- Case Type:
- Business
- Case Status:
- Affirmed in part and Reversed in part
- Citation:
- 21-40718 (5th Circuit, Oct 17,2025) Published
- Tag(s):
-
- Ruling:
- In the face of a partial dissent, the U.S. Court of Appeals for the Fifth Circuit (Circuit) agreed with the U.S. District Court for the Eastern District of Texas (DC) in reversing the judgment of the district's bankruptcy court (BC) as to damages on two creditors' breach of contract claims and as to one's claim for diminution in value, finding the evidence as to any damage model and quantification testimony given to be insufficient, respectively, but agreed with the BC (and thus reversed the DC) that another creditor had violated the Texas Theft Liability Act.
- Procedural context:
- Lori and Philip Aaron (Aarons), who had entered into an agreement with Carol Rose (CR) for the purchase of some of the DR"s horses at an upcoming auction and a lease for her Gainesville ranch, and CR had spent years litigating a state court lawsuit launched by CR during which the Aarons asserted various counterclaims, including the two relevant to this appeal: a claim for breach of contract and another for a violation of the Texas Theft Liability Act. Nearly a year after CR had opened this litigation, CR separately sued Jay McLaughlin (McLaughlin), who she had hired as her horse trainer at Gainesville Ranch and who also showed CR's horses at competitions and was paid a portion of any winnings. The two lawsuits (McLaughlin-Aaron Litigation) were consolidated in September 2015. Two years later, CR and her company, Carol Rose, Inc. (Rose Parties), filed for bankruptcy relief in the BC, and the McLaughlin-Aaron Litigation was removed to the BC. After a trial, the BC held in favor of the Aarons on two issues in their litigation and awarded McLaughlin a judgment on his claim. The parties appealed to the DC, which reversed both holdings in favor of the Aarons; reversed the judgment in favor of McLaughlin. All sides appealed.
While other issues between the Rose Parties and Elizabeth Weston and her company (Weston Parties) had been litigated, decided, and appealed, these two sides had settled their dispute. The Weston Parties had therefore moved to dimsiss their cross-appeal; the Circuit had granted that motion. The Rose Parties moved to dismiss their own appeal of the DC's judgment in favor of the Weston Parties; the Circuit granted that motion with this order.
- Facts:
- Described as a well-known breeder, owner, and competitor in the American Quarter Horse industry, CR began operating her business in Gainesville, Texas, in 1968 (Gainesville Ranch). In 2009, CR hired McLaughlin. In April 2013, CR decided to hold a dispersal sale of horses, tack, and equipment. Prior to the sale, CR and the Aarons had agreed that the latter would buy some of CR's horses at an upcoming auction and lease her Gainesville Ranch, and the former would provide consulting services to the Aarons. At the auction, CR sold many of her horses to the Aarons, and others to the Weston Parties. Subsequently, CR and the Aarons sued each other, and the Weston Parties sued Rose and the Aarons alleging that the Rose–Aaron deal infected the auction with fraud.
- Judge(s):
- Priscilla Richman; Jennifer Walker Elrod; and Andrew Oldham
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