Civelli v. J.P. Morgan Chase ( 2023 )

Case: 21-20618 Document: 00516606432 Page: 1 Date Filed: 01/11/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
January 11, 2023
No. 21-20618
Lyle W. Cayce
Clerk
Carlo Giuseppe Civelli;
Aster Capital S.A. (LTD) Panama,
Plaintiffs—Appellants,
versus
J.P. Morgan Securities, L.L.C.;
JP Morgan Chase Bank, N.A.,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:17-CV-3739
Before Smith and Haynes, Circuit Judges. *
Jerry E. Smith, Circuit Judge:
Carlo Civelli and his company, Aster Capital S.A. (LTD) Panama,
appeal a summary judgment declaring their claims of negligence and conspir-
acy to commit theft to be time-barred and their claim of breach of fiduciary
duty to be without merit. Plaintiffs further contend the district court erred
*
Judge Barksdale took part in oral argument but now stands recused and did not
participate in the opinion. This matter is decided by a quorum. See 28 U.S.C. § 46(d).
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No. 21-20618
in awarding attorneys’ fees.
Finding these assertions without merit, we affirm on all issues.
I.
Civelli, an investor and venture capitalist, and Phillippe Mulacek,
CEO of InterOil Corporation (“InterOil”), an energy company, developed a
business relationship beginning in September 2002. Throughout that rela-
tionship, Civelli (and “entities controlled and beneficially owned by him”)
provided loans, cash advances, and funds to Mulacek and InterOil, who were
“regularly in financial distress.”
At issue is a series of loans and transfers that began in September
2009. “Mulacek was a defendant in a Texas lawsuit . . . [and] asked Civelli
to loan Mulacek shares in InterOil that could be used in the future for the
purposes of satisfying a potential judgment or settlement.” Without any for-
mal written documentation, Civelli entered into a loan agreement under
which Mulacek could use Civelli’s InterOil shares for the purpose of satis-
fying a potential judgment or settlement. Plaintiffs allege that the terms of
the agreement were as follows:
(1) [A] loan of InterOil shares would be made to Mulacek for
potential use in the Texas Lawsuit and subsequently payable
upon demand, (2) the loaned InterOil shares would be held in
the trust account of Dale A. Dossey, Esq. (“Dossey”), an attor-
ney in Texas who represented both Civelli and Mulacek in
other matters, (3) if Mulacek actually needed the shares for the
Texas Lawsuit, the shares could be transferred to the plaintiffs
in the Texas Lawsuit, but only upon Civelli’s approval, and the
loan could be documented at that time, and (4) that the shares
would be returned to Civelli upon request or the loan repaid.
Following the agreement, Civelli created an entity, Aster Capital S.A.
(LTD) Panama (“Aster Panama”), to hold these shares. Dossey then sent
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an email to Civelli asking Civelli to send the shares and stating that he would
“open a trust account for Aster here [at Chase Bank] to show a paper trail.”
Civelli complied with the request.
Plaintiffs allege that next, without their knowledge, “Mulacek in-
structed Dossey to transfer a number of the loan shares from the Dossey
Chase Trust Account to accounts of various corporations beneficially owned
or controlled by Mulacek.” That occurred in several stages. First, shares
were transferred from the Dossey Chase Trust Account to a J.P. Morgan
account (“JP Account 1”) in November 2009. Second, shares were trans-
ferred in December 2009 from the Dossey Chase Trust Account to a
Deutsche Bank account that belonged to Mulacek’s company PIE Group
LLC (“PIE”). Third, shares were transferred from that Deutsche Bank
account to a separate account at J.P. Morgan (“JP Account 2”). Fourth,
shares in JP Account 2 were transferred to “JP Account 3,” which plaintiffs
allege was known as “a PIE ‘special account’ where stock was to be held for
the benefit of Aster Panama.” Then, in December 2013, shares from JP
Account 3 were transferred to a bank in Singapore. The J.P. Morgan defen-
dants were instructed to transfer those shares from JP Morgan Account 3 to
the Singapore bank “for further credit to account #113845 into Aster Capital,
Inc.” 1
Civelli and Mulacek continued to have a business relationship until
2016, at which point Mulacek’s actions and words made Civelli concerned
he would not receive his shares back from Mulacek. In late 2017, as part of a
larger suit against Mulacek, Civelli and Aster Panama sued the J.P. Morgan
1
Aster Capital, Inc. (“Aster Brunei”), was not Civelli’s Aster Panama, but a com-
pletely separate company to which Civelli had no ownership or ties and which was alleged
to be “beneficially owned and controlled by Mulacek.”
