Cone et al v. Sanitarios Lamosa S.A. DE C.V. et al
Filing
287
MEMORANDUM OPINION AND ORDER. The parties are ORDERED to submit an Amended Final Judgment consistent with the above order for the Court to enter within five (5) days. It is further ORDERED that should the parties have remaining disputes related to the Amended Final Judgment, the parties shall call the Court to schedule a telephone conference before filing an Amended Final Judgment with contested provisions. Signed by District Judge Amos L. Mazzant, III on 5/11/2020. (rpc, )
Case 4:17-cv-00001-ALM-KPJ Document 287 Filed 05/11/20 Page 1 of 9 PageID #: 14164
United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
MARK AND AMBER FESSLER,
ANDREW HOCKER, KEVIN REUSS,
MATTHEW CARRERAS, CHARLES
AND MICHELLE HANDLY, AARON
AND STACEY STONE, and DANIEL
AND SHARON SOUSA, on Behalf of
Themselves and Those Similarly Situated
v.
PORCELANA CORONA DE MÉXICO,
S.A. DE C.V f/k/a SANITARIOS
LAMOSA S.A. DE C.V. a/k/a Vortens
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Civil Action No. 4:19-CV-00248
Judge Mazzant
AND
STEVEN AND JOANNA CONE, MARK
AND AMBER FESSLER, ANDREW
HOCKER, MATTHEW CARRERAS,
CHARLES AND MICHELLE HANDLY,
AARON AND STACEY STONE, and
DANIEL AND SHARON SOUSA, on
Behalf of Themselves and Those Similarly
Situated
v.
PORCELANA CORONA DE MÉXICO,
S.A. DE C.V f/k/a SANITARIOS LAMOSA
S.A. DE C.V. a/k/a Vortens
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§ Civil Action No. 4:17-CV-00001
§ Judge Mazzant
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MEMORANDUM OPINION AND ORDER
Pending before the Court is a dispute between the parties regarding the proper
interpretation of one subsection of the settlement agreements in these two cases. See Case No.
4:17-CV-00001, (Dkt. #286); 4:19-CV-00248, (Dkt. #58).
This dispute is the product of
Plaintiffs’ Unopposed Motion to Amend Final Order and Judgment in order to incorporate the
Case 4:17-cv-00001-ALM-KPJ Document 287 Filed 05/11/20 Page 2 of 9 PageID #: 14165
Court’s resolution of Class Counsel’s Consolidated Fee Award Application into the final
judgment. See Case No. 4:17-CV-00001, (Dkt. #283); 4:19-CV-00248, (Dkt. #54). The Court
granted these unopposed motions and issued its Memorandum Opinion and Order awarding Class
Counsel $4,333,949.50 in attorneys’ fees and $371,354.98 in litigation expenses and costs for both
cases on April 24, 2020. See Case No. 4:17-CV-00001, (Dkt. #285); 4:19-CV-00248, (Dkt. #56).
But in conferring with Defendant to submit a joint Amended Final Order and Judgment in
accordance with the Court’s orders, see Case No. 4:17-CV-00001, (Dkt. #284); 4:19-CV-00248,
(Dkt. #55), the parties failed to agree on how to interpret a provision in the settlement agreements.
The Court conducted a telephonic hearing with the parties to discuss this issue on May 7, 2020.
The parties’ proposed language, along with each party’s objection to the other party’s
competing language, is reproduced below:
11.
PLAINTIFFS’ REQUESTED LANGUAGE
Class Counsel’s Motion for Approval of Award of Attorneys’ Fees and Request for
Reimbursement of Litigation Expenses [Dkt. #275] was GRANTED in part and
DENIED in part. [Dkt. 285]. Class Counsel is awarded $4,333,949.50 in attorneys’
fees and $371,354.98 in litigation expenses and costs against the Defendant
pursuant to Federal Rules of Civil Procedure 23(h) and 54.
Post judgment interest is payable on all of the above amounts allowable by law
from the date this judgment is entered until the date this judgment is paid. There is
no just reason for delay in the entry of this Amended Final Judgment and the Court
orders execution to issue forthwith.
The Court denies all relief not granted in this Amended Final Judgment.
Defendant’s Response: Plaintiffs’ requested language is contrary to the plain
language of the parties’ settlement agreements. Plaintiffs expressly agreed,
when they finalized the settlements for each settlement class, that payment of
any Court- approved amount of attorney fees and costs would not be due until
after the final resolution of all appeals concerning the application for fees and
costs.
