source: Caselaw Access Project

author: GREGG COSTA, Circuit Judge:

license: Public Domain

text:
    In the MATTER OF: DELTA PRODUCE, L.P.; Staci Properties, Limited, Debtors Kingdom Fresh Produce, Incorporated; I. Kunik Company, Incorporated; Five Brothers Jalisco Produce Company, Incorporated, doing business as Bonanza 2001; Rio Bravo Produce, Limited Company, L.L.C.; G.R. Produce, Incorporated, Appellees Cross-Appellants v. Stokes Law Office, L.L.P., Appellant Cross-Appellee In the Matter of: Delta Produce, L.P.; Superior Tomato-Avocado, Limited; Atled, Limited; Staci Properties, Limited, Debtors Kingdom Fresh Produce, Incorporated; I. Kunik Company, Incorporated; Five Brothers Jalisco Produce Company, Incorporated, doing business as 300Bonanza 2001; Rio Bravo Produce, Limited Company, L.L.C.; G.R. Produce, Incorporated, Appellees v. Stokes Law Office, L.L.P., Appellant.
    No. 14-51079 Consolidated with 14-51080
    United States Court of Appeals, Fifth Circuit.
    Filed December 21, 2016

      Michael John Keaton, Attorney, Keaton Law Firm, P.C., Deerfield, IL, for Appel-lees Cross-Appellants.
    Mark Charles Hewitt Mandell, Annan-dale, NJ, Maurleen Worley Cobb, Craig Alan Stokes, Stokes Law Office, L.L.P., San Antonio, TX, for Appellant Cross-Ap-pellee.
    Bartholomew M. Botta, Rynn & Janow-sky, L.L.P., Newport Beach, CA, for Rynn & Janowsky, L.L.P., Amicus Curiae.
    Before REAVLEY, PRADO, and COSTA, Circuit Judges.
   GREGG COSTA, Circuit Judge:

The prior opinion is withdrawn and the following is substituted to clarify in response to the final argument made in Ap-pellees Cross-Appellants’ petition for panel rehearing. The motion is denied otherwise.

This attorney’s fee dispute has its roots in the Perishable Agricultural Commodities Act (PACA), a Depression-era statute designed to protect sellers of perishable produce from delinquent purchasers. Two such purchasers filed for bankruptcy and the bankruptcy court appointed special counsel to collect and disburse funds to PACA-protected sellers that had claims against the purchasers-turned-debtors. When special counsel sought approval of his fees and expenses, which would be paid out of the PACA fund, some sellers objected and appealed the bankruptcy court’s fee award to the district court, which vacated it. Now that this same chain of events — fee awards, objections, appeals, and vaca-turs — has occurred twice more, this case is ripe for decision. The question is: can special counsel’s fees and expenses be disbursed from the PACA fund?

I

A

We begin with some background on PACA.

The short lifespan of produce makes it a risky business. It has been described as an industry “engaged almost exclusively in interstate commerce, which is highly competitive, and in which the opportunities for sharp practices, irresponsible business conduct, and unfair methods are numerous.” See H.R. Rep. No. 84-1196 (1956), reprinted in 1956 U.S.C.C.A.N. 3699, 8701. Sellers “must entrust their products to a buyer who may be thousands of miles away, and depend for their payment upon his business acumen and fair dealing.” Golman-Hayden Co. v. Fresh Source Prod. Inc., 217 F.3d 348, 351 (5th Cir. 2000); see also Endico Potatoes, Inc. v. CIT Grp./Factoring, Inc., 67 F.3d 1063, 1067 (2d Cir. 1995) (“[D]ue to the need to sell perishable commodities quickly, sellers of perishable commodities are often placed in the position of being unsecured creditors of companies whose creditworthiness the seller is unable to verify.”). Congress thus enacted PACA in 1930 to regulate and “promote fair dealing in the sale of fruits and vegetables,” Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., 336 F.3d 410, 413 (5th Cir. 2003) (internal citation and quotation marks omitted), in part by making it a violation of federal law for buyers of perishable commodities to “fail ... [to] make full payment promptly” to sellers. 7 U.S.C. § 499b(4).

In 1984, Congress strengthened the protections of the Act by requiring buyers— often brokers that purchase the produce from farmers and then sell it to grocery stores or restaurants — to hold either the produce or all proceeds or accounts receivable from a subsequent sale of the produce in trust for the benefit of unpaid suppliers until “full payment of the sums owing in connection with such transactions has been received by” the supplier. See id. § 499e(c)(2). These amendments were modeled after the statutory trust provisions that Congress added to the Packers and Stockyards Act in 1976, 7 U.S.C. §§ 196-197, so courts have often looked to those “parallel” provisions when interpreting PACA’s trust provisions. See In re Monterey House, Inc., 71 B.R. 244, 246 (Bankr. S.D. Tex. 1986); In re Fresh Approach, Inc., 51 B.R. 412, 419-20 (Bankr. N.D. Tex. 1985); see also Consumers Produce Co. v. Volante Wholesale Produce, Inc., 16 F.3d 1374,1382 n.5 (3rd Cir. 1994).

As intended by Congress, which was concerned that suppliers of produce were typically unsecured creditors who lost out when purchasers gave banks a security interest in their accounts receivable, the PACA trust has had a significant effect in bankruptcy. See In re Lombardo Fruit & Produce Co., 12 F.3d 806, 808-09 (8th Cir. 1993). Although buyers hold legal title to the assets in this “nonsegregated ‘floating’ trust in favor of unpaid sellers,” Bocchi Americas Assocs. Inc. v. Commerce Fresh Mktg. Inc., 515 F.3d 383, 388 (5th Cir. 2008), “the seller retains an equitable interest in the trust assets pending full payment.” C.H. Robinson Co. v. Alanco Corp., 239 F.3d 483, 487 (2d Cir. 2001). The trust assets are thus insulated from the buyer’s bankruptcy estate. See 11 U.S.C. § 541(d) (“Property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest, ... becomes property of the estate ... only to the extent of the debt- or’s legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold.” (emphasis added)). Sellers therefore have a “‘superpriority’ right that trumps the rights of the buyer’s other secured and unsecured creditors.” Bocchi, 515 F.3d at 388; see also Golman-Hayden, 217 F.3d at 351 (“We have recognized that PACA is a ‘tough law.’ ... An investor in a perishable commodities corporation ‘should know at the beginning of his association with such a corporation that he is “buying into” a corporation which is strictly regulated by the federal government through PACA.’ ” (internal citations omitted)). To the extent PACA funds are insufficient to pay each seller in full, the assets are shared pro rata. See Golman-Hayden, 217 F.3d at 349.

