Waiver of Texas Fee-Segregation Objections and Federal-Court Path for Appellate Attorney’s Fees in Diversity Cases (Marrufo v. Couch)

Court: United States Court of Appeals for the Fifth Circuit
Date: March 18, 2025
Case: Marrufo v. Couch (Nos. 22-50062 & 22-50280) (unpublished)

1) Introduction

Marrufo v. Couch arises from a failed sale of a Texas auto mechanic’s shop. Hector Marrufo (employee-buyer) and Danny and Amber Couch (seller-lenders) executed a “Loan Agreement” under which the Couches loaned Marrufo the $432,000 purchase price; Marrufo would make monthly payments until paid in full, at which point legal title would transfer. The agreement also contained default/reversion provisions and a clause stating Marrufo would be responsible for “all debts associated with Danny’s Mobile Repair LLC.”

After Marrufo made a down payment and monthly installments totaling $449,622, Couch asserted there were delinquent 2016 federal taxes of approximately $72–$73,000, refused to provide documentation, locked Marrufo out, and did not transfer title. Marrufo sued in Texas state court; the case was removed to federal court based on diversity jurisdiction. After a jury trial (with the Couches appearing pro se), the jury found the Couches breached and Marrufo did not, awarding $207,000 in damages. The district court also awarded $134,611.58 in attorney’s fees and $5,243.10 in costs.

On appeal, the Couches challenged (1) sufficiency of the evidence supporting the verdict and (2) attorney’s fees—arguing lack of fee segregation and asserting conditional appellate fees were not proven. The Fifth Circuit affirmed the merits judgment and trial fee award, and remanded solely for the district court to determine and award appellate attorney’s fees.

2) Summary of the Opinion

  • Sufficiency/Preservation: Because the Couches filed no Rule 50 or Rule 59 post-verdict motions, their sufficiency challenge was arguably forfeited. The court did not resolve forfeiture because, even under plain-error review, “any evidence” supported the verdict; thus, the judgment was affirmed.
  • Trial attorney’s fees (Texas segregation): Texas law governs fee entitlement in diversity, but a party waives a fee-segregation complaint if it fails to object in the district court. The Couches did not object; segregation could not be raised for the first time on appeal.
  • Appellate attorney’s fees: Under Texas substantive law, a party entitled to fees at trial is also entitled to fees for successfully defending on appeal. Federal procedure, however, does not require a “placeholder” conditional appellate-fee request/proof in the district court. The Fifth Circuit affirmed the trial fee award and remanded for an initial determination of appellate fees.

3) Analysis

A. Precedents Cited

1. Preservation of sufficiency challenges (Rule 50/59) and plain error

  • Acadian Diagnostic Labs., LLC v. Quality Toxicology LLC, 965 F.3d 404 (5th Cir. 2020): Cited for the proposition that failing to file Rule 50(a) or Rule 59 motions can forfeit appellate review of sufficiency of the evidence. The panel acknowledged this line of authority as supporting potential forfeiture.
  • Moss v. Princip, 913 F.3 d 508 (5th Cir. 2019) (quoting NewCSI, Inc. v. Staffing 360 Sols., Inc., 865 F.3d 251 (5th Cir. 2017)): Cited for an alternative approach—when sufficiency is not preserved, review may be for plain error. The opinion applied the plain-error lens (without deciding whether forfeiture barred review altogether) and affirmed because evidence supported the verdict.
  • McLendon v. Big Lots Stores, Inc., 749 F.3d 373 (5th Cir. 2014) (per curiam) (unpublished): Cited to underscore that even where courts have considered unpreserved sufficiency arguments under plain error, relief is exceedingly rare.

2. Jury’s role in credibility and weighing evidence

  • Eastman Chem. Co. v. Plastipure, Inc., 775 F.3d 230 (5th Cir. 2014) (quoting Roman v. W. Mfg., Inc., 691 F.3d 686 (5th Cir. 2012)): Used to reinforce that appellate courts do not reweigh evidence or reassess witness credibility. This supported deference to the jury’s acceptance of Marrufo’s testimony that he made payments and did not agree to assume the Couches’ personal 2016 tax liability.