2
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DEFENDANT’S REQUESTED LANGUAGE
Class Counsel’s Motions for Approval of Award of Attorneys’ Fees and Request
for Reimbursement of Litigation Expenses [Dkt. #275] was GRANTED in part and
DENIED in part [Dkt. 285]. Class Counsel is awarded $4,333,949.50 in attorneys’
fees and $371,354.98 in litigation expenses and costs pursuant to Federal Rules of
Civil Procedure 23(h) and 54. Pursuant to the parties’ Settlement Agreement,
execution on this award shall not issue if the award is appealed. Rather, as agreed
by the parties in Sec. VIII.C. of their Settlement Agreement, within five days of the
final resolution of all appeals and/or objections to the Court’s Memorandum
Opinion and Order [Dkt. 285] regarding Class Counsel’s Motion for Approval of
Award of Attorneys’ Fees and Request for Reimbursement of Litigation Expenses,
Defendant shall pay any Court-approved amount of attorney fees and costs. This
judgment shall bear interest, but in accordance with the terms of the court-approved
settlement, the fee award judgment shall not bear interest until the date the award
is due and payable under the terms of the settlement.
There is no just reason for delay in the entry of this Amended Final Judgment and
immediate entry by the Clerk of the Court is expressly directed.
Plaintiffs’ Response: Defendant’s requested language is not the plain language
of the Settlement Agreement. Defendant is requesting this Court: (1) remove
the current terms referencing the fee application process; (2) replace the
current language to now read “appeals to the Court’s Memorandum Opinion
and Order;” (3) extend the new language to include appeals to the Amended
Final Judgment; (4) add additional language that execution cannot issue if
Defendant chooses to appeal; and (5) engraft a waiver of Plaintiffs’ rights
under the Federal Rules of Civil Procedure and Appellate Procedure to
protect the Judgment during the pendency of appeal.
Plaintiffs and Class Counsel did not expressly (or otherwise) agree to the
language or the interpretation proposed by Defendant. The Settlement
Agreement does not waive rights of execution or interest under the Judgment
absent appropriate supersedeas protections or security.
See Case No. 4:17-CV-00001, (Dkt. #286) (footnotes omitted); 4:19-CV-00248, (Dkt. #58)
(footnotes omitted).
Section VIII, subsection C of both settlement agreements read as follows:
C.
Within five days of 1) the Effective Date or 2) the final resolution of all
appeals and/or objections to Class Counsel’s Fee Application, whichever is
later, Defendant shall pay any Court-approved amount of attorney fees and
costs in the form of one or more checks or wire transfers delivered into trust
accounts to be identified by Class Counsel. Class Counsel shall provide to
Defendant’s counsel in a timely manner all wiring and account information
3
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necessary to enable Porcelana to make such deposits within the time
required.
See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits 3 & 4); 4:19-CV-00248, (Dkt. #46, Exhibits 3
& 4).
ANALYSIS
The two disputes before the Court here are: (1) whether Section VIII, subsection C of the
settlement agreements extends to an appeal of this Court’s Memorandum Opinion and Order on
the issue of Class Counsel’s Fee Application; and (2) if the answer to the first question is “yes,”
whether postjudgment interest does not begin to accrue until the date the award is due under the
terms of the settlement. 1
The Court concludes that: (1) Section VIII, subsection C of the settlement agreements
extends to an appeal of this Court’s Memorandum Opinion and Order on the issue of Class
Counsel’s Fee Application; and (2) postjudgment interest accrues from the date of the entry of
judgment.
I.
Section VIII, Subsection C Covers Appeals of This Court’s Memorandum Opinion and Order
Under Texas law, 2 “[t]he goal of contract interpretation is to ascertain the parties’ true
intent as expressed by the plain language they used.” Great Am. Ins. Co. v. Primo, 512 S.W.3d
890, 893 (Tex. 2017) (citations omitted). “A contract’s plain language controls, not ‘what one side
or the other alleges they intended to say but did not.’” Id. (quoting Gilbert Tex. Const., L.P. v.
Underwriters at Lloyd’s London, 327 S.W.3d 118, 127 (Tex. 2010)). And terms are assigned
1
Although raised by Plaintiffs in their response to Defendant’s proposed language, the issue of a supersedeas bond is
not currently before the Court.
2
As established by both settlement agreements, Texas substantive law governs except for the Court’s determination
of a reasonable award of attorney fees as costs, which was governed by federal law. See Case No. 4:17-CV-00001,
(Dkt. #275, Exhibits 3 & 4); 4:19-CV-00248, (Dkt. #46, Exhibits 3 & 4).
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“their ordinary and generally accepted meaning unless the contract directs otherwise.” Id.
(citations omitted).
