United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS May 6, 2003
Charles R. Fulbruge III
Clerk
For the Fifth Circuit
No. 01-41094
INTERNATIONAL PAPER COMPANY,
Plaintiff - Counter Defendant -
Third Party Defendant - Appellee,
VERSUS
RICHARD N. FRAME, ET AL.,
Defendants,
RICHARD N. FRAME; B. A. KENNEDY, individually, doing business
as Kennedy Specialty Lumber; JULIE ANN KENNEDY, individually,
doing business as Kennedy Specialty Lumber,
Defendants - Counter Claimants -
Third Party Plaintiffs - Appellants.
Appeals from the United States District Court
for the Eastern District of Texas
(2:98-CV-36)
Before DEMOSS, STEWART, and DENNIS, Circuit Judges.
1
DENNIS, Circuit Judge:*
The appellants’ petition for panel rehearing is DENIED. The
opinion of the court issued on April 8, 2003 is withdrawn, and the
following is substituted:
In this appeal, defendants-appellants Richard N. Frame, B.A.
Kennedy, and Julie Ann Kennedy appeal both the jury verdict holding
them liable for conspiring to commit fraud, theft, breach of
fiduciary duty, and breach of contract, and the district court’s
finding of joint and several liability and award of attorneys’ fees
and costs to plaintiff-appellee International Paper Company (“IP”).
Because we do not have jurisdiction to consider Frame’s untimely
appeal of the final judgment, we DISMISS this portion of his
appeal. But after considering the Kennedys’ appeal of the final
judgment, we AFFIRM the jury verdict and the district court’s
imposition of joint and several liability. In addition, we VACATE
the district court’s order awarding attorneys’ fees and costs, and
REMAND for re-entry of an attorneys’ fees and costs award that
excludes recovery for litigation expenses.
I. Background
IP brought suit in the Eastern District of Texas based on
diversity jurisdiction, asserting claims against Frame and the
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
2
Kennedys for fraud, theft, and civil conspiracy. IP also sued
Frame for breach of fiduciary duty and the Kennedys for breach of
contract. The defendants counterclaimed for damages based on
defamation, malicious prosecution, intentional infliction of
emotional distress, civil conspiracy, breach of contract, and
tortious interference with contract. These counterclaims were
dismissed on summary judgment and have not been appealed.
Frame worked as a scaler at IP’s Domino, Texas paper mill.
Scalers are responsible for weighing trucks as they enter and exit
the mill. As a truck enters the mill, the truck driver presents
the scaler with a driver’s ticket. The driver’s ticket contains
information about the type of wood delivered, the hauling company,
the truck license tag, and the date of delivery. The truck driver,
not the scaler, is the person responsible for completing and
signing the driver’s ticket. IP alleged that Frame had forged over
1,500 of these tickets between 1995 and 1997, which allowed the
Kennedys, whose names were on the tickets, to receive payment for
nonexistent loads of wood. After receiving an anonymous tip, IP
set up surveillance at the mill. As a result of the investigation,
IP pursued criminal charges against Frame and brought a civil suit
against all three defendants. The criminal charges resulted in a
mistrial and, ultimately, an acquittal, and the civil suit forms
the basis of this appeal.
3
In July 2001, after a ten-day trial, the jury found for IP,
holding the defendants liable on all claims. As a result, the jury
awarded IP $500,000 in compensatory damages from Frame, $250,000
from B.A. Kennedy, and $250,000 from Julie Ann Kennedy. The jury
also awarded IP $1 from each defendant as punitive damages.
On August 15, 2001, the district court entered a judgment on
the merits, finding the defendants jointly and severally liable as
co-conspirators. On August 29, 2001, Frame filed a motion to set
aside the verdict or for a new trial. On the same day, IP filed a
motion for attorneys’ fees and costs. The court denied Frame’s
motion on October 1, 2001, but granted IP’s motion for attorneys’
fees and costs on October 16, 2001. Although the Kennedys filed
their notice of appeal on September 13, 2001, Frame did not file
his notice of appeal until November 13, 2001.
