Wesley Howard v. Maxum Indemnity Company

Case: 16-11746 Document: 00514272342 Page: 1 Date Filed: 12/13/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-11746
Fifth Circuit
FILED
December 13, 2017
WESLEY HOWARD, Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
MAXUM INDEMNITY COMPANY,
Defendant - Appellee
Appeals from the United States District Court
for the Northern District of Texas
USDC No. 3:16-CV-2487
Before SMITH, BARKSDALE, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:*
Appellant Wesley Howard alleges that he inhaled chlorine gas released
by a malfunctioning hotel hot tub in Enid, Oklahoma. Howard sued the hotel,
and the parties quickly settled. As part of the settlement, the hotel assigned
its claims arising out of Howard’s injury against its insurer, appellee Maxum
Indemnity Company, to Howard.
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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No. 16-11746
On July 29, 2016 Howard sued Maxum in Texas state court. Relying on
the assignment, Howard “st[ood] in the shoes” of the hotel to assert five causes
of action: (1) breach of contract, (2) breach of the duty of good faith and fair
dealing, (3) violation of the Texas Deceptive Trade Practices Act, (4) violation
of the Texas Insurance Code, and (5) violation of the Texas Prompt Payment
of Claims Act. Maxum removed the action to the United States District Court
for the Northern District of Texas and promptly moved to dismiss.
In its motion to dismiss, Maxum argued in part that the hotel’s purported
assignment to Howard was barred by an anti-assignment clause in the hotel’s
insurance policy. Maxum cited Texas law in support. In a footnote, Maxum
recognized that the hotel’s insurance policy was delivered in Oklahoma, and
that the agreement may therefore be governed by Oklahoma law. Nonetheless,
Maxum asserted that “[b]ecause there is no conflict between Oklahoma and
Texas law on any issue presented by this motion . . . the Court need not conduct
a conflict-of-law analysis.”
In his response to Maxum’s motion, Howard did not brief the choice of
law issue or argue that Oklahoma and Texas law differed. Rather, Howard
argued that the anti-assignment clause is unenforceable under Texas law.
Howard pointed to Rhodes v. Chicago Insurance Co., a Fifth Circuit decision
applying Texas insurance law, as the “control[ling]” case. 719 F.2d 116 (5th
Cir. 1983).
The district court granted Maxum’s motion to dismiss. Following the
parties’ lead, the court applied Texas law and concluded that the anti-
assignment provision was enforceable, and that Howard’s claims were not ripe.
Weeks later, Howard filed a motion under Federal Rule of Civil Procedure 59(e)
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to alter or amend the district court’s judgment. 1 In his motion, Howard argued
for the first time that Oklahoma law controls, and that the anti-assignment
clause is unenforceable under Oklahoma law. The district court denied
Howard’s motion, and Howard noticed his appeal.
Howard’s appeal raises as a central, threshold question whether he
waived application of Oklahoma law. Our law is clear: “[f]ailure to raise an
argument before the district court waives that argument, including an
argument for choice-of-law analysis.” Fruge v. Amerisure Mut. Ins. Co., 663
F.3d 743, 747 (5th Cir. 2011). Although Howard did raise the choice of law
issue in his Rule 59(e) motion, “[t]his court will typically not consider an issue
or a new argument raised for the first time in a motion for reconsideration in
the district court.” U.S. Bank Nat’l Ass’n v. Verizon Commc’ns, Inc., 761 F.3d
409, 425 (5th Cir. 2014); see also Kohler v. Englade, 470 F.3d 1104, 1114 (5th
Cir. 2006) (argument raised for the first time in a Rule 59(e) motion was waived
on appeal). Accordingly, by failing to dispute Maxum’s assertion that
Oklahoma and Texas law do not conflict, and by citing only Texas law on the
anti-assignment issue in his opposition to the motion to dismiss, Howard
waived any argument that the hotel insurance policy is governed by Oklahoma
law.
“[P]arties generally are bound by the theory of law they argue in the
district court, absent some manifest injustice.” Am. Int’l Trading Corp. v.
Petroleos Mexicanos, 835 F.2d 536, 540 (5th Cir. 1987) (internal quotation
marks omitted). Howard has shown no such manifest injustice here. “If
‘manifest injustice’ only meant that application of another jurisdiction’s law
1Howard styled his motion as a “Motion to Reconsider Dismissal.” Recognizing,
however, that “[t]he Federal Rules do not recognize a ‘motion for reconsideration,’” Ford v.
Elsbury, 32 F.3d 931, 937 n.7 (5th Cir. 1994), the district court considered the motion under
Rule 59(e). In his briefing before this court, Howard embraces the reclassification.
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would yield a different result, then choice of law issues could always be raised
first on appeal.” Id. Here, Howard does not argue in his principal brief that
applying Texas law would result in manifest injustice. In his reply brief,
Howard argues that manifest injustice is present because Howard was “misled
by [Maxum]’s assertions” that Oklahoma and Texas law are the same. But
Howard simply describes waiver by a different name: Maxum asserted a point
of law, and Howard embraced it. This alone does not meet the demanding
manifest injustice standard.
The judgment of dismissal is AFFIRMED.
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