In this edition of Litigation Roundup, we detail a case where an intermediate appellate court seems dubious about a real estate developer’s claim that he missed a deadline to appeal because he suffered a stroke, Southwest Airlines is hit with a suit over an alleged in-flight sexual assault, and a woman accused of stealing more than $100 million from the government goes to prison.
The Litigation Roundup is a weekly feature highlighting the work Texas lawyers are doing inside and outside the state. Have a development we should include next week? Please let us know at tlblitigation@texaslawbook.net.
Western District of Texas
Civilian Who Bilked Government Out of $108M Gets Prison
U.S. District Judge Xavier Rodriguez sentenced Janet Yamanaka Mello to 15 years in prison on July 23 after finding the civilian Army employee had stolen more than $108 million from a federal grant program.
Mello was indicted in December on charges of fraud, filing a false tax return and identity theft. She originally pled not guilty to the crimes but entered a guilty plea in March, admitting to five counts of fraud and five counts of filing false tax returns.
Prosecutors allege that while Mello was working as a financial program manager for the Army at Fort Sam Houston, she created a sham business she used to apply for and receive grant funds from the 4-H Military Partnership Grant program that were intended to help the children of military families.
Instead, millions were funneled through her business, Child Health and Youth Lifelong Development, between December 2016 and August 2023. She received 50 grant checks totaling $108.9 million over that period, according to the government.
The money was used to purchase more than 80 luxury vehicles, more than 1,500 pieces of jewelry, several homes and at least three longhorn cattle, which Judge Rodriguez on Thursday said the IRS can seize.
Mello is represented by Albert A. Flores of San Antonio.
Assistant U.S. Attorneys Justin Simmons, Antonio Franco, Kristy Callahan, Todd Keagle, and Steven Seward prosecuted the case.
The case number is 5:23-cr-00620.
Central District of California, Southern Division
Minor Sues Southwest Over Alleged In-Flight Sexual Assault
Dallas-based Southwest Airlines has been sued by a passenger who accuses the airline of failing to protect him from an in-air sexual assault.
The plaintiff, who was 16 at the time of the incident in July 2022, filed the negligence lawsuit on July 17, alleging that he was seated away from his family on the flight from Las Vegas to Portland and ended up taking a seat between two adult men.
One of the men, who the plaintiff alleges was in his 50s, was intoxicated and, once the cabin lights were dimmed, began assaulting him.
“The negligence demonstrated by Southwest Airlines in this case reflects a broader systemic failure that must be addressed to ensure the safety and well-being of all passengers, especially minors,” said Daniel Cha of Greenberg Gross, who represents the plaintiff. “This lawsuit underscores the urgent need for airlines to implement and enforce policies that protect passengers from sexual assault.”
The case has been assigned to U.S. District Judge John F. Walter and Magistrate Judge Autumn D. Spaeth.
The minor is also represented by Daniel Cha, Emily Malloch, Jemma E. Dunn and Wayne R. Gross of Greenberg Gross in Costa Mesa, California.
Counsel for Southwest had not filed an appearance as of Monday.
The case number is 8:24-cv-01581.
Fourteenth Court of Appeals, Houston
Citing ‘Clear Incongruity’ Between Stroke Claim, Court Appearances Justices Ax Appeal
In a brief, three-page opinion a panel of justices in Houston recently determined real estate developer Ali Choudhri, who alleged he was hospitalized after suffering a stroke, wasn’t entitled to an extension to file his appeal in a dispute over a rental property.
Choudhri, who was appealing a Harris County jury’s verdict in favor of attorney Ashley B. Patten, had told the court he missed the June 4 deadline to file notice of appeal because he suffered a stroke on June 2. But the panel noted in its July 23 opinion that Choudhri — who ended up filing notice of appeal on June 11 — had not given the court any evidence to support the claim that he suffered a stroke.
Additionally, Patten filed a response with the court “containing evidence that appellant was actively participating in other litigation on June 3rd and 4th, as well as days beyond, despite his claim of having suffered a stroke and being under doctor’s care.”
“Notably, on June 3rd, appellant not only participated personally in a bankruptcy proceeding at Houston’s federal courthouse, he was recorded later that day walking and talking outside that courthouse with no apparent paralysis or slurred speech, and otherwise exhibiting no signs of having suffered a stroke the previous day,” the panel wrote. “Moreover, appellant apparently attended another hearing in person at Houston’s federal courthouse on June 4th, the deadline for filing his notice of appeal. On one final note, on June 5th, the day after the deadline for filing the notice of appeal, appellant personally conducted a deposition for approximately four hours as a pro se litigant, despite (in his motion’s telling) recently suffering a stroke and being under doctor’s care.”
In the underlying case, a jury returned a verdict that Choudhri owes Patten nearly $370,000 in attorney fees. Choudhri sued Patten in June 2017, accusing him of failing to pay rent he owed on a home in Houston.
Less than two months later, Patten filed an answer and counterclaim, accusing Choudhri of hiding the fact that the home had been foreclosed on by a lender and purchased by another entity. After Patten found an eviction notice taped to his front door, he raised the issue with Choudhri, who allegedly told him “that the foreclosure sale was a mistake and not to worry about the forcible detainer action since he filed an action for wrongful foreclosure.”
“This representation, however, was known by plaintiff to be false and was made to deceive and induce Patten to continue monthly rental payments in the amount of $4,900 for the use and enjoyment of the property,” Patten alleged.
The justices wrote that “despite the clear incongruity between the vigorous activities appellee has alleged appellant was carrying out in early June and appellant’s claim that he suffered a stroke and was under doctor’s care at that time, appellant has made no effort at all to refute appellee’s claims.”