On appeal, the defendants jointly challenge: (1) the
sufficiency of the evidence supporting the jury verdict, (2) the
district court’s finding that the defendants were jointly and
severally liable, and (3) the district court’s award of litigation
expenses to IP. IP counters that (1) Frame’s appeal of the first
two issues must be dismissed because this court does not have
jurisdiction, (2) the jury verdict was supported with sufficient
evidence, and (3) the district court’s holdings on joint and
several liability and litigation expenses were proper.
II. Analysis
4
A. Frame’s Notice of Appeal
We must first determine whether Frame timely filed his notice
of appeal.1 If an appeal is untimely, we lack jurisdiction to
consider it, and the appeal will be dismissed. First Nationwide
Bank v. Summer House Joint Venture, 902 F.2d 1197, 1199 (5th Cir.
1990)(“Time limits for filing a notice of appeal are ‘mandatory and
jurisdictional.’”). IP contends that Frame’s appeal of the final
judgment was untimely because it was not filed within thirty days
after the district court denied his motion to set aside the verdict
or for a new trial. Frame counters that his appeal was timely
because it was filed within thirty days after the district court
granted IP’s motion for attorneys’ fees and costs.
Rule 4(a)(1)(A) of the Federal Rules of Appellate Procedure
provides that “the notice of appeal must be filed within 30 days
after the judgment appealed from or ordered is entered.” However,
Rule 4(a)(4) outlines several exceptions to this rule. In
particular, Rule 4(a)(4)(A)(iv) provides that if the party timely
files a motion to alter or amend the judgment under Rule 59 of the
Federal Rules of Civil Procedure (“FRCP”), then the time for appeal
runs from the date the district court disposes of that motion.
1
Although the defendants jointly filed their briefs, the
Kennedys and Frame filed separate notices of appeal. The Kennedys
filed a joint notice of appeal on September 13, 2001, which is
within thirty days of the final judgment entered on August 15,
2001. Therefore, their appeal of the final judgment was timely.
5
Similarly, Rule 4(a)(4)(A)(iii) provides that a motion for
attorneys’ fees under Rule 54 of the FRCP will have the same effect
“if the district court extends the time to appeal under [FRCP] Rule
58.” But Rule 4(a)(4)(A)(iii) does not require the district court
to order such an extension under FRCP Rule 58(c)(2).
In this case, there were two post-trial motions that
potentially could have affected the timeliness of Frame’s notice of
appeal: his Rule 59 motion and IP’s Rule 54 motion. But because
the district court did not order pursuant to Rule 58(c)(2) that
IP’s motion alter the defendant’s time to appeal, that motion did
not have the effect of a Rule 59 motion. See FED. R. APP. P.
4(a)(4)(A)(iii); FED. R. CIV. P. 58(c)(2); Budinich v. Becton
Dickinson & Co., 486 U.S. 196, 201-03 (1988); Echols v. Parker, 909
F.2d 795, 798 (5th Cir. 1990). Hence, the only relevant date in
calculating the timeliness of Frame’s notice of appeal is October
1, 2001, the date on which the district court denied his Rule 59
motion. His notice of appeal was therefore untimely when it was
filed on November 13, 2001, which was fourteen days after the
deadline passed.
Frame further contends that our decision in Ramsey v. Colonial
Life Insurance Co., 12 F.3d 472 (5th Cir. 1994), requires us to
extend the time period for appeal. In Ramsey, the final judgment
included a denial of an attorneys’ fees award, and the plaintiffs
6
filed a motion for reconsideration solely on the issue of
attorneys’ fees. Id. at 476. The plaintiffs then appealed within
thirty days after the motion for reconsideration was denied. Id.
at 474. The Ramsey court held that the appeal was timely because
the final judgment expressly decided the issue of attorneys’ fees.
Id. at 477-78. Therefore, the motion in Ramsey was not a request
for attorneys’ fees, but rather a Rule 59 motion seeking
reconsideration of the final judgment. Id. Here, the district
court’s entry of judgment on the merits did not discuss or even
mention the attorneys’ fees issue. Thus, IP’s motion for
attorneys’ fees cannot be considered a Rule 59 motion because IP’s
motion did not request either a new trial or alteration of the
judgment. Therefore, the Ramsey decision is inapplicable.