3. Forfeiture of new legal theories raised for the first time on appeal

  • Rollins v. Home Depot USA, 8 F.4th 393 (5th Cir. 2021) (citing United States v. Zuniga, 860 F.3d 276 (5th Cir. 2017)): Cited for the rule that arguments not raised in the district court are forfeited on appeal. The panel used this to reject any attempt to convert the “all debts” dispute from a factual sufficiency question into a new appellate legal theory about contract meaning.

4. Attorney’s fees in diversity: state law entitlement, federal procedure

  • Transverse, L.L.C. v. Iowa Wireless Servs., L.L.C., 992 F.3d 336 (5th Cir. 2021) (quoting Tex. Com. Bank Nat'l Ass'n v. Cap. Bancshares, Inc., 907 F.2d 1571 (5th Cir. 1990)): Cited for the general Erie principle that state law governs the award of attorney’s fees in diversity cases (substantive entitlement/standards).
  • Am. Home Assurance Co. v. United Space All., LLC, 378 F.3d 48 2 (5th Cir. 2004) (citing Green Int'l, Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997)): Central to the segregation dispute. The court relied on Texas Supreme Court authority (via Green Int'l) that a party waives a segregation complaint if it does not object; thus, the Couches’ non-objection barred appellate relief.
    The panel distinguished American Home: there, remand was driven by failure to address reasonableness/necessity, and segregation followed because “segregation is an essential component of reasonableness.” Here, the Couches did not argue (and the court did not find) unreasonableness, so a segregation-only remand was unavailable due to waiver.
  • ATOM Instrument Corp. v. Petroleum Analyzer Co., 969 F.3d 210 (5th Cir. 2020) (citing DP Sols., Inc. v. Rollins, Inc., 353 F.3d 421 (5th Cir. 2003)): Cited for two linked propositions: (1) under Texas law, a prevailing party entitled to fees at trial is entitled to fees for successfully defending on appeal; and (2) Texas intermediate appellate courts’ procedural requirement of conditional appellate-fee requests at trial does not carry over to federal court.
  • Marston v. Red River Levee & Drainage Dist., 632 F.2d 466 (5th Cir. 1980) and 5th Cir. R. 47.8: Cited to support that Fifth Circuit practice allows a petition for appellate attorney’s fees without a district-court “placeholder” request.
  • Instone Travel Tech Marine & Offshore v. Int'l Shipping Partners, Inc., 334 F.3d 423 (5th Cir. 2003): Cited for the procedural mechanism: appellate-fee entitlement may be recognized on appeal, but the district court should make the initial determination and award after the appeal resolves—hence the remand.

B. Legal Reasoning

1. Sufficiency of the evidence: affirmed under plain-error “any evidence” review

The opinion’s procedural fulcrum is the Couches’ failure to file post-verdict motions under Federal Rules of Civil Procedure 50(a), 50(b), or 59(a). The panel acknowledged competing Fifth Circuit formulations—some treating the omission as forfeiture of appellate sufficiency review, others applying plain error. The court avoided choosing between those approaches because the result was the same: even under plain error, it would “not reverse if any evidence supports the jury verdict.”

On the merits, the Couches argued Marrufo breached by (a) not making monthly payments “himself” because payments came from a business account, and (b) failing to pay “all debts,” allegedly including the Couches’ 2016 taxes. The panel identified record evidence supporting the jury’s contrary findings:

  • The Loan Agreement’s “revert back” language permitted the inference that the Couches held a security interest, not ongoing ownership—so payments from the business were not conclusively “their due as owners.”
  • Marrufo testified he made the payments; under Eastman Chem. Co. v. Plastipure, Inc., credibility determinations are for the jury.
  • Danny Couch testified he understood he was responsible for the 2016 taxes; Marrufo testified he did not understand “all debts” to include the Couches’ personal 2016 tax liability—supporting the jury’s finding of no breach by Marrufo.

To the extent the Couches attempted a fresh appellate legal interpretation that “all debts” necessarily includes taxes, the panel treated that as a new argument forfeited under Rollins v. Home Depot USA.