Plaintiffs argued during the May 7 hearing that Section VIII, subsection C refers only to
objections or appeals to Class Counsel’s Fee Application to the extent that Magistrate Judge
Johnson—who handled these cases up until final settlement approval—had drafted a Report and
Recommendation regarding Class Counsel’s Fee Application. Ultimately, this Court decided
Class Counsel’s Fee Application in a Memorandum Opinion and Order, but Plaintiffs contend that
it was not the parties’ intent that “appeals” in Section VIII, subsection C referred to any appeal of
this Court’s Memorandum Opinion and Order.
Defendant disagrees. As expressed to the Court during the May 7 hearing, Defendant
believed at all times that the plain language of the provision—“the final resolution of all appeals
and/or objections”—covered appeals of the Court’s Memorandum Opinion and Order. The Court
agrees with Defendant that the plain language covers appeals of this Court’s Memorandum
Opinion and Order on the issue of Class Counsel’s Fee Application. 3
Section VIII, subsection C of the settlement agreements contemplates that “[w]ithin five
days of 1) the Effective Date or 2) the final resolution of all appeals and/or objections to Class
Counsel’s Fee Application, whichever is later, Defendant shall pay any Court-approved amount of
attorney fees . . . .” See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits 3 & 4) (emphasis added);
4:19-CV-00248, (Dkt. #46, Exhibits 3 & 4) (emphasis added). The language “final resolution of
all appeals and/or objections” plainly contemplates an appeal to the Fifth Circuit Court of Appeals,
3
The Court believes Plaintiffs’ representation that Plaintiffs’ intent was for this provision to only cover objections to
Class Counsel’s Fee Application to the extent that Magistrate Judge Johnson drafted a Report and Recommendation
on the issue. But the Court’s hands are bound by the plain language of the contract: “The fact that the parties may
disagree about the policy’s meaning does not create an ambiguity.” Id. (quoting State Farm Lloyds v. Page, 315
S.W.3d 525, 527 (Tex. 2010)). And because the language here “lends itself to a clear and definite legal meaning, the
contract is not ambiguous,” and the plain language—not one party’s sincere but unilateral intent—controls. See id.
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along with any objection to a magistrate judge’s report and recommendation—it does not
encompass objections to a report and recommendation to the exclusion of any appellate-court
proceedings as Plaintiffs argue.
Plaintiffs’ argument is also belied by the other provisions of the settlement. See, e.g., State
Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995) (explaining that courts must “read
all parts of a contract together.”). Subsection E—which also appears in section VIII—explicitly
contemplates that the Court’s Memorandum Opinion and Order on the issue of Class Counsel’s
Fee Application might be challenged on appeal:
E.
. . . The Court’s or an appellate court’s failure to approve, in whole or in
part, any award of attorney fees and costs to Class Counsel, or any Service
Award, shall not affect the validity or finality of the Settlement, nor shall
such non-approval be grounds for rescission of the Agreement, as such
matters are not the subject of any agreement among the Parties other than
as set forth above.
See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits 3 & 4); 4:19-CV-00248, (Dkt. #46, Exhibits 3
& 4). Indeed, subsection E discusses the effect of “[this] Court or an appellate court’s failure to
approve, in whole or in part, any award of attorney fees and costs to Class Counsel” on the finality
and validity of the settlements. See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits 3 & 4)
(emphasis added); 4:19-CV-00248, (Dkt. #46, Exhibits 3 & 4) (emphasis added).
Additionally, on the first page of the settlement agreement, numeral 5 reflects Class
Counsel’s position that the settlement—“taking into account the risks and costs of continued
litigation, and the length of time that would be required to complete the litigation and any
appeals”—is in the best interest of the class. See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits
3 & 4) (emphasis added); 4:19-CV-00248, (Dkt. #46, Exhibits 3 & 4) (emphasis added). This
evinces that throughout the settlement, the parties understood the term “appeal” to have its plain
6
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meaning. So, reading the agreement as a whole, the Court concludes that the term “appeals” in
Section VIII, subsection C refers to appellate-court proceedings.
Plaintiffs—pointing to the settlement’s definition of the term “Effective Date”—argued at
the May 7 hearing that the term “appeal” cannot refer to an appeal of the Court’s Memorandum
Opinion and Order on the issue of Class Counsel’s Fee Application. Under the settlement,
“Effective Date” means:
R.
“Effective Date” means the first date that is three business days after all of
the following have occurred: (i) the Court has entered an order granting final
approval of the Settlement Agreement in accordance with the terms of this
Agreement; (ii) the time for any challenge to the Settlement, both in the
Court and on appeal, has elapsed; and (iii) the Settlement has become final,
either because no timely challenge was made to it or because any timely
challenge has been finally adjudicated and rejected. For purposes of this
paragraph, an “appeal” shall not include any appeal that concerns solely the
issue of Class Counsel’s Attorney Fees and Expenses or the Service Awards
to the Class Representatives.