Because Frame did not appeal the final judgment in a timely
fashion, we are without jurisdiction to consider his appeal of this
judgment. Therefore, we dismiss this portion of his appeal.
Although we dismiss Frame’s appeal of the final judgment, we will
consider the Kennedys’ challenge to both the sufficiency of the
evidence supporting the jury verdict and the district court’s
decision to impose joint and several liability.
B. Sufficiency of the Evidence
The Kennedys request that we reverse the jury’s verdict and
enter judgment as a matter of law (“JMOL”) pursuant to FRCP Rule
7
50, holding that IP take nothing in this suit because it has not
introduced sufficient evidence to support the jury verdict. When
considering a Rule 50 motion for JMOL following a jury verdict, we
must be “especially deferential” to the jury’s findings. Brown v.
Bryan County, Okla., 219 F.3d 450, 456 (5th Cir. 2000). We may
grant a JMOL only where upon reviewing the entire record, we find
that there is no legally sufficient evidentiary basis for a
reasonable jury to find for the non-moving party on an issue. FED
R. CIV. P. 50(a). In evaluating the record, we must make all
reasonable inferences for the non-moving party, and disregard all
evidence from the moving party that a jury is not required to
credit. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133,
150-51 (2000). And of course, we must remember that "[c]redibility
determinations, the weighing of the evidence, and the drawing of
legitimate inferences from the facts are jury functions, not those
of a judge." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986).
IP has brought four different claims against the Kennedys:
fraud2, theft3, breach of contract4, and engaging in a civil
2
To prove fraud under Texas law, a plaintiff must show:
(1) the defendant made a material representation; (2) the
misrepresentation was made with knowledge of its falsity or made
recklessly without any knowledge of the truth and as a positive
assertion; (3) the misrepresentation was made with the intention
that it should be acted on by the other party; and (4) the other
party acted in reliance on the misrepresentation and thereby
suffered injury. T.O. Stanley Boot Co. v. Bank of El Paso, 847
8
conspiracy with Frame to commit these acts.5 The Kennedys contend
that IP failed to provide sufficient evidence to prove that they
were liable for these claims. We disagree.
During the ten-day trial, IP introduced the following
evidence: (1) two anonymous letters, which alerted IP that the
defendants were defrauding the company; (2) 1,589 drivers’ tickets,
which resulted in over $1 million in payments to the Kennedys; (3)
S.W.2d 218, 222 (Tex.1992); Johnson & Higgins v. Kenneco Energy,
Inc., 962 S.W.2d 507, 524 (Tex.1998).
3
Under the Texas Theft Liability Statute, a person is
liable for the damages resulting from his or her theft. TEX. CIV.
PRAC. & REM. CODE § 134.003(a). A person commits theft “if he
unlawfully appropriates property with intent to deprive the owner
of property.” TEX. PENAL CODE § 31.03(a). The appropriation of
property is unlawful if: “(1) it is without the owner's effective
consent” or “(2) the property is stolen and the actor appropriates
the property knowing it was stolen by another.” Id. 31.03(b).
4
To prevail on a breach of contract claim under Texas law,
a plaintiff must prove (1) the existence of a valid contract
between plaintiff and defendant, (2) the plaintiff's performance or
tender of performance, (3) the defendant's breach of the contract,
and (4) the plaintiff's damage as a result of the breach. Prime
Products, Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 637 (Tex.
App. 2002); Frost Nat'l Bank v. Burge, 29 S.W.3d 580, 593 (Tex.
App. 2000).
5
A civil conspiracy is, "a combination of two or more
persons to accomplish an unlawful purpose, or to accomplish a
lawful purpose by unlawful means." Carroll v. Timmers Chevrolet,
Inc., 592 S.W.2d 922, 925 (Tex.1979). The essential elements for
proving a civil conspiracy claim are: (1) two or more persons; (2)
an object to be accomplished; (3) a meeting of minds on the object
or course of action; (4) one or more unlawful, overt acts; and (5)
damages as the proximate result. Massey v. Armco Steel Co., 652
S.W.2d 932, 934 (Tex.1983).
