert O ORE ge ee re 16

L\

Conclusion 16

Appendix

Appendix A—Jn re Velocita Worldwide Logistics,

Inc., Opinion of the Court of Appeals (5th Cir.,

June 2, 2010)... <o sity tnidie ace

Appendix B—ShAerman vy. LaMothe, Judgment (N.D

TOR... WORD. BG, FIG os discccssvensrpeeravss iesnecaec ae

Appendix C— Sherman v. LaMothe, Memorandum

Opinion & Order (N.D. Tex., Mar. 26, 2009) . 10a

Appendix D— /n re Velocita Worldwide Logtstics,

/ne., Order on Motions for Summary Judgment

(Bankr. N.D. Tex., June 9, 2008)............... .... 16a

Appendix E— J/n re Velocita Worldwide Logistics,

[nc., Denial of Petition for Rehearing (5th Cir.,

Sry IZ. BOP)... secees: Serv! eee

TABLE OF AUTHORITIES

Page

CASES

Arizonans for Official Enghshv. Arizona, 520 U.S.

ee MD aoe teans tisteeecnategasous Seesidaycksct oo cianenicoteas tien ane 7

Beech Aircratt Corp. v. Jinkins, 739 S.W.2d 19 (Tex.

yf Saher t SAA NS) EWE ea EN TOP NER AER SR MAS ARE SADE Maze 4

Betottiv. Baird, 428 U.S. 132 (IO7G).........c.cccccescosssee f

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

goer awa ad aud cer eanren eee toavernee tad: ae

Faires v. Cockrill, 31 S.W. 190 (Tex. 1895)............. 13

Greenspan v. Green, 255 S.W.2d 917 (Tex. Civ.

App. — Dallas 1953, writ refd n.r.e.)....0...0.... 15-16

Haximogluv. Trump Taj Mahal Assocs.,

FOr ek BOE VO Cie, TODD oivvvevcncscscocccccacccacvsrscsees 10

Harmanv. Forssentus, 380 U.S. 528 (1965) ............. 7

Hawau Housing Authority v. Midkiff 467 U.S. 229

8 SER URSPEe Speen ae nena Ope te pray DPT SN RCE orn POA 7

Houston v. Hill, 482.U.S. 451 (1987)... cece. 7

Jones v. Dillard's, Inc., 331 F.3d 1259 (11th Cir.

NA a en ne Oe IE 1]

Vi

Klaxon Co. v. Stentor Klec. Mfg. Co., 313 U.S. 487

(1941)......... RN | 14

Lehman Bros. v. Schein, 416 U.S. 386

tly) EO Aan ee 6.8. 10. 12

Martinez v. Rodriguez, 110 F.2d 72:

(5th Cir. 1969) | y | 9

Mateerv. Ceckrill, 45 5.W. 751 (Tex. Civ. App

(| SER SRP Terre va 13

MeceRedmond v. Wilson, 533 F.2d 757 (2d Cir

Uf.) ree Rae ee | re a3 12

Nolan v. Transocean Aur Lines, 276 F.2d 280 (2d

Cir. 1960), revad, 365 U.S. 293 (1961) ....... LO

PR. R. Comm'n of Tex. v. Pullman Co., 312 U.S. 496

EM oi On ea ee BOER Fi

Stevens v. Battelle Memorial Institute, 488

W Sd BOG C1 ith Cir, 2007)... cccoccccoccceccceccess vee 21°12

White v. Edgar, 320 A.2d 668 (Me. 1974) .... ae

STATUTES

28 U.S.C. & 12541) ......... OAR . ne

TEX. R. APP. P. 58.1 ........ CHAT eer ree re

Vi

MISCELLANEOUS

Jessica Smith, Justice, Avoiding Prognostication and

Promoting Federalism: The Need for An Inter-

Jurisdictional Certification Procedure in North

Carolina, 77 N. CAR. L. REV. 2123 (1999).......... 6-7

18 AM. JUR. 2d Contribution § 31 (1985)

PETITION FOR A WRIT OF CERTIORARI

Petitioner Daniel Sherman _ respectfully

submits this petition for a writ of certiorari to review

the judgment of the U.S. Court of Appeals for the

Fifth Circuit.

OPINIONS AND ORDERS BELOW

The opinion of the court of appeals (App.,

infra, at la-8a) is reported at 608 F.3d 212. The

order of the court of appeals denying rehearing

(App., infra, at 22a) is not reported. The district

court's judgment (App., infra, at 9a) and opinion

(App., infra, 10a-15a) are unreported, as is the

bankruptcy court’s order (App., infra, at 16a-21a).

JURISDICTION

The Fifth Circuit filed its opinion on June 2,

2010, and denied a timely petition for rehearing on

July 12, 2010. The jurisdiction of this Court is

invoked under 28 U.S.C. § 1254(1).

STATUTE INVOLVED

Rule 58.1 of the Texas Rules of Appellate

Procedure provides that:

The Supreme Court of Texas may

answer questions of law certified to

it by any federal appellate court if

the certifying court is presented

with determinative questions of

Texas law having no controlling

Supreme Court precedent. The

Supreme Court may decline to

answer the questions certified to it.

y

&s

STATEMENT OF THE CASE

This case presents an optimal vehicle for this

Court to refine its instruction on when federal courts

should certify state-law questions in non-diversity

cases not involving constitutional challenges. The

case is ideal because of its unique and narrow facts,

which would permit this Court to provide much

needed guidance on certification while preserving

the broad grant of discretion enunciated in earlier

Cases.

If left undisturbed, the Fifth Circuit’s opinion

will encourage federal courts to resolve difficult and

important state-law questions—even in non:

diversity cases—on policy grounds, substituting

their own policy analysis for that of the state’s

highest court and upsetting the delicate balance

between the national and_= state judiciaries

envisioned by our federal system. That imbalance is

exacerbated in this case by the existence of old but

never-overruled precedent seeming to contradict the

circuit court’s decision.

This case arose from a settlement agreement

entered as a final judgment. That agreement

required a company and ten individuals to pay,

“Sointly and individually,” the sum of $1.85 million.