3
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defendants 2 for (1) breach of trust and fiduciary duty, (2) negligence, and
(3) conspiracy to commit theft. The district court granted summary judg-
ment on all counts relating to the J.P. Morgan defendants and awarded them
attorneys’ fees under the Texas Theft Liability Act (“TTLA”), Tex. Civ.
Prac. & Rem. Code Ann. § 134.005(b). Plaintiffs appeal.
II.
As this dispute is between “citizens of a State and citizens or subjects
of a foreign state,” the requirements of diversity jurisdiction are satisfied. See
28 U.S.C. § 1332(a)(2). Civelli and Aster Panama are foreign parties. Civelli
is alleged to be a citizen of Switzerland. Aster Panama is a foreign defendant
registered in Panama with Civelli as its “sole beneficial owner and director.”
JPMS and Chase Bank are citizens of the United States. As reported by
defendants,
[JPMS] is a Delaware limited liability company with its principal
office and place of business in New York. The sole member of JPMS
is J.P. Morgan Broker-Dealer Holdings Inc., which is a Delaware
corporation with its principal place of business in New York . . . .
Defendant JPMS is an affiliate of [Chase Bank], a national bank with
its principal office in Ohio.
Mulacek and his related entities are citizens of the United States and are not
parties to this appeal. We agree with the parties that there is federal-court
jurisdiction.
III.
This court reviews a summary judgment de novo. Cuadra v. Hous.
Indep. Sch. Dist. 626 F.3d 808, 812 (5th Cir. 2010) (citing Shields v. Twiss,
2
The J.P. Morgan defendants are J.P. Morgan Securities, L.L.C. (“JPMS”), and
JPMorgan Chase Bank, N.A. (“Chase Bank”). At other times in this case, JPMS has been
erroneously referred to as “J.P. Morgan Chase Securities, L.L.C.”
4
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389 F.3d 142, 149 (5th Cir. 2004)). Summary judgment is granted when “the
movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a).
An issue is genuine when “the evidence is sufficient for a reasonable jury to
return a verdict for the nonmoving party.” Hamilton v. Segue Software,
232 F.3d 473, 477 (5th Cir. 2000) (per curiam) (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)). In this posture, we “construe all facts
and inferences in the light most favorable” to the nonmovant. Murray v.
Earle, 405 F.3d 278, 284 (5th Cir. 2005) (citation omitted).
IV.
Plaintiffs’ claims are predicated on their theory that the J.P. Morgan
defendants owed them a fiduciary duty. Therefore, say plaintiffs, J.P. Mor-
gan should have asked for their consent before transferring the shares else-
where. Because that did not occur, plaintiffs claim negligence, breach of
fiduciary duty, and even conspiracy to commit theft. As the district court
correctly held, each of these claims fails at the summary judgment stage.
A. Negligence.
Plaintiffs say that the J.P. Morgan defendants were negligent in failing
to “obtain the consent of the owners of shares before transferring such
shares” because that failure went against industry and company policy.
Without reaching the merits of this claim, we dismiss it as time-barred.
In diversity cases, limitations is determined by the choice-of-law rules
of the forum state. Ellis v. Great Sw. Corp., 646 F.2d 1099, 1103 (5th Cir.