See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits 3 & 4); 4:19-CV-00248, (Dkt. #46, Exhibits 3
& 4). Pointing to the last sentence of this defined term, Plaintiffs asserted that the parties carved
out an appeal of the Court’s Memorandum Opinion and Order on the issue of Class Counsel’s Fee
Application from Section VIII, subsection C. Plaintiffs’ reading is unpersuasive.
The sentence Plaintiffs look to for support within the defined term “Effective Date” states
that: “For purposes of this paragraph, an ‘appeal’ shall not include any appeal that concerns solely
the issue of Class Counsel’s Attorney Fees and Expenses or the Service Awards to the Class
Representatives.” See Case No. 4:17-CV-00001, (Dkt. #275, Exhibits 3 & 4) (emphasis added);
4:19-CV-00248, (Dkt. #46, Exhibits 3 & 4) (emphasis added). All this sentence does is ensure
that when “Effective Date” is used throughout the agreements, 4 any appeal of “Class Counsel’s
Attorney Fees and Expenses or the Service Awards to the Class Representatives” is not considered
4
By the Court’s count, “Effective Date” is used four times.
7
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in calculating the Effective Date. And Section VIII, subsection C contemplates that Defendant
shall pay “[w]ithin five days of 1) the Effective Date or 2) the final resolution of all appeals and/or
objections to Class Counsel’s Fee Application, whichever is later . . . .” See Case No. 4:17-CV00001, (Dkt. #275, Exhibits 3 & 4) (emphasis added); 4:19-CV-00248, (Dkt. #46, Exhibits 3 & 4)
(emphasis added). The fact that the term “Effective Date” includes a specific carveout for an
appeal of Class Counsel’s fee award does not alter the meaning of Section VIII, subsection C. 5
To adopt Plaintiffs’ interpretation would require the Court to turn a blind eye to the plain
text of the agreements and either: (1) read out “the final resolution of all appeals” from Section
VIII, subsection C; or (2) treat the term “appeals” as surplusage. Either option is impermissible.
See Quicksilver Res., Inc. v. Reliant Energy Servs., Inc., 2-02-249-CV, 2003 WL 22211521, at *2
(Tex. App.—Fort Worth Sept. 25, 2003, no pet.) (citations omitted) (“every clause in a contract
should be construed so that every word is given meaning.”). Defendant’s interpretation that
Section VIII, subsection C applies to appeals of this Court’s Memorandum Opinion and Order
regarding Class Counsel’s fee award is the correct interpretation.
II.
Postjudgment Interest Accrues from the Date of the Entry of Judgment
But Defendant’s assertion that under the settlement agreements, “the fee award judgment
shall not bear interest until the date the award is due and payable under the terms of the settlement”
is erroneous. See Case No. 4:17-CV-00001, (Dkt. #286); 4:19-CV-00248, (Dkt. #58).
“In diversity cases, federal law controls the award of postjudgment interest, including
decisions about when postjudgment interest begins to accrue.” Art Midwest, Inc. v. Clapper, 805
F.3d 611, 615 (5th Cir. 2015) (citing Nissho–Iwai Co. v. Occidental Crude Sales, Inc., 848 F.2d
5
If anything, this supports that the parties contemplated an appeal of the Court’s Memorandum Opinion and Order on
the issue of Class Counsel’s Fee Application and drafted Section VIII, subsection C broadly with that possibility in
mind.
8
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613, 622–24 (5th Cir. 1988)). 6 And federal law provides that “postjudgment interest ‘shall be
calculated from the date of the entry of the judgment.’” Id. (quoting 28 U.S.C. § 1961(a)).
Defendant points to nothing in Section VIII, subsection C—or anything else in the settlement
agreements—that alters the statutory rule. Accordingly, postjudgment interest shall accrue from
the date of the entry of the judgment.
CONCLUSION
Accordingly, the parties are ORDERED to submit an Amended Final Judgment consistent
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with the above order for the Court to enter within five (5) days.
It is further ORDERED that should the parties have remaining disputes related to the
Amended Final Judgment, the parties shall call the Court to schedule a telephone conference before
filing an Amended Final Judgment with contested provisions.
SIGNED this 11th day of May, 2020.
___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
6
Postjudgment interest is “procedural because it confers no right in and of itself.” Nissho–Iwai Co., 848 F.2d at 623.
9
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