The question presented was whether the company,

having paid the entire amount, could pursue the

individuals for their pro rata shares of the

obligation.

1. The Underlying Litigation. William

LaMothe founded a freight-forwarding company and

sold it to a predecessor of Exel Global Logistics. ROA

——

at 48. Mr. LaMothe and several of his employees

signed five-year employment agreements with Exel.

ROA at 48. Just before expiration of those

agreements, Mr. LaMothe formed a new company,

which eventually became Velocita Worldwide

Logistics. ROA at 48. When the five-year period

ended, Mr. Lamothe and his employees left Exel to

work for Velocita—now an_ Exel competitor

ostensibly owned and operated by Mr. LaMothe’s

wife. ROA at 48.

Exel sued Velocita and ten of its employees,

all of them former Exel employees (eight of whom

are the respondents in this case). 2 BR at_0091. The

parties settled the litigation, executing an “Agreed

Final Judgment and Permanent Injunction” as their

settlement agreement. 2 BR at 0237-0275. That

agreement required Velocita to cease operations and

imposed a host of other obligations including

numerous injunctions against the individual

defendants. BR-2 at 0237-0275. The agreement also

obligated Velocita and the individual defendants to

pay Exel the sum of $1.85 million:

Defendants Velocita, Lamothe,

Sobhan1, Brack, Kstrada,

Studebaker, Alexander, Walsh,

Mok, Robinson and Strayer, jointly

and individually, shall be and are

hereby ordered to pay to Excel, its

successors and assigns, the amount

of $1,850,000.00 .. ..

2 BR at 0255.

1 The Record on Appeal is referenced as ROA, while the

Bankruptcy Record is referenced as BR

Despite their individual liability, none of the

individual defendants paid a single cent of the

settlement—instead, Velocita paid the entire $1.85

million. 2 BR at 0135-0136. Velocita raised these

funds by selling its equipment assets and by

obtaining a $1 million loan—secured by _ the

company’s receivables-—irom another LaMothe

entity. 2 BR at 0125-0126, 0130-0131. Velocita then

collected its receivables and repaid the LaMothe

loan, making its last payment on the final day of the

company's fiscal operations. 2 BR at 0126. Nine

days after expiration of the one-year preference

period on the LaMothe loan payment, and facing

numerous unpaid creditors, Velocita sought

bankruptcy protection

2. Mstrict Court Proceedings. ‘he

bankruptcy trustee, Daniel Sherman, filed an

adversary proceeding to recover the individuals’ pro

rata shares of the settlement payment. Both partics

sought summary judgment. The bankruptcy court

granted summary judgment to the defendants based

on the Texas Supreme Court’s decision in Beech

Aircratt Corp. v. Jinkins, 739 S.W.2d 19 (Tex. 1987),

denying any right of contributiva against a non

settling joint tortfeasor. App., 7nfra, at 16a°21a; 1 BR

at 0003-0006.

The district court affirmed that decision, but

on different grounds, holding that the parties’ failure

to include an express contribution clause in their

settlement ayvreement precluded any right’ to

contribution based both on legal principles and

public policy favoring settlement of litigation. App

infra, at 10a-15a; ROA at 101-105.

3. Fifth Circuit Proceedings. On appeal, Mi:

Sherman's brief relied principally on two Texa

Supreme Court cases from the 1890's establishing an

implied nght of contribution amony co-obligors on a

contract. Mr. Sherman did not seek certification at

the briefing stage because he believed those case

governed the dispositive state law issue

During oral argument, one of the circuit

judges almost immediately interrupted Mi

Sherman’s counse! and expressed the opinion that

the ‘Texas Supreme Court's decisions on the matter

simply were too old. Another circuit judge inquired

about certification to the Texas Supreme Court

In its opinion the court of appeal

characterized the question as one of first impression

in Texas, stating that “[t}his appeal asks us_ to

consider whether Texas law would imply a right of

contribution for a covobligor of a settlement

agreement that paid more than its proportionate

share of the settlement.” App., infra, at 3a. The court

of appeals acknowledged Mr. Sherman's reliance on

the two cases, describing them as “two century-old

Texas cases that recognize an implied right to

contribution.” /hid. But the court did not otherwise

discuss or distinguish those cases. Neither did the

court rely on—or even mention—the bankruptcy

court's joint tortfeasor analysis or the district court’

express contribution clause analysis. Instead, the

court of appeals simply concluded that public policy

weighs against permitting an imphed = right” of

The oral argument 1 available on. the Oral Argument

Ktecordings portion of the Pifth Circuit websit

&

contribution from a settlement agreement. App.,

infra, at 7a.

After receiving the opinion, Mr. Sherman filed

a petition for rehearing urging the court of appeals

to reconsider its refusal to credit the state-court

decisions. Mr. Sherman also asked that if the court

of appeals would not credit those decisions, and

continued to view the question as one of first

impression turning on policy grounds, that it certify

the question to the Texas Supreme Court.

REASONS FOR GRANTING THE WRIT

This case demonstrates the need for further

guidance on certification in non-diversity, non-

Pullman cases. In this case, three federal courts

attempted to decide what they considered an

unsettled but important question of Texas law;

though they all reached the same result, each of

them relied on a different legal theory to do so.

There are three reasons this Court should grant the

writ of certiorari in this case.

First, the circuit court’s failure to certify the

dispositive question in this case conflicts with this

Court’s decision in LeAman Bros. v. Schein, 416 U.S.

386 (1974), vacating a circuit court’s decision and

remanding for certification under similar

circumstances.

Second, failure to certify this case cannot be

squared with traditional notions of judicial

federalism. “When federal courts decide unsettled

questions of state law in cases involving policy

judgments with widespread impact, the intrusion on

state sovereignty 1s at its greatest.” See Jessica

~]

Smith, Avoiding Prognostication and Promoting

Federalism: The Need for An Jater-Jurisdictional

Certification Procedure in North Carolina, 77 N.

Car. L. REV. 2123, 2135 (1999) (citation omitted).

Finally, the court of appeals incorrectly

substituted its policy judgment for valid state-law

precedent. Texas law permits the contribution claim

brought by Mr. Sherman.