1981). Texas’s choice-of-law rules instruct us to apply Texas’s statute of
limitations, which for this claim is two years. Tex. Civ. Prac. & Rem.
Code Ann. § 16.003(a); see also Henderson v. Republic of Texas,
672 F. App’x 383, 384 (5th Cir. 2016). Plaintiffs sued in December 2017, but
the transfer occurred in December 2013. Thus, the claims are time-barred
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unless the rule of discovery applies.
The rule of discovery “is a ‘limited exception’ to the general rule that
a cause of action accrues when a legal injury is incurred.” Archer v. Tregellas,
566 S.W.3d 281, 290 (Tex. 2018) (quoting BP Am. Prod. Co. v. Marshall,
342 S.W.3d 59, 66 (Tex. 2011)). It applies “when the nature of the injury is
inherently undiscoverable and the evidence of the injury is objectively verifia-
ble.” Id. (citing S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996)). An injury is
“inherently indiscoverable” where it is “unlikely to be discovered within the
prescribed limitations period despite due diligence.” Id. (quoting Via Net v.
TIG Ins. Co., 211 S.W.3d 310, 313–14 (Tex. 2006)). The analysis is categori-
cal, not fact-specific: Courts ask whether the injury “was the type of injury
that could be discovered through the exercise of reasonable diligence,” not
whether a particular plaintiff could have discovered its injury with diligence.
Id. (quoting BP Am., 342 S.W.3d at 66). If the rule applies, limitations is
tolled “until the plaintiff knew or, exercising reasonable diligence, should
have known of the facts giving rise of the cause of action.” Comput. Assocs.
Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996) (citations omitted).
It is not easy to assert the rule of discovery, which “is a narrow excep-
tion that is only applied in ‘exceptional cases.’ Applications of the rule
‘should be few and narrowly drawn.’” Berry v. Berry, 646 S.W.3d 516, 524
(Tex. 2022) (first quoting Via Net, 211 S.W.3d at 313, and then quoting S.V.,
933 S.W.2d at 25). And the discovery rule “tolls limitations only until a
claimant learns of a wrongful injury. Thereafter, the limitations clock is run-
ning, even if the claimant does not yet know: the specific cause of the injury;
the party responsible for it, the full extent of it; or the changes of avoiding
it.” PPG Indus., Inc. v. JMB/Hous. Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79,
93–94 (Tex. 2004) (citations omitted).
Plaintiffs have alleged that the J.P. Morgan defendants were negligent
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in transferring the stocks to Aster Brunei without first asking for Plaintiffs’
permission. Specifically, Plaintiffs claim that “the [J.P. Morgan] Defendants
knew account 720-18452 was a ‘special account’ for the benefit of Aster Pan-
ama.” Therefore, they were negligent when they “transferred the Loan
Shares from a special account to [Aster Brunei], a third party who was not a
beneficiary of the special account, and failed to obtain the consent of the
owner . . . to transfer such shares.” Civelli claims that the discovery rule
applies because he could not, through due diligence, have learned of the
wrongful injury until at least September 2016, when he first had reason to
believe that “the Aster shares would not be returned.”
But the parties appear to agree that Civelli knew of the transfer by
February 25, 2014. Even assuming that an email (written by Civelli and dated
February 25, 2014) stating, “I don’t have any shares anymore, as the Aster
shares were transferred out, without my knowledge or approval,” was in fact
“obtuse,” as plaintiffs claim, Civelli himself submitted a declaration to the
court stating, “I did learn around February of 2014 that Mulacek had trans-
ferred the Aster shares to one of his accounts in Singapore.”