The Ninth Circuit has provided a useful illustration of how this works:

Farmer sells oranges on credit to Broker. Broker turns around and sells the oranges on credit to Supermarket, generating an account receivable from Supermarket. Broker then obtains a loan from Bank and grants Bank a security interest in the account receivable to secure the loan. Broker goes bankrupt. Under PACA, Broker is required to hold the receivable in trust for Farmer until Farmer was paid in full; use of the receivable as collateral was a breach of the trust. Therefore, Farmer’s rights in the Supermarket receivable are superior to Bank’s. In fact, as a trust asset, the Supermarket receivable is not even part of the bankruptcy estate.

Boulder Fruit Express & Heger Organic Farm Sales v. Transportation Factoring, Inc., 251 F.3d 1268, 1271 (9th Cir. 2001).

B

It is within this statutory framework that this litigation arose in late 2011 when various unpaid sellers of perishable produce sued Delta Produce, L.P. and Superi- or Tomato-Avocado — San Antonio-area “repackers” that purchased produce from farmers that they then sold to grocers— and Delta’s individual owner in district court for claims arising under PACA. On January 3, 2012, Delta and Superior filed a voluntary petition for chapter 11 bankruptcy. The two cases were consolidated, with the PACA case being referred to bankruptcy court. The PACA creditors that had filed suit in district court explicitly consented to the reference. The remaining PACA claimants filed their claims directly in the bankruptcy court.

Soon thereafter, the debtors, Craig Stokes — an attorney who had previously represented the debtors — and various PACA claimants moved to appoint Stokes as “Special PACA Counsel.” A week before filing the motion, one of the PACA claimants emailed a draft of the motion to the other claimants, seeking any comments because “there would probably be a shortened amount of notice to respond” once the motion was filed. The email explained that Stokes “has the working relationship with the Debtor, and it is in the Debtors’ and its principal’s interest to maximize collections for the trust, so there is no conflict of interest.” Although the record reflects that Kingdom Fresh’s attorney responded with some “major concerns,” none specifically dealt with the issue it raises now about the propriety of paying Stokes with trust funds. The motion was filed on January 19, a hearing was held five days later, and the order — which established a deadline to file claims, laid out the procedure for administering those claims, and appointed Stokes as “Special PACA Counsel” — issued the following day.

As Special PACA Counsel, Stokes was deputized to “take those steps reasonably necessary to preserve and collect the PACA trust assets ... and to facilitate the distribution of the collected PACA trust assets.” The order also provided for Special PACA Counsel’s “fees and costs” at a rate of $350 an hour. Those fees and costs would be paid from the PACA trust funds.

In addition to being appointed as Special PACA Counsel, the debtors also moved to appoint Stokes as debtors’ “PACA litigation counsel” pursuant to 11 U.S.C. § 327(e). In an affidavit attached to the section 327(e) motion, Stokes attested that he held a $33,000 retainer from debtors as of the commencement of the case, and agreed to be paid $350 an hour for his section 327(e) services, except that any payment from chapter 11 or PACA trust assets “would require Court approval under the Bankruptcy Code.” No one objected, and the court granted the motion requesting this alternative basis for Stokes’s role.

As Special PACA Counsel, Stokes collected and liquidated the debtors’ assets that were properly part of the PACA trust; reviewed and evaluated the PACA creditors’ claims; filed objections to claims and resolved disputes among claimants; collected accounts receivable; and disbursed PACA funds to claimants. During the more than two years that Stokes acted as Special PACA Counsel, he collected over $4 million in PACA assets.

We have now arrived at the rulings that are the subject of this appeal. During the pendency of the PACA litigation, Stokes filed three fee applications: two interim applications for $95,978 plus $2,492.97 in expenses, and $62,807, respectively, and a third and final fee application for $206,371 plus $15,911.02 in expenses, which included $74,526 for a successful mediation. Kingdom Fresh and four other claimants (hereafter “Kingdom Fresh”) objected to all three applications, arguing that the bankruptcy court lacked jurisdiction to disburse PACA trust assets that are not part of the bankruptcy estate and that Stokes could not be paid out of the PACA trust but was instead limited to recovering from the debtor’s estate.

At the hearing on the first application, the bankruptcy court concluded that it had proper jurisdiction over the PACA claims. The bankruptcy court, relying on the order appointing Stokes, awarded Stokes fees. Kingdom Fresh appealed to the district court.

With that first appeal pending, Stokes filed his second interim fee application. Kingdom Fresh again objected, reiterating its concerns. When the bankruptcy court again approved Stokes’s fees, Kingdom Fresh again appealed. Both appeals were consolidated.

In reviewing both interim applications, the district court agreed that the bankruptcy court had proper jurisdiction over the PACA trust but vacated the fee awards. Kingdom Fresh Produce v. Bexar Cty. (In re Delta Produce, LP), 498 B.R. 731 (WD. Tex. 2013). With respect to the fees, the district court relied on the language of the statute and C.H. Robinson Co. v. Alanco Corp., 239 F.3d 483 (2d Cir. 2001), to hold that because Stokes “[essentially ... acted as a trustee for the PACA trust,” he was not entitled to attorney’s fees paid out of the trust unless and until the trust beneficiaries were paid in full. Id. at 745. In its view, the award of any fees “before PACA trust beneficiaries receive full payment would directly violate the language of PACA and its regulations.” Id. at 746.

While that first appeal to the district court was still pending, Stokes filed his third and final fee application. Kingdom Fresh objected for the same reasons but also argued that Stokes labored under a conflict of interest. Before the bankruptcy court held a hearing on the third application, the district court issued its ruling vacating the first and second fee applications. The bankruptcy court nevertheless again found in Stokes’s favor and approved his final request. It found that a number of PACA claimants — not including Kingdom Fresh — waived their objections to Stokes’s fee applications by signing a consent form and thus Kingdom Fresh could not object to the portion of Stokes’s fee associated with those consenting PACA claimants. That portion of the fee was thus disbursed to Stokes, but the bankruptcy court stayed the portion of the fee allocable to Kingdom Fresh — $14,518.20 in fees and $1,135.24 in expenses — pending appeal.