I. THE FIFTH CIRCUITS REFUSAL TO

CERTIFY THIS CASE CONFLICTS WITH

THIS COURTS REASONING IN LEHMAN

BROS. AND VIOLATES BASIC TENETS OF

FEDERALISM.

Most of this Court’s certification decisions

concern abstention under A. A. Comm'n of Tex. v.

Pullman Co., 312 U.S. 496 (1941). These cases

usually involve constitutional challenges to state

statutes. See, e.g., Belotti v. Baird, 428 U.S. 132,

150-53 (1976); Arrzonans for Official English v.

Arizona, 520 U.S. 48, 79 (1997). The use of

certification is relatively clear under Pul/man

abstention, where federal courts certify a question

only where the challenged statute is fairly subject to

a narrowing interpretation which would render

unnecessary or substantially modify the federal

constitutional question. See Houston v. Hill, 482

U.S. 451, 468-471 (1987) (erting Harman v.

Forssentus, 380 U.S. 528, 534-535 (1965) and Hawai

Housing Authority v. Midkiff 467 U.S. 229, 236

(1984)).

This case presents certification in a different

context, a non-diversity case not involving Pullman

abstention. In this context, certification trenches

upon the framework of our federal system, and its

delicate balance between national and state judicial

power.

The circuit court’s decision in this case 1s

difficult to reconcile with this Court's decision in

Lehman Bros., which involved a diversity lawsuit in

federal court in New York, in which hability turned

on an unsettled question of Florida law. The district

court resolved that question based on Florida

intermediate appellate decisions and_ rendered

judgment. The court of appeals reversed, finding no

Florida cases decisive and applying the law of other

states to predict the hkely outcome in Florida. /hid

at 388-89. This Court vacated the circuit court’s

decision and remanded the case for consideration of

certification to the Florida Supreme Court.

This Court relied on three factors in

suggesting that certification was warranted: (1) the

novelty of the question, (2) the “great unsettlement”

of state law concerning it, and (3) the distance of the

New York federal court from Florida. Jhbid at 391.

Two of those three factors are present in this case,

along with a host of others not presented by LeAman

Bros.

The question in this case—whether a co-

obhgor to a settlement agreement who pays an

obligation under that agreement has an implied

right to contribution from non-paying co-obligors—is

a novel one under Texas law. Indeed, the

respondents argued with vigor that Texas courts

never have confronted it. And neither the parties nor

the court of appeals cited any case from any other

jurisdiction considering it. Despite Mr. Sherman’s

9

position that valid Texas precedent governs the

matter, the three federal courts to examine this

issue relied on three different theories in resolving

it. It would appear, then, that the matter is neither

clear nor easily determined by federal judges. After

all, the court of appeals decided that the bankruptcy

and district court judge applied the wrong law to the

case---and both of them are Texas judges. This raises

the risk that even the circuit court’s interpretation of

Texas law may be wrong.

Certification reduces the risk of this type of

erroneous guess by a federal court concerning state-

law issues. These erroneous guesses inequitably

affect the losing federal litigant who cannot appeal

the decision to the state supreme court, and skew

the decisions of people and businesses who rely on

them. Moreover, as this Court has pointed out, “[t]he

reign of law is hardly promoted if an unnecessary

ruling of a federal court is . .. supplanted by a

controlling decision of a state court.” Pullman Co.,

312 U.S. at 500. In a case like this, certification is

better than “the sometimes. scholastic, always

uncertain exploration into what the local Judges

would say they would say the local law is.” A/artinez

v. Rodriguez, 410 F.2d 729, 730-31 (5th Cir. 1969).

The court of appeals viewed its task as

predicting “whether Texas law would imply” a

contribution right under a settlement agreement.

Attempting to predict a state court’s decision in any

case is a difficult task. As one court summarized

this frustrating process of judicial soothsaying: “Our

principal task, in this diversity of citizenship case, is

to determine what the New York courts would think

the California courts would think on an issue about

LO

which neither has thought.” No/an v. Transocean Ar

Lines, 276 F.2d 280, 281 (2d Cir. 1960), rev, 365

U.S. 293 (1961).

In contrast, if the state’s highest court hears

the question, its response will be definitive. Because

that court is the final arbiter of state law, its

decision always will be correct. And the state court

decision will create certainty, which benefits future

parties (who know their rights) and the court system

as a whole (by reducing litigation). Finally, the

Texas certification rule permits the Texas Supreme

Court to decline certification; the court might well do

so in this case based upon its previous decisions

concerning contribution. And that decision would

also provide a definitive answer.

Of course, this case differs from LeAman Bros.

because the Fifth Circuit regularly reviews Texas

law. But this case also presents other factors

weighing in favor of certification and not present. in

Lehman Bros. The most important among these is

the policy-laden analysis underlying the decision by

the court of appeals. Without certification in this

situation, federal courts “are forced to make

important state policy, in contravention of basic

federalism principles.”. Hakimoglu v. Trump Taj

Mahal Assocs., 70 F.3d 291, 302 (3d Cir. 1995)

(Becker, J., dissenting). In contrast, certification

helps “build a cooperative judicial federalism.”

Lehman Bros., 416 U.S. at 391.

Certification also fosters comity by affording

state judges control over the content of state law.

Resolving unsettled issues of state law requires

value-laden policymaking; state judges, immersed in

1]

their state’s social and legal milieu and accountable

to its citizens, should decide those issues. That the

state should have the opportunity to declare and

control the development of state law, particularly

when important state policies hang in the balance,

seems self-evident in our federal system. As one

state supreme court has explained:

[A]part from the most. fundamental

principle of “our federalism’”—that

the state court of last resort is alone

the supreme arbiter of the

substantive content of the law of the

State—a concern to promote federal:

state comity would counsel that,

whenever reasonably possible, the

state court of last resort should be

given opportunity to decide state law

issues on which there are no state

precedents which are controlling or

clearly indicative of the

developmental sequence of state law.

White v. Edgar, 320 A.2d 668, 675 (Me. 1974)

(footnote and citation omitted).

II. THIS CASE PRESENTS AN _ IDEAL

VEHICLE TO REFINE THIS COURTS

INSTRUCTIONS ON - CERTIFICATION

WITHOUT LIMITING THE BROAD

DISCRETION ENUNCIATED BY PRIOR

DECISIONS.