Plaintiffs do not dispute this point, instead submitting that “a funda-
mental flaw with the [J.P. Morgan defendants’] (and lower court’s) reasoning
was their near singular emphasis on when Mr. Civelli arguably had reason to
conclude the 527,396 InterOil Shares had been transferred—without any
attempt to illuminate why it necessarily followed the transfer was injurious to
the Civelli Appellants.” But for the negligence claim, that’s all the appellees
had to show, because under Texas law, that is when the asserted injury
occurred.
Especially instructive is Velsicol Chemical Corp. v. Winograd,
956 S.W.2d 529, 530–31 (Tex. 1997) (per curiam): Judwin, a landlord, had
hired Velsicol, an exterminator, to treat her apartments for insects. Tenants
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were upset to discover that there was residue of the toxic chemical chlordane
inside their apartments. Judwin then sued Velsicol for, inter alia, damage to
her property and business. Judwin knew that there was chlordane inside the
apartments as early as 1987 but was not aware that the chlordane levels
exceeded the legal limit until 1991, at which point she sued. The court held
that the rule of discovery could not toll the standard two-year statute of limi-
tations because Judwin was not suing Velsicol for exceeding the legal limits;
instead, she was suing “to recover damages for lost income, rents, and prof-
its,” all of which were “due to tenant fears and adverse media coverage
related to the chlordane application. Those damages arose in April 1987
because of the presence of chlordane, irrespective of the later detection of
elevated interior concentrations amounting to ‘contamination.’” Id. at 531.
The same analysis applies here. Any injury incurred from the J.P.
Morgan defendants’ alleged negligence in transferring the shares without
plaintiffs’ consent arose at the time of the transfer. Because Civelli admits
that he knew by February 2014 that they had transferred the funds, the rule
of discovery does not apply. 3
B. Breach of Fiduciary Duty.
Plaintiffs ask us to find that the account at issue was a “special
account,” a fixture of Texas law that can create a fiduciary duty from a bank
to a non-client. Such accounts are formed when “a customer deposits funds
for a specific purpose and the bank agrees to be responsible for the safe-
3
There is a conflict in this circuit over what standard the non-movant must meet
to show that limitations has been tolled. See Agenbroad v. McEntire, 595 F. App’x 383, 385
n.1 (5th Cir. 2014) (citations omitted) (“We note that the precedent in this circuit is in
conflict on the issue of whether to apply the Texas ‘conclusively negate’ summary judg-
ment standard or the federal standard, which would not impose that burden on the moving
party.”). We do not reach this conflict, because defendants have satisfied both standards.
8
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keeping, return, or disbursement of the same funds that were entrusted to
it.” Bandy v. First State Bank, Overton, 835 S.W.2d 609, 618–19 n.4 (Tex.
1992). Texas courts generally require explicit proof that the bank agreed to
such a duty. See Villarreal v. First Presidio Bank, No. EP-15-CV-88-KC, 2017
WL 1063563, at *7 (W.D. Tex. 2017) (citing Hudnall v. Tyler Bank & Trust
Co., 458 S.W.2d 183, 186 (Tex. 1970)). The presumption is always that no
such special account exists, and “[t]he burden is upon one who contends that
the bank is his trustee or owes a duty to restrict the use of funds for certain
purposes.” Citizens Nat’l Bank of Dall. v. Hill, 505 S.W.2d 246, 248 (Tex.
1974).
Plaintiffs contend that JP Account 3 was transformed into a special
account after its formation because it “was the result of ‘more communica-
tions that modified antecedent considerations beyond what was ‘initially con-
ceived,’ and representatives of the [J.P. Morgan defendants] engaged in
objectively verifiable actions that mirrored that understanding.” But plain-
tiffs’ proffered evidence does not even come close to creating a genuine dis-
pute of material fact over whether a special account was created.