Again Kingdom Fresh appealed and again the district court vacated the bankruptcy court’s opinion, reiterating the reasoning from its earlier orders that PACA beneficiaries are entitled to “full payment” before any others — including Special PACA Counsel — can be paid from the PACA trust assets. See Kingdom Fresh Produce v. Bexar Cty. (In re Delta Produce, LP), 521 B.R. 576, 583 (W.D. Tex. 2014). The district court also clarified that Stokes had other avenues for compensation: “(1) he can seek payment from the buyer/debtor, or (2) he can seek payment from the PACA trust but only after all PACA beneficiaries have received full payment.” Id. at 593 (emphasis in original). Given its fee finding, the district court declined to decide whether Stokes labored under a conflict of interest. Id. at 599. Stokes appeals both of the district court’s orders, which have been consolidated, and Kingdom Fresh cross appeals on the conflict of interest issue.

II

Before turning to the merits of this fee dispute, we address two jurisdictional questions: (1) whether in light of Stern v. Marshall, 564 U.S. 462,131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), the bankruptcy court had jurisdiction over the PACA case that was transferred from the district court, and (2) if so, whether the district court had appellate jurisdiction over the two interim fee applications.

A

Although the bankruptcy court raised the issue of its authority to resolve PACA claims, neither party raises it here. We nonetheless have an obligation to address a jurisdictional question like this one. In Stem, the Supreme Court held that although the bankruptcy court had statutory authority to enter final judgment on a state law counterclaim, it lacked constitutional authority to do so. 131 S.Ct. at 2620. It explained that “Congress may not withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or in admiralty.” Id. at 2609 (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272, 284, 15 L.Ed. 372 (1856)). To determine whether a bankruptcy court has the constitutional authority to decide a claim, the question is not whether “a proceeding may have some bearing on a bankruptcy case,” but rather “whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process,” Id. at 2618 (emphasis in original).

Stem’s impact on what has been a common practice — litigating PACA claims in bankruptcy court — presents a difficult question. To be sure, PACA’s trust provisions have a direct and significant effect on bankruptcy by creating “superpriority” status for sellers of produce. Yet the effect of these provisions is that trust assets are “not even part of the bankruptcy estate.” Boulder Fruit Express & Heger Organic Farm Sales, 251 F.3d at 1271. PACA claims can be and are litigated outside of bankruptcy. See, e.g., Bocchi Americas, 515 F.3d at 383 (case involving PACA trust claims litigated in district court). Although the source of a PACA claim is federal statutory law rather than state common law, what was true of the counterclaim in Stem is also true of PACA claims — they “exist[ ] without regard to any bankruptcy proceeding.” Stem, 131 S.Ct. at 2618.

But we need not resolve doubts about the bankruptcy court’s constitutional authority to adjudicate PACA claims because there was consent for it to act. The Supreme Court recently held that “allowing bankruptcy litigants to waive the right to Article III adjudication of Stem claims does not usurp the constitutional prerogatives of Article III courts.” Wellness Int’l Network, Ltd. v. Sharif, — U.S.-, 135 S.Ct. 1932, 1944-46, 191 L.Ed.2d 911 (2015). Such consent may be implied, so long as “ ‘the litigant or counsel was made aware of the need for consent and the right to refuse it, and still voluntarily appeared to try the case’ before the non-Article III adjudicator.” Id. at 1948 (quoting Roell v. Withrow, 538 U.S. 580, 590, 123 S.Ct. 1696, 155 L.Ed.2d 775 (2003)).

The original PACA claimants that filed in federal district court consented to adjudication of their claims, which necessarily implicated the entire PACA trust, in bankruptcy court. Claimants like Kingdom Fresh later filed PACA claims in this proceeding in which the docket sheet put them on notice that the original filers had consented to bankruptcy court adjudication. They raised no constitutional objection when joining the case. This consent— express from some parties and implied from others — thus vested the bankruptcy court with jurisdiction to preside over the PACA claims even if doing so posed a Stem problem. See Wellness Int’l Network, Ltd. v. Sharif, 617 Fed.Appx. 589 (7th Cir. 2015) (holding on remand from the Supreme Court that appellant had forfeited a Stem claim when he did not raise it until his reply brief in the district court appeal of the bankruptcy order he was challenging).

B

The scope of the bankruptcy court’s constitutional authority to adjudicate the PACA claims is not the only jurisdictional issue in this case. Stokes asserts that the district court lacked appellate jurisdiction to review the bankruptcy court’s two interim fee awards because they were not final orders. We agree.

“Virtually all decisions agree that the concept of finality applied to appeals in bankruptcy is broader and more flexible than the concept applied in ordinary civil litigation.” 16 Charles Alan Wright & Arthur R. Miller, FED. PRAC. & PROC. § 3926.2 (3d ed.). This circuit has expressly rejected a “rigid rule, of finality” in bankruptcy appeals and instead views finality “in a practical, less technical light.” ASARCO, Inc. v. Elliott Management (In re ASARCO, L.L.C.), 650 F.3d 593, 600 (5th Cir. 2011) (citation omitted). A “ease need not be appealed as a ‘single judicial unit’ at the end of the entire bankruptcy proceeding, but the order must constitute a ‘final determination of the rights of the parties to secure the relief they seek in this suit,’ or the order must dispose of a discrete dispute within the larger bankruptcy case for the order to be considered final.” Tex. Extrusion Corp. v. Lockheed Corp. (In re Tex. Extrusion Corp.), 844 F.2d 1142, 1155 (5th Cir. 1988) (internal citations omitted).

Yet even under this “flexible” approach, In re ASARCO, L.L.C., 650 F.3d at 600, we have held that interim fee awards are interlocutory orders — the very term interim denotes that such an award is not the end of the fee dispute — and thus not subject to automatic review. See Cluck v. Osherow (In re Cluck), 101 F.3d 1081, 1082 (5th Cir. 1996) (“Every circuit which has addressed this issue has concluded that an interim award of compensation granted by a bankruptcy court in an ongoing bankruptcy proceeding generally is an interlocutory order which is not subject to review.”); see also 1 Collies on BanKruptcy ¶5.08[5] (16th ed.) (providing that “order[s] fixing interim compensation for professionals” have been held to be interlocutory); 16 Wright & Miller, § 3926.2 (same).