Even in the Pullman abstention arena, the

circuit courts have struggled to enunciate consistent

standards for certification. According to one court of

appeals, “[slubstantial doubt about a question of

state law upon which a particular case turns should

be resolved by certifying the question to the state

supreme court.” Jones v. Dillard's, Inc., 331 F.3d

1259, 1268 (11th Cir. 2003); see also Stevens v.

Battelle Memorial Institute, 488 F.3d 896, (11th Cir.

2007). But most circuit courts apply a fairly rigorous

three-part test before certifying a case. See, e.g.,

McRedmond v. Wilson, 533 F.2d 757, 761 (2d Cir.

1976).

Given the uncertainty surrounding

certification—underscored by the circuit court’s

failure to certify this case despite its similarity to

Lehman Bros.—additional guidance from this Court

would be helpful both to judges and litigants. At the

same time, this Court has made clear its reluctance

to make any decision infringing on the_ broad

discretion afforded to lower courts in evaluating the

advisability of certification. See Lehman Bros., 416

U.S. at 392 (Rehnquist, J., concurring).

This case presents an ideal vehicle to refine

this Court’s guidance on certification. The unique

and extraordinary circumstances in this case mean

the decision in this case will znform—rather than

inhibit—the exercise of discretion by federal judges

in deciding certification requests. Those unique and

extraordinary circumstances include state law so

unclear that three federal courts applied three

different theories in attempting to ascertain it, a

circuit court opinion based entirely on_ policy

grounds, an issue of importance to the state's

jurisprudence, and—perhaps most important—the

absence of any significant issue of federal law.

13

As a result, this Court can further illustrate

for lower federal courts the types of factors

supporting certification in a limited decision that

will preserve the broad scope of discretion previously

established.

Il. THE FIFTH CIRCUIT INCORRECTLY

APPLIED TEXAS LAW AND POLICY

CONCERNS IN REJECTING MR.

SHERMAN’S CLAIM.

The opinion by the court of appeals appears to

grant that the cases cited by Mr. Sherman

established a right of contribution among co-obligors,

but states that Texas courts “have not found

occasion to extend the contribution right implied in

guaranty and surety agreements to other types of

contracts” (Opinion at 4). But in Mateer v. Cockrill,

45 S.W. 751 (Tex. Civ. App. 1898), the court applied

the right even though it explicitly stated the

obligations at issue were not the same as those in a

note or guaranty:

We think the duties and liabilities of

these guarantors, as between

themselves, are not in all respects

the same as those existing between

the guarantors of a note or bond for

payment of definite sums of money

upon default by the payor or obligor.

[bid at 755. So almost from the beginning, the right

extended beyond the payment of money and applied

to promises to “pay a sum of money to, or to do

something for’ another party. Faires v. Cockrill, 3)

S.W. 190, 193 (Tex. 1895) (emphasis added).

14

This Texas rule comports with the general

American doctrine that “[w]here several obligors are

jointly or jointly and severally bound as principals

upon an obligation founded in contract, one who has

rightfully paid more than his share of the joint

obligation may recover contribution from his

cocontractors.” 18 AM. JUR. 2D Contribution § 31

(1985) (citations omitted). And this is true “when the

parties are under a common burden, obligation, or

liability, regardless of whether such common burden

is one assumed by the parties through contract, one

devolving upon them as co-owners of property, one

imposed by statute, or one which the law imposes

equally on the parties in certain cases... .” [bid §

10 (citations omitted).

In essence, Texas treats contractual co-

obligors as sureties for each other. In practical effect,

‘ach co-obligor is a principal as to his share, and a

surety as to the others’ shares. Respondents and

Velocita entered into a single promissory sentence

with respect to payment of the settlement funds, and

each of them was a principal as to his own share and

a surety as to the others’ shares.

The court of appeals disregarded these Texas

cases and decided the case on policy grounds. Even if

the circuit court’s policy analysis is correct—and it is

not—it would not constitute a basis for ignoring

established Texas law. The court of appeals was

tasked with ascertaining what the law is in Texas,

not what it ought to be based on policy concerns.

Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487,

487 (1941).

15

Enforcing the settlement agreement by

holding respondents accountable for their respective

portions of the common liability will not discourage

settlements. Any small number of settlements

deterred by this case would be offset by the

numerous defendants more likely to enter into joint

and several settlements knowing they can enforce

those settlements against co-obligors who refuse to

pay their shares.

Even for parties who may be skittish as a

result of this case, the most likely result will not be

to discourage settlements but instead to promote

better-drafted settlement agreements. In this case,

respondents agreed to be jointly and individually

liable for the entire settlement amount. If they did

not wish to be jointly and individually lable—and

therefore subject to this contribution claim—all they

had to do was specify each party’s specific financial

obligation or state that Velocita alone was

responsible for payment of the monetary settlement.

If the Texas contribution scheme disquiets

litigation, Texas courts apparently deem that an

acceptable cost. Contribution claims often are

disquieting by their very nature, sometimes

necessitating reopening underlying disputes. And

judicial economy prefers resolution of all disputes in

a single controversy. But Texas courts have deemed

these costs to judicial economy warranted in

permitting, for example, a contribution claim by one

judgment debtor against another. Greenspan v.

Green, 255 S.W.2d 917 (Tex. Civ. App. — Dallas

1953, writ ref'd n.r.e). In Greenspan, the Texas court

of appeals upheld a summary judgment by Judge

16

Sarah Hughes permitting a contribution claim by a

judgment co-obligor.

IV. MR. SHERMAN PROPERLY REQUESTED

CERTIFICATION.

Mr. Sherman requested certification in his

timely petition for rehearing. Normally, this Court

might look askance at such a late request, but the

timing of the request is understandable in the

context of this case. The Texas Supreme Court cases

govern this matter, and Mr. Sherman had no idea

the court of appeals would consider those cases

unworthy of respect due to their age until issuance of

the opinion. Under these limited circumstances, Mr.

Sherman’s request for certification on petition for

rehearing should be sufficient.