Under Texas law, the only question is whether the J.P. Morgan defen-
dants expressly accepted a duty to ensure the stocks were kept in trust for
Civelli or Aster Panama. That could have been done by express agreement
(via either the opening agreement of the account or subsequent communica-
tions) or by the bank’s acceptance of a deposit that contained writing that set
forth “by clear direction what the bank is required to do.” Id. (citation omit-
ted). Plaintiffs’ burden is heavy, as Texas courts require a large amount of
evidence to show that a bank has accepted such a duty. 4
4
See S. Cent. Livestock Dealers, Inc. v. Sec. State Bank, 551 F.2d 1346, 1348–49 (5th
Cir. 1977); Citizens First Nat’l Bank of Tyler v. Cinco Expl. Co., 540 S.W.2d 292, 295 (Tex.
1976); Citizens Nat’l, 505 S.W.2d at 247–49; Quanah, A. & P. Ry. v. Wichita State Bank &
9
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Even after extensive discovery, the entirety of plaintiffs’ evidence that
the J.P. Morgan defendants agreed to accept a fiduciary duty to Civelli and
Aster Panama is as follows:
(1) Mulacek told his Chase advisor (“Rahn”) to move InterOil shares
from one Chase account into an account that Mulacek called “PIE Group
LLC #3, c/o Aster Capital S.A. 720-18542-2-RW8”;
(2) The J.P. Morgan defendants generated account statements that
referred to the account as “PIE Group, LLC Acct. #3 ASTER”;
(3) Mulacek appears to refer to the above account as “Pie Group, LLC
#3 Aster” 5;
(4) In August 2013, Rahn referred to the account as “Pie Group LLC
special account for Aster Capital”;
(5) In December 2013, Mulacek wrote to Rahn and referred to “PIE
Group LLC (I have c/o of Aster)”.
The J.P. Morgan defendants dispute the import of those statements, but the
crux of their argument is that the documents establish no more than “what
Appellees have asserted the entire time – [JP] account 3 was a brokerage
account for PIE that Mulacek nicknamed the ‘Aster’ account to identify it
from his other PIE accounts.”
Defendants provide evidence that the customer agreement they
signed with Mulacek when he opened his accounts stated that “the JPMS
‘nature of services’ will be solely to execute transactions and act as broker-
Trust Co., 93 S.W.2d 701, 705–09 (Tex. 1936); cf. U.S. Fid. & Guar. Co. v. Adoue & Lobit,
104 Tex. 379, 391–92 (1911).
5
One digit is different in the account number Mulacek used, but it appears to be
the same account.
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dealer and custodian, and could not be modified except by ‘a written instru-
ment signed by an authorized representative of JPMorgan,’” and “only the
undersigned has any interest in the Account(s) established pursuant to this
agreement.” They also contend that J.P. Morgan could not have had a spe-
cial account at all, because it is a “brokerage firm, not a bank,” and it “does
not even offer ‘special accounts,’ because they would contradict its express
contractual right as a broker-dealer to hold shares in its own name and as a
bailee for itself with respect to margin accounts.”
With this backdrop, no jury could find that the proffered statements
and emails were sufficient evidence of intent from the J.P. Morgan defen-
dants to show an express agreement that they “owe[d] a duty to restrict the
use of the funds for certain purposes.” Citizens Nat’l, 505 S.W.2d at 278.
The district court therefore did not err in granting summary judgment in
favor of the J.P. Morgan defendants.
C. Conspiracy to Commit Theft.
Plaintiffs contend that the J.P. Morgan defendants conspired with
Mulacek to steal Civelli’s money because “[e]ach had knowledge of, agreed
to and intended a common objective or course of action, the theft of Civelli
and Aster Panama’s shares in InterOil.” Specifically, “Mulacek directed the
[J.P. Morgan] defendants to transfer the shares to [Aster Brunei]. The [J.P.
Morgan] defendants, complicit with Mulacek, made the transfer, knowing
the transfer was not to the owner and not for the benefit of the owner.”
Plaintiffs fail to raise a genuine dispute as to any material fact regarding their
conspiracy claim, and summary judgment was therefore proper.
