A recent decision by the U.S. Fifth Circuit holds that an appellee who failed to cross-appeal an adverse finding by the jury cannot, on remand, attempt to relitigate the same issue. ART Midwest Inc. v. Atlantic Ltd. Partnership XII, No. 11-11140 (5th Cir. Feb. 3, 2014).
In a nutshell, this is what happened. Buyer contracted with Seller to purchase eight apartment complexes. Later, alleging title problems with two of the complexes, Buyer notified Seller that it was terminating the entire deal. Buyer then sued Seller, alleging Seller's fraud and seeking a declaratory judgment that Buyer had the right to terminate the deal. The jury rejected the fraud claim but found that Buyer had the right to terminate the deal. Seller appealed, but Buyer failed to cross-appeal the jury’s finding of no fraud. The Fifth Circuit reversed the verdict against Seller, finding that the Seller did not default and remanding the case to the district court to determine liability and damages.
On remand, the district court granted summary judgment on Buyer’s fraud claim, holding that issues previously decided by the district court and forgone on the first appeal could not be relitigated on remand. A jury resolved other liability issues against Buyer and awarded millions of dollars in damages.
On Buyer’s appeal, the Fifth Circuit affirmed the summary judgment dismissing Buyer’s fraud claim. The court held that Buyer’s decision not to cross-appeal the jury’s adverse fraud findings in the first district-court proceeding prevented Buyer from raising the same rejected fraud claims in the second district-court proceeding.
(Hat tip to the Bar Association of the Fifth Federal Circuit.)