In any event, there is no requirement

jurisdictional or prudential—as to when a

certification request must be made. Even if there

were, this Court finds exceptions even to entrenched

jurisdictional requirements like the final-judgment

rule. See, e.g., Cox Broadcasting Corp. v. Cohn, 420

U.S. 469, 484-86 (1975).

CONCLUSION

Based on this Court’s decision in Lehman

Bros., and principles of comity and federalism, the

petition for a writ of certiorari should be granted.

Alternatively, this Court should vacate the circuit

court’s decision and remand the _ case for

certification.

he pectiully ubmitted

WM CHRIS WOLFFARTH CHARLI CHAD

SHACKELFORD, MELTON & KARUCH

MCKINLE Counsel of Record

3333 Lee Parkway HE LAW OFFICE O]

Tenth Floor CHAD BARUCH

Dallas, Texas 75219 $201 Main Street

(214) 780-1400 Rowlett. Texas 750}

(9°72) 412-7192

Baruchk q@aol.ce }

{ ounsel fol Petit

Pani i She Wlali

iILinited Stat Court of Appeal

Mifth Circuit

RITLED

June 2, 201

Lvie W. Cavel

Clerk]

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT COURT

09° 10416

in the Matter of: VieLOCITA WORLDWID!

LOGISTICS INC

DANIEL SHERMAN

WILLIAM LAMOTHE; RAJAN SOBHANI CHRI

BRACK; DANIEL ESTRADA; SCOTT

STUDEBAKER; JAMES MICHAEL WALSH

BRANDON ROBINSON; PATRICK STRYER

Appellees

\ppeal from the United States District Court

lor the Northern District of Texa

LISDC No. 3:0O8-CV-151¢

Vill VI i/\ (oi t sud

Uan nel a iru nkruptl

i) te fo} Vie ita Worldwid in

Velocita bpp i] aal Gdistrict Court hudement

iffirming the bankruptcy urt and declhning t

imply a nmeht of contmbution amony defendants whi

reed to bi untly and individually table for a

DAYMenL a part | if I L stern t |

tate tort actiol

i | ! i] f f ( (] a

mpl \ } VOrKCQ 1a) \ lon } h) |

OmMmpany \ mpcting Hippmny OMmMpAans vee

(slobal Logisti (“hkoxel ) ued Velocita ind tl

employes lor trade CCcret Violatiol Vite everal

month ot acrimoniou htigation. the partie ettled

the case. In addition to dozens of pages of injunction

ivalnst Velocita mad mdividuall tailored

mnjunctions against the Hmployes the settlement

iyreement contained faust requilril,! > |

millon payment to IOxe | In the payment chau

Velocita and the employes avreed to bi momtiv and

individually hable to pay Exel a $1.85) muilhiws

Velocita paid the entire $1.85 muilhon and. lates

entered bankruptcy Vhes | pull | ( eit

leomand i if reat

The Trustee brought suit against the

Employees, attempting to force them to pay their pro

rata share of the $1.85 million to Velocita. Since the

settlement agreement made no mention of

contribution, the Trustee relied on an implied

contractual right to equitable contribution. Both the

bankruptcy court and the district court denied relief.

The Trustee timely appealed to this court.

/

IT.

This appeal asks us to consider whether Texas

law would imply a right of contribution for a co-

obligor of a settlement agreement that paid more

than its proportionate share of the settlement.2 The

Trustee relies primarily on Fares v. Cockri/l, 31

S.W. 190 (Tex. 1895), and Merchants’ National Bank

v. McAnulty, 33 S.W. 963 (Tex. 1896), two century-

old Texas cases that recognize an implied right to

contribution. The Employees argue that the doctrine

announced in these cases has only been applied to

sureties and guaranties in the 100 years since it was

announced, and caution against expanding its

application here.

Under Texas law, a claim for contribution is

separate from the underlying tort or contract. “The

obligation to contribute is not founded upon contract.

.. but upon principles of equity and natural justice

which requires [sic] that one shall not be made to

bear more than his jut share of a common burden to

2 Since the appeal is taken frem the district court’s summary

judgment ruling, our review is de novo. Mongrue v. Monsanto

Co., 249 F.3d 422, 428 (5 Cir. 2001). We apply the same

standards as the district court. /d.

3a

the advantage of his co-obligors.” M/cKelroy v.

Hamilton, 130 S.W. 2d 1114, 1116 (Tex. Civ. App.

1939). The reasoning that underlies the right of

contribution is that the co-obhgors have made an

implied promise to bear the burden equally: “[iJn

suits for contribution the right of action is on the

unplied proniuse for reimbursement and not upon the

debt.” AM/ler v. Miles, 400 S.W. 2d 4, 7 (Tex. Civ.

App. 1966) (emphasis added).

iexas courts have long allowed actions for

contribution in guaranty and surety cases even

where the right was not set out in the note or

contract. Occasionaliy, Texas courts have recognized

the right to contribution in language broad enough

to be construed to cover the situation here. See, e.g.

E'mplovers Cas. Co. v. Transp. Ins. Co., 444 S.W.2d

606, 609 (Tex. 1969) (“The general contribution rule

is announced in 18 AM. JUR.2d 16, Contribution § 7,

in this language: ‘The primary requisites of the

equitable right to contribution ... are (1) a situation

wherein the parties are in aequali jure under some

common obligation or burden, and (2) compulsory

payment or other discharge, by the party secking

contribution, of more than his fair share of the

common obligation or burden.’”). Other cases have

defined the right to implied contribution more

narrowly. “Under Texas law, there is a very limited

right of contribution on a breach of contract claim;

that is, a contribution right exists among co-

guarantors on a note, or in any situation where there

is an implied promise of co-obligors to pay their

proportionate shares of a common. obligation.”

Interstate Contracting Corp. v. City of Dallas, No.

4a

3:98-CV-2913-M, 2000 WL 1281198 at *4 (N.D. Tex.