In Texas, “[t]he essential elements [of civil conspiracy] 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
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932, 934 (Tex. 1983) (citing 15A C.J.S. Conspiracy § 1(2) (1967)). To establish
a meeting of the minds, “there must be an agreement among [the alleged
conspirators] and each must have a specific intent to commit the act.” San
Antonio Credit Union v. O’Connor, 115 S.W.3d 82, 91 (Tex. 2003) (citation
omitted).
Plaintiffs’ theory appears to be that the “meeting of the minds”
occurred when J.P. Morgan transferred the funds without plaintiffs’ consent,
because if defendants knew that the funds were meant to be held in trust for
plaintiffs, then agreeing to transfer them without plaintiffs’ consent was evi-
dence of their mutual intent to steal from plaintiffs. But this fails for the rea-
sons outlined above—even in a summary judgment posture, plaintiffs have
not provided enough evidence to show that J.P. Morgan owed a fiduciary
duty to the plaintiffs. Without such a duty, J.P. Morgan’s transfer was noth-
ing more than compliance with its client’s request and, without further evi-
dence, cannot evince an intent of minds to steal from Civelli and Aster Pan-
ama. The summary judgment on this claim was therefore correct. 6
V.
Plaintiffs’ final request raises a novel issue: whether a common law
conspiracy suit predicated on a violation of the TTLA is considered a “suit
brought under the TTLA” for purposes of attorneys’ fees. Tex. Civ.
Prac. & Rem. Code Ann. § 134.005(b).
Civil suits generally follow the American Rule, under which each party
pays its own attorneys’ fees regardless of the outcome of the case. See, e.g.,
6
Although the district court dismissed this claim as time-barred without reaching
the merits, we can affirm on any basis supported by the record. Smith v. Reg’l Transit Auth.,
827 F.3d 412, 417 (5th Cir. 2016) (citing Bluebonnet Hotel Ventures, L.L.C. v. Wells Fargo
Bank, N.A., 754 F.3d 272, 276 (5th Cir. 2014)).
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Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121, 126 (2015). But the TTLA
includes a fee-shifting provision: “Each person who prevails in a suit under
this chapter shall be awarded court costs and reasonable and necessary
attorney’s fees.” Tex. Civ. Prac. & Rem. Code Ann. § 134.005(b).
Thus, when the district court granted summary judgment in favor of the J.P.
Morgan defendants for the conspiracy claim, defendants timely moved for
attorneys’ fees and costs under the TTLA.
The district court reasoned that under Texas law, it was clear that the
J.P. Morgan defendants were prevailing parties, as they had “successfully
defended . . . on summary judgment based on the statute of limitations having
expired,” and Texas courts have held that a prevailing party is defined as
when a “plaintiff loses with prejudice, whether on the merits or for some
other reason.” Agar Corp., Inc. v. Electro Circuits Int’l, LLC, 580 S.W.3d 136,
148 (Tex. 2019). But whether defendants had prevailed in a suit under the
TTLA was a novel issue. Interpreting the applicability of that state statute
requires an Erie guess. We thus review de novo. See Est. of Bradley ex rel.
Sample v. Royal Surplus Lines Ins. Co., 647 F.3d 524, 529 (5th Cir. 2011). See
also In re Glenn, 900 F.3d 187, 189 (5th Cir. 2018).
To make an Erie guess, we determine “how the Texas Supreme Court
would decide the issue.” Terry Black’s BBQ, L.L.C. v. State Auto. Mut. Ins.
Co., 22 F.4th 450, 454 (5th Cir. 2022) (citing Erie R.R. v. Thompkins, 304 U.S.
64, 58 (1938)). That determination is based on
(1) decisions of the Texas Supreme Court in analogous cases,
(2) the rationales and analyses underlying Texas Supreme
Court decisions on related issues, (3) dicta by the Texas
Supreme Court, (4) lower state court decisions, (5) the general
rule on the question, (6) the rulings of other states to which
Texas courts look when formulating substantive law, and
(7) other available sources, such as treatises and legal
commentaries.
