In this edition of Litigation Roundup, the Dallas court of appeals agrees a trial court got it wrong by forcing the parties in a breach of contract case into a bench trial when one requested trial by jury, and an automotive equipment manufacturer sued by Tesla tells the court the company named the wrong defendant.
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.
Northern District of Texas
Dallas Lab Agrees to $24M Settlement in FCA Case
Dallas clinical laboratory Magnolia, its owners and its investors will pay the government a total of $24 million to resolve allegations they violated the False Claims Act by billing Medicare for medically unnecessary Covid-19 testing for seniors.
John Bains and Kelly Bains will pay $19.2 million under the deal announced Thursday, while the company’s investors will pay $4.8 million to resolve claims of unjust enrichment and related claims under the Federal Debt Collection Procedures Act stemming from distributions received from Magnolia.
In a statement, Assistant Attorney General Brett A. Shumate said the deal represents the Department of Justice’s commitment to “protecting taxpayer-funded programs and holding accountable those who exploit them.”
“We will pursue not only companies that submit false claims and the owners who direct the misconduct, but also investors who receive and retain its financial benefits — especially when vulnerable Americans are exploited for profit,” Shumate said.
The government alleged that beginning in April 2020 the Bainses, through Magnolia, began requiring senior living communities seeking Covid testing to also receive “respiratory pathogen panels,” or RPPs, and that John Bains “allegedly threatened to withhold covid-19 testing from communities that asked not to receive RPPs,” according to a news release.
John Bains and Magnolia are represented by Gene Besen of Sheppard.
Kelly Bains is represented by Paul Monnin of Alston & Bird.
The government is represented by Paul Perkins, Asha Natarajan and Brian Stoltz of the Department of Justice.
A case number was not available Monday.
TGI Friday’s Gets OK on Consensual Chapter 11 Plan
Chief U.S. Bankruptcy Judge Stacey Jernigan last week entered an order confirming the consensual liquidating plan for Dallas-based TGI Friday’s and its affiliates in the company’s Chapter 11 bankruptcy cases.
In November 2024, the restaurant chain and 23 of its subsidiaries filed for bankruptcy, reporting $100 million to $500 million in debts and the same range for assets. In its filing, TGI Friday’s blamed its financial issues on the impact of the Covid-19 pandemic and an overwhelming capital structure.
In a news release announcing the confirmation, the law firm Foley & Lardner, which represented TGI Friday’s, said the negotiations surrounding the Chapter 11 plan enabled the company to avoid confirmation litigation and noted the “broad creditor support” for the plan of liquidation.
“The Chapter 11 process preserved the TGI Friday’s brand by facilitating the sale of substantially all operating assets to new owners and operators, supported the continued employment of hundreds of employees, and ensured the ongoing operation of restaurants under new ownership,” the news release states. “The confirmed plan also established an orderly framework for winding down the Company’s prior operations and liquidating and distributing the estate’s remaining assets to creditors through a post-confirmation trust.”
TGI Friday’s is represented by Holland O’Neil, Stephen Jones and Zach Zahn of Foley & Lardner and Rahmon Brown, Chris Dickerson, Nyle Hussain, Alexys Ogorek and Michael Wheat of Ropes & Gray.
The U.S. Trustee is represented by its own Elizabeth Young.
The case number is 24-80069.
Western District of Texas
Tesla Sues ‘Wrong Corporate Entity’ in Quest to Recover Tooling
Angstrom Automotive Group, which last week was sued by Tesla and accused of holding its property “for ransom,” told a federal judge Monday that the automaker has sued the wrong corporate entity.
Tesla, in the lawsuit filed July 23, alleged Angstrom was in possession of tons of specialized manufacturing tooling it paid for and has a contractual right to retrieve. Tesla told the court the tooling — including jigs, dies, gauges, fixtures, molds, patterns, and related equipment — “is the means by which critical components for Tesla’s Cybertrucks are manufactured.”
“If Tesla is not allowed to recover its tooling from the Anderton facility, Tesla’s current on-hand inventory of products will be exhausted shortly,” the lawsuit alleges. “Without the tooling, Tesla will be unable to manufacture several thousand Cybertrucks that are currently in or planned for production, most, if not all, of which are already committed to customers.”
The Anderton facility is in Troy, about 8 miles north of downtown Temple, along Interstate 35.
A day after Tesla filed its suit, it requested an expedited hearing on the matter. Angstrom filed a response to the request Monday morning, telling the court it did not object to the request for expedited relief.
“Angstrom Automotive respectfully requests, however, that the Court permit it a short opportunity to submit its substantive response to Tesla’s motion for temporary restraining order… before the court rules on that motion,” the response reads. “Tesla’s request presents substantial factual and legal issues that should not be resolved on an abbreviated record.”
“Most fundamentally, Tesla has sued the wrong corporate entity.”
Angstrom told the court some of the tooling Tesla is seeking is in the possession of Angstrom Aluminum Casings Texas, and some is in the possession of Enforge in North Carolina.
“These are not minor factual matters that can be resolved by simply accelerating the hearing,” Angstrom told the court. “They go directly to whether Tesla has sued the proper party, whether the Court can grant the requested relief against that party, what contractual rights and obligations govern the Tooling, and whether Tesla has demonstrated a likelihood of success on the merits.”