Sept. 8, 2000)(unpublished), revd on other grounds,

407 F.3d 708 (5th Cir. 2005).

Notwithstanding the broad language quoted

above, Texas courts, to the best of our knowledge,

have not found occasion to extend the contribution

right implied in guaranty and surety agreements to

other types of contracts. Because the doctrine has

been limited to guaranty and surety agreements, if

stands to reason that features of these contracts

make them more conducive to equitable contribution

than other types of contracts. An examination of the

underlying reasons why Texas courts have allowed

contribution only in these’ limited types of

agreements bears out this contention.

First, in sureties and guaranties, the subject

matter of the contract is (generally) money that has

been lent to one party on the binding assurance of

another or others. Should the lendee fail to repay,

the only contested item is completely fungible and

thus easily divisible, making pro rata lability simple

to calculate and knowable in advance. Second,

contribution accords with the settled expectation of

the guarantors: if there are three guarantors, in the

absence of contractual provisions to the contrary,

each can expect to bear no more than one-third of

the amount at issue. The implied promise underlying

the right to contribution is implied because it is

expected and desired ex ante. Disallowing

contribution would force each guarantor in a multi

party guaranty to gamble with his potential liability.

This would stifle the lending that guaranties

va

encourage. Third, contribution in the world of

guaranties and sureties is both fair and efficient. It

speeds the collection process for lenders and ensures

that each of the guarantors or sureties is treated

equally by default. In sum, surety and guaranty

contracts feature both an easily divisible subject

matter and an unmistakable underlying intent as to

how the parties will bear the risk of default by the

lendee.

Assuming arguendo that Texas courts would

imply a right to contribution in settlement

agreements as a general matter, we decline to do so

here. The factors that justify the contribution right

implied in sureties and guaranties are absent here.

First, the subject matter of the settlement

agreement. involved more than money. Although a

$1.85 million payment constituted one part of the

agreement, the remainder comprised individually

tailored injunctions against the Employees and

Velocita.? Texas courts have recognized that the

general rule of an equally divided pro rata

contribution is altered when, for example, co-obligors

3 The presence of disparate injunctions, in addition to money,

distinguishes the instant case from Greenspan v. Green, 255

S.W.2d 917 (Tex. Civ. App. 1953). In Greenspan, a bankruptcy

trustee was allowed to assert a contribution claim against a co-

judgment debtor, even though the “joint judgment [was]

without a provision for contribution between the co-debtors.”

Id. at 918. Although the case supports the Trustee's position, it

is not entirely analogous because the underlying judgment only

involved money, thus making it more similar to a surety or

guaranty than the instant settlement agreement.

Furthermore, at oral argument, the Trustee specifically

disavowed any theory of recovery based on co-debtor status.

6a

shared unequally in the consideration received out of

the note, in which case “contribution my be prorated

according to the benefits each received.” Dittbherner

v. Bell, 558 S.W.2d 527, 534 (Tex. Civ. App. 1977).

In this case, the benefits that the individual

Employees received from being released from the

suit were presumably not equal. Some Employees

must have been less involved in the actions that Exel

alleged were trade secret’ violations. The

individually tailored injunctions support this

contention: LaMothe, for example, faced = an

injunction that was notably more strict than that

faced by the other Employees. Thus, contrary to the

Trustee’s arguments, implying ae right to

contribution would necessarily force the district

court to open up the underlying settlement to

determine an equitable division among the

Employees.

The instant facts are in stark contrast to the

situation in Dittberner, where the court was able to

find the amount of consideration received by each

party to the promissory note as a percentage of the

whole. Jd. at 534. In cases where the percentage

that each party should bear is obvious from the face

of the contract or where the parties entered into the

arrangement with their potential share of lability

allocated by existing law, it is relatively easy for the

courts to calculate each party’s contribution. The

implied promise on which the right of contribution

rests 1s more plausible in such cases. The difficulty

of equitably apportioning contribution here weighs

against implying the remedy.

Additionally, nothing indicates that

contribution would accord with the expectations of

the Employees and Velocita. Allowing contribution

would imply an eleven-way promise that the

Employees and Velocita would almost surely not

have made in the circumstances of this case.4 The

Trustee has not pointed to anything in the record

indicating _ that, ex ante, the Employees

contemplated an arrangement at all analogous to a

guaranty.

III.

In conclusion, we do not find the obligations in

the instant settlement agreement to be analogous to

the obligations in surety and guaranty agreements,

the contractual arrangements in which Texas courts

have allowed contribution claims against co-obligors.

Here, where each party appears to have received a

different benefit from the settlement agreement, the

shared burden is neither completely fungible nor

easily divisible. Accordingly, we affirm the district

court’s judgment that, on these facts, a right to

contribution should not be implied.

AFFIRMED.

HAROLD R. DeMOSS, JR., Circuit Judge, concurs in

the judgment only.

' Each of the Employees had a different interest in Velocita:

LaMothe, for example, appears to have been a principal in the

company. We find it highly unlikely that the more “minor

players” signed the agreement with the understanding that

they could each be lable for approximately $200,000 of the

payment to Exel.

oa

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

DANIEL J. SHERMAN, §

8

Appellant, §

§

V. § Civil Action No.

§ 3:08-CV-1516-K

WILLIAM LaMOTHE, et al., §

§

Appellees. §

JUDGMENT

The Court having affirmed the order of the

United States Bankruptcy Court on the matters

appealed in this case, judgment is hereby entered for

Appellees. It is hereby

ORDERED, ADJUDGED, AND DECREED

THAT:

the bankruptcy court’s order of June 9, 2008,

granting summary judgment is affirmed.

Signed March 26¢t, 2009.

s/ Ronnie Jacobson

RONNIE JACOBSON

DEPUTY CLERK

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

DANIEL J. SHERMAN, 8

8

Appellant, §

§

\ § Civil Action No.

§ 3:08-CV-1516-K

WILLIAM LaMOTHE, et al., §

S

Appellees. §

MEMORANDUM OPINION AND ORDER

Before the Court is an appeal from the

bankruptcy court's order’ granting summary

judgment in Adversary No. 06-03533 on June 9,

2008, and Appellees’ Motion for Leave to File a Sur-

reply (Doc. No. 17). The Court DENIES the motion

for leave to file a sur-reply and turns to the appeal of

the bankruptcy court’s order.

Appellant Daniel J. Sherman, Chapter 7

Trustee for Velocita Worldwide Logistics, Inc.