9
a handwriting expert’s testimony, which certified that Frame’s
handwriting was on all but two of these tickets; (4) videotape
surveillance and scaler timecards, which established that during
Frame’s shift the number of trucks entering the mill and scale
house was significantly less than the number of tickets issued; (5)
raw scale ticket data, which showed that IP paid for more wood than
it received; (6) a certified fraud examiner’s testimony, which
demonstrated that the license plates listed on the driver’s tickets
were either nonexistent or corresponded to vehicles that were not
able to carry large amounts of wood, such as boats and motorcycles;
(7) the defendants’ income tax returns and bank account
information, which proved that the Kennedys had over $1 million and
Frame $450,000 in unreported income; (8) a certified public
accountant’s testimony, which established that the cash withdrawals
made by the Kennedys approximated Frame’s unreported income; and
(9) Frame’s salary information, which showed that he earned only
$25,000 a year as a scaler.
The above evidence is sufficient to prove IP’s theory that the
Kennedys conspired to steal from IP for purposes of financial gain.
From this evidence, the jury could have inferred the following: (1)
Frame filled out over 1,500 tickets, which resulted in the Kennedys
receiving over $1 million; (2) IP did not receive any wood for
these tickets; and (3) the Kennedys and Frame split the proceeds
from this scheme.
10
This evidence supported the jury’s finding that the Kennedys
were liable to IP for fraud, theft, breach of contract, and
engaging in a civil conspiracy with Frame to commit the same.
First, there is sufficient evidence to establish the fraud claim.
The evidence shows that the Kennedys, by requesting payment for the
drivers’ tickets, intentionally made a material representation to
IP that IP owed them payment for wood with the purpose of inducing
IP to rely on this representation to pay the Kennedys for non-
existent materials. Second, IP provided sufficient evidence to
prove theft. The evidence proves that the Kennedys unlawfully
appropriated the money received for the false drivers’ tickets
without IP’s effective consent with the intent to permanently
deprive IP of these funds. Third, IP had sufficient evidence to
establish a valid breach of contract claim. The Kennedys had a
contract with IP that required IP to pay the Kennedys for the wood
that they provided. IP rendered performance by providing payment,
but the Kennedys breached this agreement by failed to provide the
wood. Fourth, IP sufficiently proved a civil conspiracy between
the Kennedys and Frame. The evidence demonstrates that the
defendants devised a scheme to unlawfully defraud and steal money
from IP, resulting in at least a $1 million loss to IP. Therefore,
IP has provided sufficient evidence to establish the elements of
11
all its claims.6
The Kennedys’ argue that there were a number of specific items
that IP did not prove at trial.7 But none of these items, with the
exception of damages, are elements of any claim brought by IP.
Therefore, because IP is not required to prove these items in order
to prevail, this argument is without merit.
As for damages, the Kennedys contend that IP failed to prove
its losses because the jury awarded an even amount of $1 million.
They argue that the jury’s failure to award damages equal to the
value of the disputed drivers’ tickets proves that IP failed to
offer evidence of damages with sufficient accuracy. See Coursey v.
Broadhurst, 888 F.2d 338, 345 (5th Cir. 1989)(requiring “such proof
of damages as the nature of his case permitted, with as much
accuracy as was reasonably possible”).
6
The Kennedys’ only rebuttal to this evidence is Frame’s
self-serving testimony that his unreported income was from gold
coins and family money. But this was not supported by any other
evidence. In addition, IP contradicted Frame’s testimony by
introducing a 1994 financial statement by Frame to Marine Military
Academy, which failed to list the family money and gold coins as
assets. Therefore, under Reeves, we can disregard Frame’s
testimony because the jury is not required to credit this evidence.
More significantly, the Kennedys introduced no evidence to show
that IP received any wood in exchange for the payments that they
received.
