Unreported / Non-Citable
Background
Frank Merchant and his wife Dorothy (“Dot”) conveyed a parcel of farmland in Leake County, Mississippi to Frank’s twin brother Billy in 2006 — not for safekeeping while Frank was deployed to Afghanistan, as they initially claimed, but to shield the property from their creditors. Over the following decade they repeatedly sought its return. In July 2016, Billy sold the Farm to their cousin George Harkins. Dot, who served as Chancery Clerk of Leake County, immediately discovered the transaction and the couple sued in state court to reclaim the property. Billy removed the case to federal court.
Shortly after filing suit, Frank and Dot discovered a deed — dating to 2005 — by which Billy had actually conveyed the Farm back to them years earlier, though Dot had filed it away and forgotten it. They recorded that deed and amended their complaint to add Harkins, alleging conspiracy. After a bench trial the district court ruled against them, finding that their unclean hands in conveying the Farm to evade creditors barred recovery and that Harkins was a good-faith purchaser for value. The Fifth Circuit summarily affirmed in 2022.
On remand, the district court granted Billy attorney fees of $172,118.75 under the Mississippi Litigation Accountability Act (MLAA), citing plaintiffs’ failure to investigate their claims, their assertion of inconsistent and false theories, a frivolous bid to defeat diversity jurisdiction by understating the Farm’s value, perjury at trial, and bad-faith conduct at the settlement conference. Frank and Dot appealed the fee award.
The Court’s Holding
The Fifth Circuit affirmed the attorney fee award in substantial part. The court held that the district court did not abuse its discretion in finding the lawsuit frivolous under the MLAA, which requires fees when a party sues “without substantial justification” — defined as a claim that is frivolous, groundless in fact or law, or vexatious. The court rejected plaintiffs’ argument that survival of summary judgment precluded a frivolousness finding, reasoning that plaintiffs’ own misrepresentations manufactured the factual disputes that allowed the case to survive — a circumstance the trial court could correct only after assessing credibility at the bench trial.
The court also rejected the argument that the district court improperly focused on the underlying creditor-evasion conduct rather than litigation conduct. The fee award was grounded in plaintiffs’ behavior during the lawsuit itself: inadequate pre-suit investigation, false and shifting legal theories, a frivolous remand motion, and false testimony under oath.
The court did, however, vacate the $25,000 appellate-fee component. Under Federal Rule of Civil Procedure 54(d)(2)(B)(i), a party must move for fees within 14 days of final judgment. Billy’s December 2021 fee motion sought only fees through trial and never mentioned appellate fees; his first request for appellate fees came nearly a year after judgment — well after the mandate issued from the prior appeal. Because no court order varied Rule 54’s deadline, the request was untimely and the appellate-fee award could not stand. The court acknowledged this produced an odd mechanical result — Billy would have had to move for appellate fees before plaintiffs even noticed their appeal — but held that Rule 54’s plain text controls.
Key Takeaways
- Surviving summary judgment does not insulate a party from a frivolousness finding under the MLAA if the disputed facts were manufactured through misrepresentation that a trial court only uncovers at the credibility-assessment stage of a bench trial.
- Attorney fee awards under the MLAA are properly based on litigation conduct — such as false theories, bad-faith settlement posture, and perjury — rather than on the underlying wrongdoing that gave rise to the suit.
- Under Fed. R. Civ. P. 54(d)(2)(B)(i), a motion for appellate attorney fees must be filed within 14 days of final judgment; a fee motion limited to trial-level fees does not preserve or provide fair notice of a later claim for appellate fees, and the district court cannot tacitly extend the deadline by ignoring it.
- A district court may vary Rule 54’s fee-motion deadline only by express court order — not by silence or implicit acquiescence.
Why It Matters
This decision clarifies that defendants in Mississippi federal cases can pursue MLAA fee awards even when plaintiffs managed to survive dispositive motions, so long as trial reveals that false or inconsistent litigation conduct — rather than genuine factual dispute — kept the case alive. Litigants and their counsel should understand that procedural survival is not a safe harbor against sanctions if the underlying claims were objectively hopeless and sustained only through misrepresentation.
The appellate-fee ruling carries a practical warning for prevailing parties in any Fifth Circuit case: the right to seek appellate attorney fees must be preserved promptly under Rule 54, ideally in the original fee motion filed within 14 days of judgment. Waiting until after a mandate issues on appeal will forfeit that recovery, regardless of how deserving the request might otherwise be.