These interlocutory orders were nonetheless still subject to review if the district court granted Kingdom Fresh leave to appeal under 28 U.S.C. § 158(a)(3). Although Kingdom Fresh did not seek such leave, it invokes the bankruptcy rule providing that “[i]f an appellant timely files a notice of appeal ... but does not include a motion for leave, the district court ... may order the appellant to file a motion for leave, or treat the notice of appeal as a motion for leave and either grant or deny it.” Fed. R. Baner, P. 8004(d). Kingdom Fresh contends that by issuing a lengthy order on the merits, the district court impliedly granted leave to appeal. But this court recently rejected that reasoning in an unpublished decision. Stansbury v. Holloway (In re Holloway), 370 Fed.Appx. 490, 493 (5th Cir. 2010) (citing Clark v. First State Bank (In re White Beauty View, Inc.), 841 F.2d 524, 527 (3d Cir. 1988), for the proposition that “a district court cannot impliedly grant leave to appeal by merely ruling on an appeal before it from the bankruptcy court”). We adhere to that view. In allowing a district court to treat a notice of appeal as a request for leave to appeal, Rule 8004(d) still contemplates some exercise of discretion by the district court — it must “either grant or deny” leave to appeal. Fed. R. Baner. P. 8004(d). This makes sense given that interlocutory appeals are still disfavored, despite the more lenient view of finality in the bankruptcy context. See In re White Beauty View, 841 F.3d at 526. The multiple appeals in this case demonstrate the burden of hearing interlocutory appeals. The district court issued more than a hundred pages in three almost identical orders: the first order vacating the bankruptcy court’s first and second fee awards, a denial of a motion to reconsider that first order, and the last order vacating the bankruptcy court’s final fee order.

Nowhere in the orders on the interim appeals is there an indication that the district court realized these were interlocutory orders and believed there was a benefit to hearing them in this piecemeal manner. That absence means the district court did not have appellate jurisdiction over the first two interim fee orders. And Kingdom Fresh did not seek to appeal all three fee orders in its final, timely appeal to the district court. We therefore vacate for lack of jurisdiction the district court’s order vacating the first and second fee awards, see In re Delta Produce, LP, 498 B.R. 731, and remand with instructions to dismiss the appeal, see Smith v. Gartley (In re Berman-Smith), 737 F.3d 997, 1003 (5th Cir. 2013) (finding that the “proper remedy” when the district court is left without jurisdiction to hear an appeal “is to vacate the decision of the district court and remand with instructions to dismiss the appeal” (citing Hollingsworth v. Perry, — U.S. -, 133 S.Ct. 2652, 2668, 186 L.Ed.2d 768 (2013))).

Ill

With these jurisdictional issues peeled away, we are down to only an appeal of the order granting Stokes’s final fee application in the amount of $206,371. But before getting to the core of the dispute, a bit more paring is warranted. Kingdom Fresh is the only claimant objecting to Stokes’s fees; the other PACA claimants consented to paying his fee from the trust assets. Stokes therefore argues that Kingdom Fresh has no standing to challenge the entire fee award of more than $200,000, but rather is limited to the 6.68% of the Superior PACA trust assets and 7.81% of the Delta trust assets that Kingdom Fresh holds. We agree.

In bankruptcy cases, courts follow a “person aggrieved” test, which is “more exacting ... than traditional constitutional standing.” Gibbs & Bruns LLP v. Coho Energy, Inc. (In re Coho Energy Inc.), 395 F.3d 198, 203 (5th Cir. 2004). “Because bankruptcy cases typically affect numerous parties,” which is also true of this PACA litigation that ended up being litigated in bankruptcy court, “the ‘person aggrieved’ test demands a higher causal nexus between act and injury; appellant must show that he was ‘directly and adversely affected pecuniarily by the order of the bankruptcy court’ in order to have standing to appeal.” Id. (citation omitted).

Kingdom Fresh cannot claim to be affected financially by the other PACA claimants’ consent to pay Stokes. Although PACA claimants share PACA funds pro rata when there is an insufficient “pot” of money to pay each claimant in full, see Golman-Hayden, 217 F.3d at 349, the disbursements were already distributed on that pro rata basis and the fees were charged in the same manner. Allowing Stokes to be paid the fees and expenses allocable to these other PACA claimants does not affect Kingdom Fresh’s share of the PACA trust, which has already been set aside at the direction of the bankruptcy court. Put another way, we see no reason why Kingdom Fresh has any say in how the other claimants chose to spend their PACA funds. Assuming the district court is correct that the trust funds cannot be used to pay Stokes until all claimants have been paid (we are almost to the point of deciding that question), the PACA claimants can do what they wish with funds to which they are legally entitled. They can use the PACA funds to pay business expenses, expand their produce-growing operations, or (subject to any fiduciary duties owed to investors) try their luck in Vegas. Likewise, they can chose to use the funds to pay a lawyer like Stokes. We thus find that Kingdom Fresh has no standing to dispute the percentage of Stokes’s fee allo-cable to the nonobjecting parties. Only the small percentage of Stokes’s fee apportion-able to Kingdom Fresh is at issue in this appeal; Stokes is free to keep the remainder.

IV

Although a smaller pot of money is now at stake (only the $15,653.44 that was Kingdom Fresh’s share of the final fee award), the question remains: can Stokes’s fees be deducted from the PACA trust assets before all claimants are made whole?

PACA’s trust provision evinces no exceptions. It states that buyers of perishable agricultural commodities must hold receivables or proceeds from the sale of those commodities in trust for the benefit of all unpaid sellers “until full payment of the sums owing in connection with such transactions has been received” by the sellers. 7 U.S.C. § 499e(c)(2). This strict directive was not accidental. Congress’s 1984 amendments aimed at remedying the “burden on commerce in perishable agricultural commodities and to protect the public interest” by doing away with financing arrangements in which buyers would give lenders a security interest in the produce, thus subordinating the often unsecured sellers. See id. § 499e(c)(l); see also Endico Potatoes, 67 F.3d at 1067 (“Due to a large number of defaults by the purchasers, and the sellers’ status as unsecured creditors, the sellers recover, if at all, only after banks and other lenders who have obtained security interests in the defaulting purchaser’s inventories, proceeds, and receivables.”). The “full payment” requirement is thus paramount in protecting sellers of perishable produce.

This court has never interpreted the breadth of this PACA provision but case law from other circuits provides guidance. The district court relied primarily on C.H. Robinson Co. v. Alamo, in which an attorney who represented a produce purchaser in a PACA lawsuit — litigated outside the bankruptcy context — sought to collect unpaid attorney’s fees by withholding a portion of the PACA settlement proceeds being disbursed to a seller. 239 F.3d at 485. The attorney argued that “his services were in fulfillment of [the purchaser’s] duty to the PACA trust beneficiaries and solely for their benefit, and, therefore, he [was] entitled to be paid out of the trust res under general principles of trust law.” Id. at 486. The Second Circuit disagreed. It pointed out that “[u]nlike most common law trusts, a PACA trust entitles the trust beneficiary to a sum certain,” which means that the sellers, as trust beneficiaries, “are entitled to full payment before trustees may lawfully use trust funds to pay other creditors.” Id. at 487-88. It thus held that “a PACA trustee may not use PACA funds to pay attorney’s fees incurred in collecting accounts receivable held in trust for a seller of perishable agricultural commodities.” Id.