(“Velocita”), seeks to recover from Appellees their pro

rata share of a _ $1,850,000 settlement paid by

Velocita in an underlying state court action. The

bankruptcy court granted summary judgment for

Defendants-Appellees, finding no right of

contribution or indemnification pursuant to a

settlement agreement.

This Court reviews de novo the bankruptcy

court’s decision. See Cooper Cameron Corp. v. U.S.

Dep't of Labor, Occupational Safety and Health

Admin., 280 F.3d 539, 543 (5th Cir. 2002). A

bankruptcy court’s order granting summary

judgment is correct when the pleadings and evidence

in the record establish that no genuine issue of

material fact exists and the trustee is entitled to

summary judgment as a matter of law. Matter of

Criswell, 102, F.3d 1411, 1414 (5th Cir. 1997). A

lower court’s grant of summary judgment should be

affirmed if the judgment can be supported on any

ground. Harris v. Edward Hyman Co., 664 F.2d 943,

945 (5th Cir. 1981).

Appellant raises several issues on appeal: (1)

whether the bankruptcy court erred in concluding

that a judgment entered under a_e settlement

agreement does not provide a basis in law or in

equity for a subsequent contribution claim; (2)

whether the Bankruptcy Court erred in concluding

that a right of contribution does not arise out of the

agreed order entered into under the settlement

agreement in this case; (3) whether the Bankruptcy

Court erred in concluding that no right of

contribution exists in this case because the prior

judgment was entered pursuant to a _ settlement

agreement; and (4) whether the Bankruptcy Court

erred in its decision on the parties’ respective

motions for summary judgment.

First, it is important to note that indemnity

and contribution are mutually exclusive; one with a

right of indemnity has no right of contribution

lla

against the indemnitor. RESTATEMENT (THIRD) OF

TORTS § 23(c). In the bankruptcy court, Appellant

pursued an indemnity claim that has been dropped

here in favor of solely contribution.

There is no common law right to contribution

among joint tortfeasors in Texas. Jowa Mfg. Co. v

Weisman Equip. Co., 667 S.W.2d 209, 211 (Tex.

App.—Austin 1983, writ refd nre.) (citing

Bradshaw v. Baylor University, 52 S.W.2d 1094,

1101 (Tex. Civ. App. 1932)). Contribution thus must

be statutorily created or based on a contract among

joint tortfeasors, as Appellant alleges here. The

underlying settlement agreement and agreed final

judgment settled tort claims for misappropriation,

tortuous interference with contract and prospective

business relationships, unfair competition, violations

of various statutory provisions, and a host of other

claims. The agreed final judgment notes the

defendants are joint and severally liable.

By statute, each defendant who is jointly and

severally liable is hable for the damages recoverable

by the claimant pursuant to statute in proportion to

the respective percentage of ae ged TEX. CIV.

PRAC. & REM. CODE § 33.015. If a defendant who is

jointly and severally liable pays a larger proportion

of those damages than is required its percentage of

responsibility, that defendant has a right of

contribution for the overpayment against each other

defendant with whom its (s/o) is jointly and severally

hable to the extent that the other defendant has not

paid the proportion of those damages required by

12a

that other defendant’s percentage of responsibility.

Td.

Yet there is no statutory right to contribution

among defendants who enter into a joint settlement

agreement that resolves all of a plaintiffs claims.

Southwestern Bell Tel. Co. v. Gen. Cable Indus.,

Inc., 966 S.W.2d 166, 171 (Tex. App.—-E] Paso 1998,

pet. denied). The statute does not create a right of

contribution in a settling party, but it also does not

prohrbit a contractual contribution claim. Jd. In

Southwestern Sell the settlement agreement

specifically provided for a “right to assert the claim

for contribution or indemnity’—that is, it explicitly

created a contractual claim for contribution between

settling defendants. /d. at 168. “Although a settling

defendant does not have a statutorily created right

to seek contribution, neither of the [statutory

provisions] prohibited the parties from creating a

right to contribution by settlement agreement.” /d.

at 171.

Because there is no. statutory right of

contribution among settling defendants and no such

provision was written into the contract, Appellant

would have the Court imply one in the contract.

“Under Texas law, there is a very limited right of

contribution on a breach of contract claim that is, a

contribution right exists among co-guarantors on a

note, or in any situation where there is an implied

promise of co-obligors to pay their proportionate

shares of a common _ obligation.” Interstate

Contracting Corp. v. City of Dallas, No. 3:98-CV-

2913-M, 2000 WL 1281198, at *4 (N.D. Tex. Sept. 8,

13a

2000) (Lynn. J.). revd on other ground 10" sd

708 (5th Curr. ZO0OO)

Texas public policy favo) ettlement

effectuate the efficient administration of justic

Klbaor v. Smith, 845 S.W.2d 240, 250 (Tex. 1992)

Appellant would have the Court Openhh Up a Lal

court's agreed judgment, signed on May 25, 2004, in

an ultimately futile attempt to determine the pro

rata lability of ten individual defendants. Such an

action would frustrate Texas public policy of

encouraging settlement Settling tortfeasors may

agree among themselves as to their re pective

responsibility for a plaintiff damage eC

Southwestern Bell 966. S.W.2d at 171. rather than

ask a court five vears later to do to the work for

them

Here, there 1 no mention of contribution (o)

indemnity) between the Defendant: in the

settlement agreement The setthng parties were

free to negotiate a_ provision’ providing for

contribution. They did not include such a provision

and the Court 1s unwilling to imply one for them

‘The bankruptcy court was thus correct in granting

Defendants-Appellees’ motion for summary

judgment, finding no basis in law or in equity for a

contribution claim

After review of the bankruptcy court record

the briefs of the parties, and the applicable law, the

Court concludes that the bankruptcy’ court's

determination was correct The decision of the

bankruptcy court is AFFIRMED The Clerk 1:

l4a

nt pul uUANnTL I Bankrupt f

SO ORDERED

IN THE t

FOR THE NORTHERN DISTRICT OF

DALLAS DIVISION

Velocita Worldw

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Daniel J. Sherman,

Plaintiff,

William LaMothe,

et al,

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«

Defendants. § Adversary No.