2. Trial attorney’s fees: segregation waived by failure to object

Applying the diversity rule that state law governs fee awards (Transverse, L.L.C. v. Iowa Wireless Servs., L.L.C.), the panel addressed Texas’s fee segregation requirement but held the issue waived. The dispositive fact was procedural: the Couches neither opposed the fee motion nor objected to non-segregation in the district court. Under Am. Home Assurance Co. v. United Space All., LLC (relying on Green Int'l, Inc. v. Solis), that omission waives the complaint and fails to preserve error for appeal.

The court rejected the argument that remanding for appellate fee calculation should reopen segregation. It distinguished American Home as involving a remand for reasonableness/necessity defects, where segregation was intertwined with reasonableness. Here, absent any developed unreasonableness challenge, the only basis would be segregation alone—which waiver foreclosed.

3. Appellate attorney’s fees: entitlement recognized; placeholder proof not required in federal court; remand for calculation

The panel reaffirmed a recurring Fifth Circuit theme in Texas-fee diversity cases: Texas substantive law supplies the entitlement to appellate fees once trial-level entitlement exists (ATOM Instrument Corp. v. Petroleum Analyzer Co.; DP Sols., Inc. v. Rollins, Inc.). But federal procedure governs how and when those fees must be requested/proven in federal court. Texas’s conditional-request-at-trial practice is characterized as procedural and therefore inapplicable. Fifth Circuit rules permit petitioning for appellate fees without having requested them as a placeholder in the district court (citing 5th Cir. R. 47.8 and Marston v. Red River Levee & Drainage Dist.).

Consistent with Instone Travel Tech Marine & Offshore v. Int'l Shipping Partners, Inc., the court remanded for the district court to make the initial appellate-fee determination and award.

C. Impact

  • Preservation remains outcome-determinative in jury cases: The decision underscores that failing to file Rule 50/59 motions jeopardizes sufficiency review; even when a panel reviews under plain error, the bar (“any evidence”) is exceptionally difficult to clear.
  • Texas fee-segregation disputes are often lost at the objection stage: The opinion is a practical reminder that segregation arguments must be timely raised in the district court; otherwise, they are waived even if Texas law would have required segregation had a proper objection been made.
  • Appellate fee practice in federal court is simplified compared to Texas state procedure: For Texas fee-shifting claims litigated in federal court, the panel reiterates that a party need not present conditional appellate-fee evidence as a trial-level placeholder; instead, appellate fees can be pursued post-appeal via remand for calculation.
  • Strategic effect in settlement and fee litigation: The expectation that appellate fees may be awarded upon successful defense on appeal—without having been conditionally proven at trial—can affect appellate risk assessments and settlement leverage in Texas diversity cases.

4) Complex Concepts Simplified

  • Rule 50 / Rule 59 (post-verdict motions): Tools to ask the trial judge to set aside a jury verdict (Rule 50) or grant a new trial (Rule 59). If you do not use them, appellate courts may treat sufficiency challenges as forfeited or review only for plain error.
  • Plain error review in civil sufficiency challenges: A highly deferential standard; the Fifth Circuit framed it as affirming if “any evidence supports the jury verdict.”
  • Fee segregation (Texas): When a party seeks attorney’s fees for some claims but not others, Texas generally requires separating (“segregating”) time spent on fee-recoverable claims from time spent on non-recoverable claims—unless the work is so intertwined it is inseparable. But the key procedural point here is that failure to object waives the segregation complaint.
  • Substantive vs. procedural law in diversity: State law determines whether fees are available and under what standards (substantive), while federal rules govern the mechanics of requesting/proving them in federal court (procedural). This distinction drove the appellate-fees holding.
  • Remand for appellate fees: The appellate court recognizes potential entitlement but sends the case back so the district court can calculate a reasonable amount for the appellate work.

5) Conclusion

Marrufo v. Couch delivers two practice-critical lessons for Texas diversity litigation in the Fifth Circuit: (1) sufficiency challenges are perilous on appeal without Rule 50/59 preservation, and (2) Texas attorney-fee segregation objections must be made in the district court or they are waived. At the same time, the opinion clarifies that while Texas law supplies entitlement to appellate fees when trial fees are recoverable, federal practice does not require conditional appellate-fee placeholders at trial; instead, the appropriate course is remand for the district court’s initial appellate-fee determination following a successful appeal.