There is some authority that points in the other direction. In Bank of Los Angeles v. Official PACA Creditors’ Committee (In re Southland + Keystone), 132 B.R. 632 (9th Cir. BAP 1991), for example, a bank liquidated collateral of a defaulting creditor but it was later determined that PACA creditors had priority over the bank to those funds. The bank argued that it should be compensated for its collection costs given that it had done all the legwork required to collect the PACA trust assets. Id. at 642. The court agreed:

When a bankruptcy trustee collects receivables and those moneys are subsequently turned over to PACA claimants, it should be allowed to offset its collection costs. The Bank here collected the receivables before they became stale. This undoubtedly resulted in a higher recovery than if the receivables had not been promptly collected. To deny the Bank any recovery would be unfair to the Bank and provide a windfall to the PACA claimants.

Id. at 643. That analysis relied on In re United Fruit and Produce Co., Inc., 119 B.R. 10 (Bankr. D. Conn. 1990), for the proposition that because a “bankruptcy trustee of the debtor’s estate [had] rendered substantial services in collecting the PACA receivable for the benefit of the PACA beneficiaries ... [t]he non-PACA creditors of this estate should not pay for these services and the trustee should not be forced to donate them.” Id. at 13.

Our best reading of the cases is that they draw a distinction, admittedly a somewhat blurred one, between individuals who are PACA trustees or their functional equivalents — who owe fiduciary duties to the PACA claimants and are thus aware of the trust provision — and those whose primary role is outside the PACA trustee framework and do not owe duties to the claimants. See C.H. Robinson, 239 F.3d at 488 (“Even if we were to adopt the rule announced in In re Southland + Keystone for non-PACA trustees, we would not extend it to the case at bar because Alanco is a PACA trustee.... [A] PACA trustee has a fiduciary obligation under PACA to repay the full amount of the debt owed to the PACA beneficiary. Bankruptcy trustees and other collecting agents may not owe the same fiduciary duties to PACA beneficiaries, and therefore the law governing them is inapplicable.”); see also Six L’s Packing Co. v. Post & Taback, Inc., 132 F.Supp.2d 306, 309 (S.D.N.Y. 2001) (ordering that fees incurred by PACA trustee in fulfilling its obligations “shall not be paid, directly or indirectly, from PACA trust funds,” but appointing special master pursuant to Rule 53 to “assist the Court in evaluating the claims,” and ordering payment to be drawn from PACA trust account). We thus examine Stokes’s duties as Special PACA Counsel.

We recognize that Stokes’s role was somewhat different than Mandell’s in C.H. Robinson, likely not unintentionally — the court appointed Stokes to be Special PACA Counsel whereas Mandell directly represented the buyer-turned-PACA trustee. Those involved in this litigation were also careful not to pin him as a “trustee,” instead opting for the “Special PACA Counsel” title. Additionally, Stokes did not simply withhold his fees from the PACA claimants’ disbursements, but rather followed the procedure for fee motions set out in the order appointing him, which including a clause stating that he was “entitled” to fees and costs from the PACA trust fund.

But as hard as Stokes endeavored to avoid the application of C.H. Robinson— which he was no doubt familiar with given the doubtless small “broccoli bar” and the fact that his attorney Mandell played an active role in that case — he was the functional equivalent of a PACA trustee. The Order appointing Stokes as Special PACA Counsel authorized him to “take those steps reasonably necessary to preserve and collect that PACA trust assets as defined at 7 U.S.C. § 499e(c) [the PACA trust provision].” Stokes was authorized to accomplish this goal by:

(a) attempting to determine the extent to which assets are PACA trust assets, including filing or defending adversary proceedings including declaratory judgment actions, (b) examining PACA trust claims filed by alleged PACA trust beneficiaries, and objecting to those claims where appropriate, (c) collecting the Debtors’ accounts receivables, including filing adversary actions, and (d) liquidating PACA trust assets other than the accounts receivables into cash.

These are the fundamental duties of a PACA trustee. Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701, 705 (2d Cir. 2007) (“As a PACA trustee, a produce buyer is charged with a duty ‘to insure that it has sufficient assets to assure prompt payment for produce and that any beneficiary under the trust will receive full payment.’ ” (citation omitted)); Boulder Fruit Express, 251 F.3d at 1271 (“[A] commercially reasonable sale of accounts for fair value is entirely consistent with the trustee’s primary duty under PACA ... to maintain trust assets.”). Most critically, as Stokes concedes, his “sole purpose was to benefit the PACA trust.” Appellant Brief at 19; see also id. (“Appellant was envisioned by the Judge, the Debtors, the Principal, the U.S. Trustee and the PACA claimants ... to work for ‘the trust itself.’”). Despite the different form, the substance of Stokes’s work therefore is indistinguishable from the work of the C.H. Robinson trustee. See C.H. Robinson, 239 F.3d at 488 (distinguishing the trustee in that case from parties in other cases who did not owe duties to the PACA claimants). And we agree with the Second Circuit that PACA’s unequivocal language requires that a PACA trustee — or in this case, its functional equivalent — may not be paid from trust assets “until full payment of the sums owing” is paid to all claimants. 7 U.S.C. § 499e(c)(2).

