IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
F I L E D
September 18, 2007
No. 06-20293
Summary Calendar Charles R. Fulbruge III
Clerk
HUNTING ENERGY SERVICES LP
Plaintiff–Appellant
v.
INTER-MOUNTAIN PIPE & THREADING COMPANY
Defendant–Appellee
Appeal from the United States District Court
for the Southern District of Texas
No. 4:05-CV-1993
Before SMITH, WIENER, and OWEN, Circuit Judges.
PER CURIAM:*
Hunting appeals the district court’s judgment awarding attorneys’ fees as
sanctions, arguing that the district court abused its discretion in determining
that Hunting’s claims were “vexatious.” We reverse.
I
The underlying dispute arose out of a contract between Hunting and Inter-
Mountain for the sale of pipe. Questar, a Colorado oil company, ordered pipe
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
No. 06-20293
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from Hunting. Hunting attempted to meet Questar’s order by supplying some
of its own pipe and by purchasing the remainder from Inter-Mountain.
The contract between Hunting and Inter-Mountain required, among other
things, that the pipe have “mill markings” so that the pipe’s origin could be
identified. After Hunting accepted the pipe from Inter-Mountain and allowed
a third-party to begin processing the pipe, Hunting discovered that the pipe did
not appear to have the required mill markings. A representative was sent to the
pipe’s location to attempt to locate the mill markings, which had been covered
in some instances by oxidation and varnish. Although the representative located
the mill markings on some of the pipe, he did not locate the markings on all of
the pipe because the pipe was stacked and not easily accessible.
Hunting began and continued to supervise work that was being performed
on the pipe, but a subsequent third-party inspection revealed that eighty-six
lengths of pipe apparently had no mill markings. Despite the apparent absence
of mill markings, Hunting and Questar proceeded with their transaction.
However, Questar ultimately terminated the contract when it became apparent
that the pipe provided from Hunting’s own stock did not meet Questar’s
specifications. Although Questar eventually purchased some of the pipe
supplied by Inter-Mountain, Questar did not purchase eighty-six of the Inter-
Mountain pipe joints.
After Inter-Mountain refused to accept return of the pipe, Hunting sold it
on the market as scrap. Hunting then sued Inter-Mountain for breach of
contract, breach of warranty, and violations of the Texas Deceptive Trade
Practices-Consumer Protection Act (DTPA). Inter-Mountain removed the case
to the Southern District of Texas.
At the close of Hunting’s case, Inter-Mountain moved for “judgment on
partial findings,” arguing that Hunting had produced insufficient evidence to
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support its claims. The district court granted the motion as to the DTPA claim,
but denied the motion as to the breach of contract and breach of warranty
claims. At the conclusion of the bench trial, the district court rendered a take-
nothing judgment in favor of Inter-Mountain.
Inter-Mountain then filed a post-judgment motion seeking to recover court
costs and attorney’s fees, arguing that Hunting’s claims were frivolous. The
district court granted the motion after concluding that Hunting’s claims were
“vexatious” and brought for the improper purpose of having Inter-Mountain
share in the loss of Hunting’s failed transaction with Questar. Hunting appeals.
II
After appellate briefs were filed, Hunting filed a motion to supplement the
record with the exhibits introduced at trial. Before Inter-Mountain had filed a
response to Hunting’s motion, this Court granted Hunting’s motion to
supplement the record. Inter-Mountain now moves for reconsideration of the
order granting Hunting’s motion to supplement, arguing that the materials
submitted for supplementation do not constitute the certified supplemental
record that is required by rule 10(e)(2) of the Federal Rules of Appellate
Procedure.1 This argument is without merit, however, because this Court has
the authority to certify the supplemental record.2
Inter-Mountain also argues that it would be unfairly prejudiced by the
supplementation because it prepared its brief without relying on the exhibits.
Inter-Mountain specifically argues that the supplemented exhibits contain an
e-mail that was not part of the original record, and that this e-mail negates
1
FED. R. APP. P. 10(e)(2) provides: “If anything material to either party is omitted from
or misstated in the record by error or accident, the omission or misstatement may be corrected
and a supplemental record may be certified and forwarded: . . . (C) by the court of appeals.”
(emphasis added).
2
Id.
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Hunting’s claim that “mill test reports” were a term of the contract between
Hunting and Inter-Mountain. Inter-Mountain argues that if this exhibit is
added to the record, Inter-Mountain will have to re-evaluate the arguments in
its brief to take into account this new information. This argument is without
merit for two reasons. First, Hunting’s argument does not depend on whether
“mill test reports” were part of the contract between Hunting and Inter-
Mountain, so the information is irrelevant to the disposition of this appeal.
Second, Inter-Mountain raised the largely irrelevant argument in its appellate
brief by relying on information already contained in the record. We deny Inter-
Mountain’s motion to reconsider the supplementation of the record.
III
The parties agree that the district court relied on its “inherent power” in
assessing the attorneys’ fees. A trial court has the inherent power to award fees
when it finds that a litigant “has acted in bad faith, vexatiously, wantonly, or for
oppressive reasons.”3 But this inherent power “must be exercised with restraint
and discretion.”4 “[T]he inherent power is not a broad reservoir of power, ready
at an imperial hand, but a limited source; an implied power squeezed from the
need to make the court function.”5 While “[w]e review a district court’s
imposition of sanctions under its inherent power for abuse of discretion[,] . . . our
review is not perfunctory.”6 “A court should invoke its inherent power to award
3
Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 (1991) (quotations omitted).
4
Id. at 44.
5
Id. at 42 (quotations omitted).
6
Crowe v. Smith, 151 F.3d 217, 226 (5th Cir. 1998) (quotation omitted).
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attorneys’ fees only when it finds that ‘fraud has been practiced upon it, or that
the very temple of justice has been defiled.’”7
Hunting’s claims cannot be said to defile the “very temple of justice,” and
there is no suggestion of fraud. This is a contract dispute with disputed facts.
The contract between Hunting and Inter-Mountain required that Inter-
Mountain supply pipe with mill markings. Although the parties offered
conflicting evidence as to the existence of mill markings, Hunting provided at
least some evidence that Inter-Mountain did not supply pipe with mill markings.
The district court ultimately found that even if there were a breach,
Hunting had waived it by accepting and paying for the pipe that Inter-Mountain
delivered. Although Hunting has not appealed the district court’s adverse
judgment on the merits of its claim, the issue of whether Hunting waived the
breach was not obvious, and Hunting presented evidence that it did not waive
the breach. One cannot say that Hunting’s suit for breach of contract would
defile “the very temple of justice.”
The district court abused its discretion in awarding attorneys’ fees of
$38,918.50 as sanctions in this case.
Award REVERSED. Motion DENIED.
7
Boland Marine & Mfg. Co. v. Rihner, 41 F.3d 997, 1005 (5th Cir. 1995) (quoting
Chambers, 501 U.S. at 46).
5