7
The Kennedys argue that IP failed to prove: (1) whether
the Kennedys owned the trucks shown on the videotape surveillance,
(2) whether Frame forged the tickets or had permission from the
drivers,(3) whether Frame and the Kennedys ever met outside of the
mill’s scale house, and (4) the specific amount of IP’s losses.
12
However, IP did provide accurate evidence of its losses. The
drivers’ tickets themselves are sufficient to establish that IP
lost at least $1 million. The jury’s award was not more precise
because IP could not definitively prove that IP paid the Kennedys
for all of the drivers’ tickets. Therefore, the jury had some
discretion in awarding IP less in damages than the face value of
the tickets. In addition, even if IP could not prove the exact
amount of damages, “[a] defendant whose wrongful act creates the
difficulty is not entitled to complain that the amount of the
damages cannot be accurately fixed.” Austin v. Parker, 672 F.2d
508, 522 (5th Cir. 1982). Damages are difficult to prove here
because the defendants engaged in a clandestine operation to
defraud IP utilizing fraudulent materials and cash transactions.
That they did not keep accurate records of their activities should
not be held against the plaintiff. Therefore, the Kennedys’
argument is not persuasive.
Despite the Kennedys’ arguments, IP has provided a legally
sufficient evidentiary basis for a reasonable jury to find in its
favor. Therefore, we affirm the jury’s verdict in favor of IP on
its claims against the Kennedys.
C. Joint and Several Liability
The Kennedys next contest the district court’s decision to
impose joint and several liability. They contend that under Texas
law, the court could only have imposed joint and several liability
13
for the theft claim. TEX. CIV. PRAC. & REM. CODE § 134.005; Id. §
33.002(b). Therefore, they argue that because the damage award was
not divided into individual awards for fraud, theft, and breach of
contract, the amount of damages subject to joint and several
liability is not determinable and thus joint and several liability
is not proper for any of the award.
However, this argument is incorrect. The final judgment
states that the defendants are jointly and severally liable because
the jury found that the defendants were co-conspirators. Under
Texas law, proof of civil conspiracy “imposes joint and several
liability on all co-conspirators for any actual damages resulting
from acts in furtherance of the conspiracy.” Hart v. Moore, 952
S.W.2d 90, 98 (Tex. App. 1997); see also Akin v. Dahl, 661 S.W.2d
917, 921 (Tex. 1983); Tompkins v. Cyr, 202 F.3d 770, 783 (5th Cir.
2000). As co-conspirators, the defendants are joint and severally
liable for all damages because the acts of fraud, theft, and breach
of contract were all in furtherance of the conspiracy.
Consequently, the district court properly found the defendants
jointly and severally liable for the entire amount of damages.
D. Litigation Expenses
Frame’s failure to timely file an appeal of the merits does
not dismiss his entire appeal. Frame, along with the Kennedys, can
still challenge the district court’s award of litigation expenses
14
to IP. Because Frame filed a notice of appeal within thirty days
of entry of the district court’s order awarding these expenses,
this part of his appeal is timely.
On August 29, 2001, IP filed a motion for an award of
attorneys’ fees and costs pursuant to the Texas Theft Liability
Act. See TEX. CIV. PRAC. & REM. CODE § 134.005. In its motion, IP
requested $1,453,452.00 in attorneys’ fees, $431,978.23 in
litigation expenses, and $137,919.90 in costs for a total of
$2,023,350.10. On October 15, 2001, the district court awarded IP
$982,813.00 in attorneys’ fees and $414,875.20 in costs for a total
of $1,397,688.20. In awarding this amount, the district court
discounted the total requested by IP because of insufficient
documentation and because some fees and costs were attributable to
IP’s role in Frame’s bankruptcy and criminal prosecution, not the
civil litigation.