We recognize that fidelity to the inviolable nature of the PACA trust Congress created gives rise to a free rider concern. It will often take the work of an attorney or other professional to maximize a PACA recovery, and it is not desirable for some claimants but not others to bear this burden. But there are other options for equitable allocation of collection efforts. The most straightforward method in a bankruptcy case is the alternative procedure the bankruptcy court ordered: appointment under section 327 of the Bankruptcy Code which allows a “professional ... (A) reasonable compensation for actual, necessary services rendered.” 11 U.S.C. § 330. Section 327 professionals are not relegated to the end of the bankruptcy line but are instead “afforded second priority in the distribution of an estate.” See 3 Collier on BanKruptcy ¶ 330.01. Although this avenue may not lead to full recovery, the prevalence of professionals willing to bear that risk by taking section 327 appointments dispels the amicus’s fear that no one will want to assist PACA claimants. Cf. C.H. Robinson, 239 F.3d at 488 (“[The trustee’s] prediction that a ruling against it will have dire consequences for the produce industry is hyperbole.”). Second, had the case remained in district court, the judge would have had the authority to appoint a special master whose expenses could be shared by the parties. Compare Fed. R. Civ. P. 53 (procedure for appointing special master in district court), with Fed. R. Bankr. P. 9031 (“Rule 53 F. R. Civ. P. does not apply in cases under the Code.”). Finally, a majority of courts — including the only district court to have considered the issue — allow PACA producers to recover attorneys’ fees related to collection efforts from the PACA trust if entitlement to those fees is included in the sales contract. See Mark Duedall, The Interaction Between the Bankruptcy Code and the Perishable Agricultural Commodities Act, 2006 Ann. Surv. Banrr. Law 4 (“Most cases hold that PACA Trust beneficiaries are entitled to attorney’s fees paid from the PACA Trust if their governing contractual documents or invoices call for such charges.” (citing Country Best v. Christopher Ranch, LLC, 361 F.3d 329 (11th Cir. 2004))).

These options may seem like they are just elevating form over substance, something we just decried in rejecting the significance of Stokes not receiving the “trustee” title. But there is one difference: unlike Stokes’s fee application in this case or the trustee’s fee request in C.H. Robinson, in neither the section 327 bankruptcy professional or district court special master scenarios are the costs coming directly out of the PACA trust. The superpriority status of PACA claimants is preserved and the attorney claimants bear the greater risk of nonpayment. That difference is the very one Congress sought to achieve with the trust amendments to PACA. See C.H. Robinson, 239 F.3d at 488 (observing that “the intent of Congress in enacting PACA’s trust provision was to provide unpaid produce sellers with greater protection from the risk of default by buyers”).

y

There remains a little bit of juice to squeeze out of this case. Stokes also argues that even if PACA prevents paying him with trust funds until all produce suppliers are compensated, Kingdom Fresh should be estopped from objecting to the fees. Estoppel is an equitable doctrine and “the decision whether to invoke it [is] within the court’s discretion.” In re Coastal Plains, Inc., 179 F.3d 197,205 (5th Cir. 1999). This court thus reviews the district court’s rejection of the doctrine for abuse of discretion. Id.

Stokes points out that Kingdom Fresh did not object to his appointment or his duties as Special PACA Counsel until he filed his first fee application, which happened about eight months after he was first appointed. The district court rejected this as a basis for estoppel. It pointed out that Kingdom Fresh never joined the proposed PACA claim procedure motion that appointed Stokes and that although it appeared at the hearing on the motion, it “had two days to prepare for the expedited hearing.” In re Delta Produce, LP, 521 B.R. at 597 (emphasis in original). It also believed that Kingdom Fresh’s eventual objection to the first fee request was timely, as it was made “less than eight months after Special Counsel had been appointed.” Id. We do not conclude that the district court abused its discretion in rejecting the estoppel argument. See Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524, 528 (5th Cir. 2000) (“To constitute an abuse of discretion, the district court’s decision must be either premised on an application of the law that is erroneous, or on an assessment of the evidence that is clearly erroneous.”).

Lastly, because we rule on other grounds that Stokes’s fees could not be paid with trust assets, we need not reach Kingdom Fresh’s contention that Stokes was operating under a conflict of interest.

The district court’s order vacating the first two fee awards is itself VACATED for lack of jurisdiction, and we REMAND with instructions to dismiss the appeal of that order. The district court’s order vacating the final fee award is AFFIRMED but only as to the pro rata share of the fees allocated to Kingdom Fresh and the other four claimants that appealed.

      . Congress made the following findings:
      It is hereby found that a burden on commerce in perishable agricultural commodities is caused by financing arrangements under which commission merchants, dealers, or brokers, who have not made payment for perishable agricultural commodities purchased, contracted to be purchased, or otherwise handled by them on behalf of another person, encumber or give lenders a security interest in, such commodities, or on inventories of food or other products derived from such commodities, and any receivables or proceeds from the sale of such commodities or products, and that such arrangements are contrary to the public interest. This subsection is intended to remedy such burden on commerce in perishable agricultural commodities and to protect the public interest.
      7 U.S.G. § 499e(c)(l).

      . Section 327(e) of the Bankruptcy Code allows the bankruptcy trustee — not to be confused with the PACA trustee — to employ, with the court’s approval, "for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to the debtor or to the estate with respect to the matter on which such attorney is to be employed.” 11 U.S.C. § 327(e).

      . The other claimants that objected and appeal are I. Kunik Company, Inc.; Five Brothers Jalisco Produce Company; Rio Bravo Produce, Limited Company, L.L.C.; and G.R. Produce, Inc.

      . The attorney in question in C.H. Robinson was none other than Mark Mandell, the attorney representing Stokes in this litigation.

      . Mandell also represented the purchasers in Six L’s Packing Co., 132 F.Supp.2d at 307. The “broccoli bar” appears to be an exclusive one. See infra, 621 at n.5.

      . In their motion to appoint Stokes as § 327(e) counsel, debtors pointed out that Stokes is a "leading member of the ‘broccoli bar,’ ” which apparently refers to attorneys specializing in PACA.

      . Stokes also invokes waiver, but we find no intentional relinquishment of Kingdom Fresh’s right to oppose a fee request. See Home Ins. Co. v. Matthews, 998 F.2d 305, 309 (5th Cir. 1993) (explaining that "the elements of waiver and estoppel are different.... [W]aiver [is] the intentional relinquishment of a known power or privilege. Equitable estop-pel is founded on detrimental reliance on the representations of the other party.” (internal citations and quotation marks omitted)).


author: JAMES E. GRAVES, JR., Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee v. Jose CASILLAS-CASILLAS, Defendant-Appellant
    No. 16-50379
    United States Court of Appeals, Fifth Circuit.
    Filed January 5, 2017

      Joseph H. Gay, Jr., Assistant U.S. Attorney, U.S. Attorney’s Office, San Antonio, TX, Kenneth P. Kaplan, Assistant U.S. Attorney, U.S. Attorney’s Office, El Paso, TX, for Plaintiff-Appellee.
    Sergio Garcia, Federal Public Defender’s Office, El Paso, TX, Maureen Scott Franco, Federal Public Defender, Federal Public Defender’s Office, San Antonio, TX, for Defendant-Appellant.
    Before ELROD, SOUTHWICK, and GRAVES, Circuit Judges.
   JAMES E. GRAVES, JR., Circuit Judge:

Jose Casillas-Casillas appeals the district court’s imposition of a four-level enhancement pursuant to United States Sentencing Guideline § 2L2.2(b)(3)(A) for using a fraudulently-obtained United States passport card to unlawfully re-enter the country. We AFFIRM the district court’s enhancement of Casillas-Casillas’s sentence.

