RLI Insurance Company v. Stephen Roberts ( 2020 )

Case: 19-20659 Document: 00515476779 Page: 1 Date Filed: 07/02/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 19-20659 FILED
July 2, 2020
Lyle W. Cayce
RLI INSURANCE COMPANY, Clerk
Plaintiff – Appellee
v.
STEPHEN GLYNN ROBERTS,
Defendant – Appellant.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:17-CV-1240
Before KING, GRAVES, and OLDHAM, Circuit Judges.
PER CURIAM: *
RLI Insurance Company (“RLI”) issued surety bonds on behalf of
Northstar, 1 so that Northstar could operate oil and gas wells on public land in
Louisiana. These bonds provided security to the Louisiana Department of
Natural Resources (“DNR”) for the cost of future plugging and abandonment
of Northstar’s wells. And as part of RLI’s deal to issue these bonds—
particularly, one called the “Creole Bond”—Stephen Roberts entered into an
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
We use “Northstar” to refer collectively to Northstar Offshore Energy Partners, LLC
1
and Northstar Offshore Group, LLC.
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No. 19-20659
Indemnity Agreement with RLI. Roberts was then a partial owner of
Northstar. In the event Northstar did not meet its bond obligations, Roberts
agreed, among other things, to personally pay the bond premiums to RLI and
to personally deposit collateral security with RLI.
As it happened, Northstar did not meet its bond obligations. So, the DNR
sued RLI to recover the full amount of the Creole Bond. RLI in turn sought
collateral security from Roberts. Roberts refused to pay RLI. So RLI sued him
for breaching the Agreement. Only the suit between RLI and Roberts is before
us.
The district court granted summary judgment to RLI. Roberts timely
noticed an appeal. 2 Our review is de novo. See Inclusive Communities Project,
Inc. v. Dep’t of Treasury, 946 F.3d 649, 654–55 (5th Cir. 2019).
Roberts first claims that RLI does not have standing to bring this breach
of contract claim. For RLI to meet Article III standing requirements, it “must
have ‘(1) suffered an injury in fact, (2) that is fairly traceable to the challenged
conduct of the defendant, and (3) that is likely to be redressed by a favorable
judicial decision.’ ” Ctr. for Biological Diversity v. EPA, 937 F.3d 533, 536 (5th
Cir. 2019) (quoting Gill v. Whitford, 138 S. Ct. 1916, 1929 (2018)). RLI plainly
has standing. It alleges the loss of money (injury-in-fact), caused by Roberts’
breach of their Agreement (traceability), that a court can remedy through
damages and specific performance (redressability). See Servicios Azucareros de
2 The district court also granted summary judgment on RLI’s claim that Roberts
breached the Agreement by failing to pay bond premiums and that Roberts owed RLI
attorneys’ fees. Roberts makes no argument about premiums in his briefing. Thus, any
challenge to them is forfeited. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994) (“An
appellant abandons all issues not raised and argued in its initial brief on appeal.” (emphasis
omitted)). And although he does argue that the district court should not have awarded
attorneys’ fees, his contentions are meritless because he points to no record evidence to
dispute RLI’s request for fees. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, 586 (1986).
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Venezuela, C.A. v. John Deere Thibodeaux, Inc., 702 F.3d 794, 800 (5th Cir.
2012). Roberts cannot dispute that RLI suffered an Article III injury by arguing
that RLI’s claims fail on the merits. See, e.g., N. Cypress Med. Ctr. Operating
Co. v. Cigna Healthcare, 781 F.3d 182, 191 (5th Cir. 2015) (“When considering
whether a plaintiff has Article III standing, a federal court must assume
arguendo the merits of his or her legal claim.” (internal quotation marks and
alteration omitted)).
Roberts next argues that even if RLI had standing to bring the case, it is
now moot. Roberts argues that the Creole Bond, for which he agreed to provide
collateral security, has been discharged and replaced by another bond. Roberts
says that discharges RLI’s obligations on the bond and, derivatively, lets
Roberts off the hook. See, e.g, Wright Way Constr. Co., Inc. v. Harlingen Mall
Co., 799 S.W.2d 415, 426 (Tex. App.—Corpus Christi 1990, writ denied);
Restatement (Third) of Suretyship & Guaranty § 19 cmt. a (1996). It might be
true that RLI will get off the hook for the Creole Bond—indeed, RLI and the
DNR appear to have settled. See Louisiana v. RLI Ins. Co., No. 3:19-CV-640
(M.D. La. Mar. 30, 2020) (dismissing case with prejudice due to settlement);
Louisiana v. RLI Ins. Co., No. 3:19-CV-614 (M.D. La. Mar. 31, 2020) (same).
But it is also irrelevant. All that matters is that the DNR maintained a suit
against RLI to collect on the Creole Bond. RLI still maintains that Roberts
owes it money to pay the costs of that DNR lawsuit. And Roberts still maintains
he shouldn’t have to pay. Accordingly, the legal issues are still disputed, and
this case is very much a “live” one. Already, LLC v. Nike, Inc., 568 U.S. 85, 91
(2013).
Next, Roberts turns to bankruptcy law. Prior to this lawsuit, Northstar
filed for bankruptcy, and the bankruptcy court entered an order relating to the
Creole Bond. Roberts now says that order precludes RLI from filing this suit
against him. But Roberts fails to explain how RLI’s suit against him—“not
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directed against the debtor or property of the debtor”—falls within the ambit
of the bankruptcy court’s order. Edge Petroleum Operating Co. v. GPR
Holdings, LLC, et al. (In re TXNB Internal Case), 483 F.3d 292, 301 (5th Cir.
2007). In fact, Roberts emphasizes just how unrelated he is to the debtor,
Northstar. He no longer works for Northstar nor owns any part of Northstar.
This case is thus far afield from the matters related to Northstar’s bankruptcy
estate and those proceedings. Cf. In re Applewood Chair Co., 203 F.3d 914, 918
(5th Cir. 2000) (“The general rule is that a discharge in bankruptcy does not
affect a guarantor’s liability.”).
Turning to the merits, Roberts does not dispute that the Agreement is
valid under Texas law. Nor does Roberts dispute that he has not paid collateral
security to RLI. See FED. R. CIV. P. 56(a); Transamerica Ins. Co. v. Avenell, 66
F.3d 715, 719 (5th Cir. 1995). Roberts only disputes whether the terms of the
Agreement require him to provide collateral security. Under Texas law, we
enforce the Agreement between Roberts and RLI as written and according to
its terms’ “plain, ordinary and generally accepted meaning unless the
[Agreement] itself shows them to have been used in a technical or different
sense.” Glassell Non-Operated Interests, Ltd. v. EnerQuest Oil & Gas, L.L.C.,
927 F.3d 303, 306 (5th Cir. 2019) (internal quotation marks omitted).
The Agreement states that RLI “may, in its sole and absolute discretion,
require [Roberts] provide security, in form and amounts acceptable to [RLI] to
secure [Roberts’s] obligations.” (emphasis added). And among the obligations
the collateral security can secure are the “cost and expense of whatsoever kind
or nature . . . by reason or in consequence of having executed” the Creole Bond.
Nothing in these terms allow Roberts to avoid his security obligations because
he thinks RLI will win its dispute with the DNR. Rather, Roberts must pay at
RLI’s sole discretion. Moreover, the Agreement’s plain terms say that RLI can
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demand that Roberts provide security to cover an expansive category of costs,
including those stemming from the DNR’s Creole Bond lawsuit.
AFFIRMED.
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