The defendants have not challenged either the $982,813.00
awarded in attorneys’ fees or $137,919.90 in costs. Instead, they
challenge the award of litigation expenses, which they argue cannot
be awarded under § 134.005 of the Act. They seek to reduce the
award of costs by $276,955.30, which is the difference between the
$414,875.20 awarded by the court as costs and the $137,919.90 in
costs requested by IP. This would reduce the IP’s award of
attorneys’ fees and costs to $1,120,732.90. In response, IP
counters that litigation expenses customarily billed to clients may
15
be properly awarded as part of an attorneys’ fees award, not as
court costs. Therefore, it argues that the district court
mischaracterization of the litigation expense award as costs is
insufficient to prove that the court improperly awarded IP these
expenses.
State law controls both the award of and the reasonableness of
fees awarded where state law supplies the rule of decision. Mathis
v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Because the
trial court has discretion to award attorneys’ fees and costs, we
will review their decision for abuse of discretion, although
factual determinations will only be reviewed for clear error. Id.
at 461-62.
As a successful plaintiff in a suit under the Texas Theft
Liability Act, IP has the right to recover “court costs and
reasonable and necessary attorneys’ fees.” TEX. CIV. PRAC. & REM.
CODE § 134.005. Recoverable court costs include: deposition costs,
filing fees, court reporter fees, transcripts, and
subpoena/citation fees. Id. § 31.007(b); Crescendo Investments,
Inc. v. Brice, 61 S.W.3d 465, 480-81 (Tex. App. 2001). However,
the following items are not recoverable as court costs: “delivery
services, such as Federal Express; travel; long-distance phone
calls; bond premiums; postage; reproduction expense; binding of
brief[s] ... office air conditioning, and secretarial overtime.”
16
Shenandoah Assoc. v. J&K Prop., Inc.,741 S.W.2d 470, 487 (Tex.
App. 1987).
In submitting its request for attorneys’ fees and costs, IP
separated its non-attorneys’ fees expenses into two categories:
court costs and litigation expenses. The court costs category
included items that were properly recoverable as court costs,
including deposition costs, filing fees, and subpoena/citation
fees. In contrast, the litigation expenses category consisted
solely of items that are not recoverable as court costs, including
telephone and fax charges, travel expenses, Federal Express
charges, and photocopying fees.
In seeking recovery for these expenses, IP does not contend
that the litigation expenses are recoverable as court costs.
Rather, it argues that these expenses are recoverable as part of a
reasonable attorneys’ fees award. In support of this argument, IP
notes that federal courts have allowed parties to recover
litigation expenses that “are normally charged to a fee paying
client, in the course of providing legal services” as part of an
attorneys’ fee award. See Chemical Mfrs. Assoc. v. EPA, 885 F.2d
1276, 1283 (5th Cir. 1989); see also Spell v. McDaniel, 852 F.2d
762, 771 (4th Cir. 1988); Laffey v. Northwest Airlines, Inc., 746
F.2d 4, 37 (D.C. Cir. 1984); Northcross v. Board of Educ. of the
Memphis City Schools, 611 F.2d 624, 639 (6th Cir. 1979). However,
17
these decisions concerned awards of attorneys’ fees under federal
law. Here, because the attorneys’ fees award is based on a Texas
statute, what the statute allows is determined by Texas law. See
Lasalle Bank Nat’l Ass’n v. Sleutel, 289 F.3d 837, 839 (5th Cir.
2002); Vielma v. Eureka Co., 218 F.3d 458, 462 (5th Cir. 2000). IP
has not provided any authority under Texas law for including these
litigation expenses as part of its attorneys’ fees award, and we
have found none. Therefore, we find that the district court abused
its discretion in awarding IP $276,955.30 in litigation expenses.
Consequently, the award of attorneys’ fees and costs is vacated.
On remand, the district court shall award attorneys’ fees and costs
to IP that exclude recovery for these litigation expenses.
III. Conclusion
Because we lack jurisdiction to consider Frame’s appeal of the
final judgment, we DISMISS this portion of his appeal. But after
considering the Kennedys’ appeal of the final judgment, we AFFIRM
the jury verdict and the imposition of joint and several liability
on the defendants. In addition, because Texas law does not allow
litigation expenses to be recovered as attorneys’ fees or court
costs, we VACATE the district court’s award of attorneys’ fees and
costs, and REMAND for re-entry of an award totaling $1,120,732.90.
18