BACKGROUND

On November 24, 2015, Jose Casillas-Casillas applied for admission to the United States from Mexico at the Bridge of the Americas Port of Entry in El Paso, TX, using a valid United States passport card bearing the name, photograph, and date of birth of one Jorge Gabriel Ramirez. When the inspecting Customs and Border Protection (“CBP”) officer noticed that Casillas-Casillas’s facial features did not match those in the photograph, the officer questioned Casillas-Casillas. During questioning, Casillas-Casillas claimed to have obtained the passport card at the Social Security Office. The CBP officer suspected that Casillas-Casillas was an imposter and referred him to Passport Control Secondary for further inspection. There, immigration records revealed that Casillas-Casillas is a Mexican citizen who had been previously removed from the United States to Mexico on November 9, 2015. Immigration records also revealed that Casillas-Casillas had not received consent to re-apply for admission to the United States. When officers informed Ca-sillas-Casillas of his Miranda rights, he invoked his right to counsel. He was subsequently charged with and pled guilty to attempted illegal re-entry by a removed alien in violation of 8 U.S.C. § 1326(a) and improper use of another’s passport in violation of 18 U.S.C, § 1544.

Casillas-Casillas’s Presentence Report (“PSR”) details how the United States Sentencing Guidelines were applied in his case. First, Count One (attempted illegal re-entry by removed aliens) and Count Two (improper use of another’s passport) were grouped for guideline calculation purposes. The offense level applicable to the Group was then set at the highest offense level of the counts in the Group. See U.S.S.G. § 3D1.2(a). The highest offense level was Count Two.

According to U.S.S.G. § 2L2.2, an offense involving the improper use of another’s passport has a base offense level of eight. Two levels were added pursuant to § 2L2.2(b)(l) because Casillas-Casillas had been unlawfully present in the United States and had been deported on one or more occasions prior to the offense. A four-level enhancement was added pursuant to § 2L2.2(b)(3)(A) because Casillas-Casillas had “fraudulently obtained or used a United States passport.” Because Casil-las-Casillas accepted responsibility for his offense, the offense level was decreased by two. Consequently, Casillas-Casillas’s total offense level was set at twelve, which, with a criminal history category of III, provides for a guideline range of 15-21 months.

On March 23, 2016, Casillas-Casillas objected in writing to the four-level upward adjustment pursuant to § 2L2.2(b)(3)(A). He claimed that the guideline in question only applied to “regular passports,” but not to passport cards. At sentencing, Casil-las-Casillas again objected to the four-level adjustment. The district court denied Ca-sillas-Casillas’s objection and sentenced him to 15 months in prison. Casillas-Casil-las appeals from that sentence.

STANDARD OF REVIEW

We review a district court’s application and interpretation of the sentencing guidelines de novo. United States v. Koss, 812 F.3d 460, 467 (5th Cir. 2016).

DISCUSSION

In objecting to his sentencing enhancement, Casillas-Casillas claims that: (1) the plain language of U.S.S.G. § 2L2.2(b)(3)(A) “applies to the use of a regular passport, not to the use of a passport card;” (2) reading § 2L2.2(b)(3)(A) to extend to all types of passports would “intrude upon the Executive Branch’s Department of State’s clear intent to establish and define what constitutes ‘types of passports;’ ” and alternatively, (3) the language of § 2L2.2(b)(3)(A) is ambiguous and the rule of lenity applies. We reject all three of Casillas-Casillas’s arguments.

I.

Casillas-Casillas claims that the plain language of U.S.S.G. § 2L2.2(b)(3)(A) only includes “regular passports” and does not include passport cards. We interpret the United States Sentencing Guidelines using “the ordinary rules of statutory construction.” United States v. Serfass, 684 F.3d 548, 551 (5th Cir. 2012). “The text of the guideline is the starting point in the analysis.... ” United States v. Mendez-Villa, 346 F.3d 568, 570 (5th Cir. 2003). Here, the plain language of § 2L2(b)(3)(A) does not distinguish between passport cards and “regular passports:” The guideline recommends a four-level enhancement “[i]f the defendant fraudulently obtained or used ... a United States passport.”

In addition, the Code of Federal Regulations unequivocally states that a passport card is a United States passport. It lists passport cards as one of four “[t]ypes of passports” issued by the Secretary of State. 22 C.F.R. § 51.3. In addition, the State Department’s publicly-available passport application form states that a passport card is a United States passport. See Application for a U.S. Passport (Card or Book), available at http://www.state.gov/ documents/organization/212239.pdf (stating that “[t]he passport card is a U.S. passport issued in card format”). Because a passport card is a United States passport within the meaning of § 2L2.2(b)(3)(A), the district court did not err.

II.

Casillas-Casillas also argues that reading § 2L2.2(b)(3)(A) to extend to passport cards would intrude upon the State Department’s broad rule-making authority regarding passports. See Haig v. Agee, 453 U.S. 280, 291, 101 S.Ct. 2766, 69 L.Ed.2d 640 (1981). In particular, he argues that such an interpretation “would make the words regular passport, official passport, diplomatic passport, and passport card synonymous under the State Department’s Regulation.”

On this point, we do not find Casil-las-Casillas’s argument persuasive. The State Department has spoken clearly that the passport card is among the “[t]ypes of passports.” See 22 C.F.R. § 51.3 (listing types of United States passports); see also Application for a U.S. Passport (Card or Book) (stating that “[t]he passport card is a U.S. passport issued in card format”). Furthermore, the State Department has made clear that the term “passport” refers to a general category of official travel document that comes in multiple formats. See 22 C.F.R. § 51.1(d) (defining passport “regardless of format”). Therefore, reading § 2L2.2(b)(3)(A) to include passport cards does not intrude on the State Department’s rule-making authority.

III.