§ 06-03533

ORDER ON MOTIONS FOR SUMMARY

JUDGMENT

Came before the Court for hearing on June 4,

2008, the Defendants’ Motion for Summary

Judgment (“Defendants’ Motion”) and Plaintiff's

Motion for Summary Judgment (“Plaintiff's

Motion”).

Summary Judgment Standard

Summary judgment is proper if the pleadings,

deposition, answers to interrogatories, and

admissions on file, together with the affidavits, if

any, and other matters presented to the court show

that there is no genuine issues of material fact, and

that the moving party is entitled to a judgment as a

matter of law. Celotex Corp. v. Catrett, 477 US.

317, 322-23 (1986). The movant bears the initial

burden of articulating the basis for it motion and

identifying evidence, which shows that there is no

L7va

genuine issue of material fact. Celotex Corp. v.

Catrett, 477 U.S. at 322; Anderson v. Liberty Lobby,

Inc., 477 U.S. 242 (1986). Material issues are those

that could affect the outcome of the action. Wyatt v.

Hunt Plywood, Co. Inc., 297 F.3d 405, 409 (5th Cir.

2002).

If the moving party meets this burden, Rule

56(c) requires the nonmovant to go beyond the

pleadings and show by affidavits, depositions,

answers to interrogatories, admissions on file, or

other admissible evidence that specific facts exist

over which there is a genuine issue for trial.

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio

Corp., 475 U.S. 574, 586-87 (1986); Wallace v. Texas

Tech Univ., 80 F.3d 1042, 1046-47 (5th Cir. 1996).

The burden is on the non-movant to make a showing

sufficient to establish an issue of fact for each

element as to which that party will have the burden

of proof at trial. HKpps. v. NCNB Texas Nat Bank,

838 F.Supp. 296, 299 (N.D. Tex. 1993), affd 7 F.3d

44 (5th Cir. 1993) (citing Celotex Corp. v. Catrett,

477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265

(1986)). The nonmovant’s burden may not be

satisfied by conclusory allegations and denials,

speculation, improbable inferences, unsubstantiated

assertions, metaphysical doubts as to the facts, or a

mere scintilla of evidence; and legalistic arguments

are not adequate substitutes for specific facts show

that there is a genuine issue for trial. Matsushita,

475 U.S. at 586-87; Douglass v. United Servs. Auto.

Ass'n, 79 F.3d 1415, 1428 (5th Cir. 1996) (en banc);

SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993);

Wallace, 80 F.3d at 1047.

lSa

The court must draw inferences in the light

most favorable to the party opposing the motion.

Anderson, 477 U.S. at 255. However, factual

controversies are resolved in favor of the nonmovant

“only when there is an actual controversy, that is,

when both parties have submitted evidence of

contradictory facts.”. MicCa/lum Highlands, Ltd. v.

Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th

Cir.), revised on other grounds upon denial of rel’g,

70 F.3d 26 (1995); see also Wallace, 80 F.3d at 1048;

SWS. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494

(5th Cir. 1996). The Court will not, “in the absence

of any proof, assume that the nonmoving party could

or would prove the necessary facts.” AfcCallum, 66

F.3d at 92. Once a summary judgment motion is

made and properly supported, the nonmovant must

go beyond the pleadings and designate specific facts

in the record showing that there is a genuine issue

for trial. Little v. Liquid Air Corp., 37 F.3d 1069,

1075 (5th Cir. 1994) (en bance).

Application To the Present Motions

Based on the record made before the Court,

there are no material fact issues in dispute, and the

Court finds that summary judgment should be

granted as a matter of law as to Defendants’ Motion

and denied as a matter of law as to Plaintiff's

Motion.

The Defendants’ Motion involves the right of

contribution and indemnification among parties to

an agreed judgment entered in the 192nd District

19a

Court of Dallas County, Texas, pursuant to a

settlement agreement. With respect to the right of

contribution, under Texas law, a judgment entered

under a settlement agreement does not provide a

basis in law or in equity for a_ subsequent

contribution claim. Beech Aircraft Corp. v. Jinkins,

739 S.W.2d 10, 21 (Tex. 1987). Therefore, a right of

contribution does not arise out of the agreed order

entered into under the settlement agreement

between the Plaintiff and Defendants in this case.

As to the right of indemnification, under Texas law,

common law indemnity has been abolished, except

where a party is vicariously hable. Aviation Office of

America, Inc. v. Alexander & Alexander of Texas,

Inc., 751 S.W.2d 179 (Tex. 1988); Bonniwell v. Beech

Aircraft Corp., 663 S.W.2d 816 (Tex. 1984). And a

right of indemnification exists against a party who is

vicariously lable only when there has been a judicial

determination or admission that such party is hable

to the claimant. Humana Hosp. v. American

Medical Systems, Inc., 785 S.W.2d 144 (Tex. 1990).

Since there has been no finding in this case that the

Defendants are liable to the Plaintiff, no right of

indemnification arises.

The Plaintiffs Motion also involves the right

of contribution and indemnification. As previously

mentioned, no right of contribution or

indemnification exists in this case since the prior

judgment was entered pursuant to a settlement

agreement.

Based on the foregoing, it is

20a

ORDERED that the Defendants’ Motion is

GRANTED and Plaintiffs Motion is DENIED.

DER 7H#

[Case No. 09-10146 Document: 00511170272

Date Filed: 07/12/2010]

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-10416

In the Matter of: VELOCITA WORLDWIDE

LOGISTICS. INC.

Appellant

V.

WILLIAM LAMOTHE; RAJAN SOBHANI; CHRIS

BRACK; DANIEL ESTRADA; SCOTT

STUDEBAKER; JAMES MICHAEL WALSH;

BRANDON ROBINSON; PATRICK STRYER,

Appellees

Appeal from the United States District Court for the

Northern District of Texas, Dallas

ON PETITION FOR REHEARING

Before GARZA, DeMOSS, and CLEMENT, Circuit

Judges.

PER CURIAM:

IT IS ORDERED that the petition for rehearing is

denied.

ENTERED FOR THE COURT

s/Emiho M. Garza

United States Circuit Judge