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Id. (citing Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558,
564 (5th Cir. 2010)).
Plaintiffs appeal only whether the TTLA shifts fees for a conspiracy
claim predicated on a TTLA claim, not the amount of the fees that the dis-
trict court awarded. Plaintiffs remind us that in Texas, a party may not
recover attorneys’ fees absent an express statutory provision. The remainder
of their argument is that the “plain language” of the statute makes clear that
a conspiracy claim predicated on the TTLA is not a suit brought under the
TTLA. For their part, the J.P. Morgan defendants point to the district
court’s reasoning: “Appellants’ claim for conspiracy to violate the TTLA is
a ‘suit under this chapter’ of the TTLA, because Appellants undertook to
prove a direct violation of the TTLA when they brought a lawsuit for con-
spiracy to violate the TTLA . . . . After all, the statutory text refers broadly
to a ‘suit’ under this chapter,’ not a ‘claim under this chapter.’”
In analogous situations, the Texas Supreme Court has spoken clearly
of its view of conspiracy claims, stating, “Because civil conspiracy is a theory
of vicarious liability, a lawsuit alleging a civil conspiracy that committed some
intentional tort is still a ‘suit for’ that tort.” Agar, 580 S.W.3d at 142. Al-
though the court was referring to statutes of limitations, not attorneys’ fees,
the statement strongly suggests that the TTLA’s fee-shifting provision
should be interpreted to apply to conspiracy claims predicated on TTLA
claims as well. Lower court decisions from Texas provide further support.
In Brinson Benefits, Inc. v. Hooper, the court noted, “Civil conspiracy
is a derivative tort, and a defendant’s liability for conspiracy depends on par-
ticipation in some underlying tort for which the plaintiff seeks to hold at least
one of the named defendants liable.” 501 S.W.3d 637, 643–44 (Tex. App.—
Dallas 2016, no writ) (citing Chu v. Hong, 249 S.W.3d 441, 444 (Tex. 2008)).
Further, “if an underlying tort does not entitle a party to attorney’s fees, that
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party may not recover its attorney’s fees for conspiracy to commit that tort.”
Id. (citation omitted). From those propositions, the court reasoned that
“because civil conspiracy to commit theft is a derivative tort, [the plaintiff]
could have succeeded on this claim only by proving [the defendants’] liability
for the underlying tort of theft.” Id.; see also Natour v. Bank of Am., No. 4:21-
CV-331, 2022 WL 3581396 at *5 (E.D. Tex.) (citing Brinson approvingly and
holding that “fees related to the conspiracy claim are recoverable, because
the conspiracy claim was premised on the . . . alleged theft.”). 7
We conclude that plaintiffs’ argument ignores that this case involves
a party that “prevailed in a suit under the TTLA” because the conspiracy
allegations against the J.P. Morgan defendants expressly included and incor-
porated by reference the TTLA allegations. Thus, we conclude that the J.P.
Morgan defendants and the district court correctly assessed the attorneys’
fees’ applicability here. We thus agree with the district court that, under
Texas law, a party that prevails in a civil conspiracy claim predicated on a
TTLA claim is entitled to attorneys’ fees. See Tex. Civ. Prac. & Rem.
Code Ann. § 134.005(b).
7
One federal district court, Traxxas, LP v. Dewitt, held exactly the opposite, albeit
in a hypothetical posture: “[T]he TTLA does not extend the recovery of fees to derivative
claim tortfeasors, such as co-conspirators, who are not themselves defendants in a TTLA
claim.” 2016 WL 6892819, at *3. (E.D. Tex. Oct. 28, 2016). But because we are trying to
glean what the Texas courts would have done, this holding is less instructive than are the
Texas courts’ holdings. See Terry Black’s BBQ, 22 F.4th at 454.
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