The case has been assigned to U.S. District Judge Christopher R. Wolfe and referred to U.S. Magistrate Judge Dan N. MacLemore. As of Monday, the docket did not reflect that a hearing has been set in the case.
Tesla is represented by Marc Collier and Ethan Glenn of Norton Rose Fulbright.
Angstrom is represented by Liara A. Silva of Fritz Byrne and Todd A. Holleman of Miller Johnson.
The case number is 6:26-cv-00477.
Southern District of Texas
Steel Co. Pays $1.1M to End FCA Case
A Houston-area company that manufactures stainless steel components has agreed to pay $1.1 million to bring an end to allegations it fraudulently obtained a Paycheck Protection Program loan.
Matrix Metals was accused of lying about the number of employees it had in January 2021 in order to obtain the funding. The complaint was filed by qui tam relator Verity Investigations in June 2025.
U.S. District Judge Lee Rosenthal signed the order of dismissal June 15.
Verity is represented by Stephen Shackelford of Susman Godfrey.
Matrix Metals is represented by Craig Stanfield of Paul Hastings.
The government is represented by Kenneth Shaitelman of the Department of Justice.
The case number is 4:25-cv-02546.
Fifth Court of Appeals, Dallas
Panel Undoes Bench Trial Result, Affirms Right to Trial by Jury
Tozee Construction will get to try its case to a jury, after an appellate panel last week found the trial court erred by denying that right in the breach of contract dispute.
BNG Management Group sued Tozee in April 2021, alleging it had breached an agreement to construct three restaurants in the Dallas-Fort Worth area. It also paid the jury fee when it filed suit. Tozee lodged counterclaims and, after significant discovery disputes arose, Dallas County District Judge Staci Williams imposed death penalty sanctions against Tozee in July 2023 and ordered the case proceed to a trial on BNG’s damages.
In January 2025, according to the opinion, BNG withdrew its request for a jury trial, Judge Williams set the case for a bench trial, and about a month later Tozee filed its objection to BNG’s withdrawal of the jury demand.
Over its objections, the case proceeded to a bench trial in February 2025, and final judgment in favor of BNG was entered. On appeal, Tozee argued it was entitled to a jury trial, while BNG argued Tozee had to do more than “affirmatively object to the waiver of jury trial.”
“We are not persuaded to the extent BNG asserts that Tozee was required to do more than affirmatively object to the waiver of jury trial,” the panel held. “The record reflects that the jury fee had been paid and the case had originally been placed on the jury trial docket. The rule is clear, when a party timely demands a jury and pays the fee, the trial court may not remove the case from the jury docket over the objection of the opposing party.”
Justices Bonnie Lee Goldstein, Cynthia M. Barbare and Mike Lee sat on the panel.
Tozee is represented by J. Stephen Barrick and Mariana Jantz of Hicks Thomas and William Chu of Dallas.
BNG is represented by Jin Kim of Dallas.
The case number is 05-25-00704-CV.
U.S. Court of Appeals for the Fifth Circuit
Panel Sends 2 Questions to SCOTX in Uri Natural Gas Pricing Case
Noting the concerns raised by Targa Gas Marketing and an influential industry group that filed an amicus brief, the Fifth Circuit recently agreed to certify two questions in a natural gas pricing dispute that has roots in 2021’s Winter Storm Uri.
The court, which issued a per curiam opinion Friday sending the queries to the Texas Supreme Court, issued its original opinion in the case Dec. 9. Targa then moved for rehearing en banc in its dispute with MIECO Jan. 22. The breach of contract dispute stems from the delivery of natural gas during the deadly winter storm.
“The petition for rehearing en banc urges the court — only if not convinced by the merits arguments, of course — to certify the question to the Supreme Court of Texas,” the panel wrote. “In light of the importance of the issues, and because it may be that the court did affect settled expectations, we have decided to certify the question.”
The Texas Oil & Gas Association filed its amicus brief Feb. 2, explaining to the court that the panel’s opinion was the first to find that the phrase “‘seller’s gas supply’ can mean different things depending on where the seller sits in the gas marketing chain.”
“If allowed to stand, this Erie-guess under Texas law will inject significant uncertainty into natural gas markets and fundamentally disrupt the settled expectations that underpin commercial activity throughout the Fifth Circuit and beyond,” TXOGA told the court.
The panel sent two certified questions to the Texas Supreme Court:
- Under Texas contract interpretation principles, do the force majeure provisions of the North American Energy Standards Board form contract require the seller of natural gas who is not a gas producer to enter the spot market during a force majeure event if that seller had already been using the daily or spot market for part of its gas supply?
- And if there is an obligation, how should “reasonable efforts” to provide gas from the spot market be defined?
Chief Judge Jennifer Walker Elrod and Judges Patrick E. Higginbotham and Leslie H. Southwick sat on the panel.
MIECO is represented by Creighton Magid of Dorsey & Whitney and Laura De Santos of Gordon Rees Scully Mansukhani.
Targa is represented by Russell Post, Owen McGovern and David Jones of Beck Redden.
Texas Oil & Gas Association is represented by Connie Pfeiffer and Dori Kornfeld Goldman of Yetter Coleman.
The case number is 23-20567.
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