Finding no good faith justification for Choudhri missing the deadline, the panel denied his request for an extension and dismissed the appeal.
Choudhri did not respond to a message seeking comment Monday.
Chief Justice Tracy Christopher and Justices Ken Wise and Frances Bourliot sat on the panel.
Choudhri represented himself on appeal.
Patten is represented by Rodney L. Drinnon, David L. Clark, Danielle Chester and Haseeb Dada of McCathern Houston.
The case number is 14-24-00428-CV.
Panel OKs $75.4M in Liquidated Damages in Polyethylene Plant Dispute
Bayport Polymers, which does business as Baystar, was within its contractual rights when it drew on a letter of credit to get $75 million in liquidated damages from CB&I in a dispute that arose during the construction of projects valued at $2.5 billion, an appellate court in Houston has determined.
A unanimous three-justice panel issued the ruling in favor of Baystar on July 23, finding Harris County District Judge Latosha Lewis Payne had wrongly entered an injunction barring it from seeking the recovery of damages it alleged it was entitled to because of performance failures by CB&I.
CB&I, a subsidiary of McDermott International, was hired to engineer and build an ethane cracker facility in Port Arthur, Texas, and a high-density polyethylene plant in Bayport, Texas, according to court records, and entered into contracts valued at $2.5 billion for the work in 2017.
When delays in progress caused CB&I to meet a deadline on the polyethylene plant, Baystar moved in June 2023 to seek damages. In an effort to block Baystar, CB&I filed suit, alleging it had been fraudulently induced into the deal and asked the court to enjoin Baystar from seeking the millions in damages.
In disagreeing with the trial court, the panel of justices — Frances Bourliot, Kevin Jewell and Margaret “Meg” Poissant — wrote that CB&I is a “highly sophisticated corporation with global operations” that holds itself out as the “world leader in engineering and building complex projects in energy, petrochemicals, and energy transition.”
“Accordingly, we conclude that the any alleged fraud in the transaction did not amount to egregious fraud vitiating the entire $1.2 billion transaction,” the panel wrote, referencing the value of the polyethylene plant contract. “CB&I’s reliance on the alleged affirmative representations were not reasonable or justified.”
Baystar is represented by Mike Stenglein, Christopher Taylor, Matt Vandenberg, Andrew Stakelum and Mandie Cash of King & Spalding.
CB&I is represented by David E. Keltner, Jody S. Sanders and Caitlyn E. Hubbard of Kelly Hart & Hallman.
The case number is 14-23-00643-CV.
Texas Supreme Court
Neighbors Won’t Seek Rehearing in Stinky Poultry Operations Suit
Residents who live near what they alleged were overcrowded, noxious chicken barns in East Texas have informed the Texas Supreme Court they won’t be asking the court to reconsider a June ruling that was issued in favor of the poultry growers.
The decision not to seek rehearing leaves in place a ruling from the state’s high court that the trial judge went too far in granting the request of Frank Blanchard and other neighbors to permanently close the Sanderson Farms operations.
Rather than enjoining the farming operations entirely, the Texas Supreme Court instructed the Henderson County trial judge to consider other means of injunctive relief for the neighbors, including a reduction in flock size and more frequent barn cleanings.
In October 2019, a jury found the operation was a temporary nuisance and gave neighbors nearly $6 million for the lost market value of their properties. The parties later agreed to a take-nothing judgment regarding the monetary damages. The Twelfth Court of Appeals affirmed the injunction.
The neighbors are represented by M. Keith Dollahite of Tyler.
The growers are represented by Wallace Jefferson of Alexander Dubose & Jefferson and Paul Clement of Clement & Murphy.
The case number is 21-0676.
U.S. Court of Appeals for the Fifth Circuit
Judge Duncan, ‘Gritting [His] Teeth,’ Calls for En Banc Court to Reverse Precedent
In a unanimous three-judge panel ruling determining that a dispute between Houston personal injury law firm Abraham Watkins Nichols Agosto Aziz & Stogner and a former associate cannot be litigated in federal court, Judge Stuart Kyle Duncan authored a concurrence letting readers know he wasn’t pleased with the outcome.
His displeasure is rooted in the court’s 1980 ruling in In re Weaver, where a panel determined it didn’t have jurisdiction to hear a business dispute involving claims of slander, fraud, breach and interference with contract.
Judge Duncan wrote that the panel hearing this appeal — including Judges Don R. Willett and James L. Dennis — “convincingly” laid out an argument as to why Weaver is incorrect and that two sister circuits have also “thrown shade at Weaver.” But despite that, the panel followed Weaver here “under the rule of orderliness.”
“Gritting my teeth, I concur. The removal statutes have shifted over the years, but not enough to erase the stubborn fact that Weaver transformed a remand for waiver-by-participation into a remand for lack of federal jurisdiction,” he wrote. “That is incorrect, as two circuits (and now our panel) have confirmed. We should be able to review the waiver-based remand here under settled precedent. Only Weaver bars the way. The proper course is for our en banc Court to unweave Weaver.”
The July 25 ruling came in the lawsuit involving attorney Edward Festeryga, who was accused by his former employer of trying to take its clients with him when he left. After litigation began in the state court, Festeryga attempted to remove the case to federal court on the basis that he’s a Canadian citizen.
U.S. District Judge George C. Hanks Jr. ruled that Festeryga had waived his right to remove the case by agreeing to a protective order and by filing a motion to dismiss in the state court.
Abraham Watkins is represented by Robert Owen and Dale Jefferson of Martin, Disiere, Jefferson & Wisdom and by its own Muhammad Aziz.
Festeryga is represented by Guillermo Alarcon of Armbrust & Brown in Austin.
The case number is 23-20337.