Alternatively, Casillas-Casillas argues that the language of § 2L2.2(b)(3)(A) is ambiguous and the rule of lenity applies. “The rule of lenity ... applies only when, after consulting traditional canons of statutory construction, [a court is] left with an ambiguous statute.” United States v. Shabani, 513 U.S. 10, 17, 115 S.Ct. 382, 130 L.Ed.2d 225 (1994). Casillas-Casillas argues that because he and the Government disagree as to whether § 2L2.2(b)(3)(A) includes passport cards, “the Guideline [is], at the veiy least, ambiguous.” But a statute should not be deemed ambiguous for purposes of lenity “merely because it was possible to articulate a construction more narrow than that urged by the Government.” Moskal v. United States, 498 U.S. 103, 108, 111 S.Ct. 461,112 L.Ed.2d 449 (1990). In the present case, § 2L2.2(b)(3)(A) is not ambiguous and clearly includes passport cards. Because the guideline is not ambiguous, the district court did not err.

CONCLUSION

For the reasons stated above, we AFFIRM the district court’s sentence.


author: PER CURIAM:

text:
    Anthony SHORE, Petitioner-Appellant, v. Lorie DAVIS, Director, Texas Department of Criminal Justice, Correctional Institutions Division, Respondent-Appellee.
    No. 16-70008
    United States Court of Appeals, Fifth Circuit.
    Filed January 6, 2017

      Kelley Louise Clark, Marcy Ellen Kurtz, Kevin Knox Nunnally, Bracewell, L.L.P., Kevin Knox Nunnally, McGuireWoods, L.L.P., Houston, TX, for Petitioner-Appellant.
    Fredericka Searle Sargent, Assistant Attorney General, Office of the Attorney General, Criminal Appeals Division, Tina J. Miranda, Woodson Erich Dryden, Esq.,, Assistant Attorneys General, Office of the Attorney General, Postconviction Litigation Division, Austin, TX, for Respondent-Appellee.
    Before CLEMENT, ELROD, and SOUTHWICK, Circuit Judges.
   PER CURIAM:

Petitioner Anthony Shore seeks a certificate of appealability (COA) from this court in order to appeal the district court’s denial of his habeas petition. He asserts the following grounds for relief: (1) Shore was denied his constitutional right to present mitigation evidence to the jury; (2) Shore’s right to counsel was violated by trial counsel’s failure to conduct an adequate mitigation investigation, failure to present evidence of Shore’s brain damage, and failure to represent Shore during the punishment phase of his trial; and (3) Shore’s brain injury renders his execution a violation of the Eighth Amendment prohibition against cruel and unusual punishment. Because reasonable jurists would not debate the district court’s rejection of these claims, we DENY Shore’s application for a COA.

I.

Shore was charged with the capital murder of Maria Del Carmen Estrada during the course of an aggravated sexual assault. Shore v. Stephens, No. H-13-1898, 2016 WL 687563, at *3 (S.D. Tex. Feb. 19, 2016). Shore voluntarily confessed that he offered the twenty-one-year-old a ride in his car, used a pair of shears to aid his attempt to rape her, and ultimately strangled her. Id. at *2. His confession was supported by detailed forensic evidence and witness testimony. Id. at *3, Defense counsel admitted that Shore killed Ms. Estrada and that Shore had sexual relations with her against her will, but argued that Shore should be found guilty of simple murder rather than capital murder. Id. Shore was convicted of capital murder. Id. at *4.

In the opening argument of the trial’s punishment phase, Shore’s defense counsel stated, “Against our advice, against our better judgment, against our 40 years of experience, Anthony has asked on his behalf that we ask you to answer those [special-issue] questions in such a way that he’s sentenced [to] death.” Id. Counsel explained, “It is where he is and it is what he thinks should happen to him based upon how he has lived his life.” Id. Counsel also stated, “Anthony still believes that despite all of that, despite the fact that he’s been able to sit in jail now for over a year and not violate the rules of the institution, it is time for him to sacrifice his life for what he has done.” Id.

The State provided the jury a recording of Shore’s full confession, which described additional murders and sexual assaults. Id. at *5. Shore strangled three women besides Estrada to death. Id. at *2-3. The first was a fourteen-year-old whom he had sexually assaulted. Id. at *2. The second was a nine-year-old whom he raped or attempted to rape. Id. at *3. The third was a sixteen-year-old whom Shore touched and stripped, but whom he claimed he did not sexually assault. Id. Shore also raped a fourteen-year-old girl whom he did not murder, but whom he threatened to kill, along with her family, if she reported his crime. Id. at *2. Shore stated during his confession that this rape proved he could “beat the evilness” by raping a woman without killing her. Id.

The State supplemented Shore’s confession with extensive evidence and testimony. The State corroborated Shore’s murders with forensic evidence, including photographs of his victims’ corpses. Id. at *5. It also called thirty-five witnesses, including Shore’s sister, daughters, and wife, three of Shore’s former girlfriends, and the clinical director of a sex offender program in which Shore had participated for five years. Id. Shore’s sister testified that he stabbed a kitten to death when he was four or five, that he pushed a screwdriver through his sister’s head when they were children, and that he used his sister to get girls in the neighborhood to come out of their houses so he could grope and try to kiss them. Id. Shore’s daughters testified about being abused, drugged, and molested by Shore. Id. His wife and former girlfriends testified that he drugged and raped them, choked them while having sex, used drugs, and kept pornography of young girls. Id. The clinical director of Shore’s sex offender program testified that he had superior intellectual and abstract reasoning abilities; was grandiose, opportunistic, manipulative, and narcissistic; understood what was socially acceptable but had sexual deviations and would break a law if he thought he could get away with it; and scored high on a measure of psychopathy. Id.

After the State had presented its case, Shore’s counsel told the trial court that additional discussion had not changed Shore’s mind about requesting the jury to give him the death penalty. Id. at *6. Counsel expressly stated that Shore “made it quite clear ... that he doesn’t want [his attorneys] to in any way argue to the contrary” and that this was the reason counsel was waiving a closing argument. Id. The trial court asked Shore if his counsel had accurately represented his instructions, and Shore replied, “That is very accurate.” The jury sentenced Shore to death. Id. at *6. .

Shore sought direct and collateral relief in state court. The Texas Court of Criminal Appeals affirmed his conviction on direct appeal. Shore v. State, No. AP-75049, 2007 WL 4375939, at *1 (Tex. Crim. App. Dec. 12, 2007) (not designated for publication). Shore’s state habeas petition raised numerous points of error, including constitutional claims based on the trial court’s failure to inquire on the record whether Shore’s decision to waive the presentation of mitigating evidence was competent, knowing, and voluntary; the trial court’s failure to inquire on the record whether there had been any investigation for mitigating evidence and what the results of any such investigation were; counsel’s decision to sit silent during the punishment phase.of the trial; and counsel’s failure to object to various pieces of evidence. The state trial court rejected these arguments and denied Shore’s habeas petition, adopting the State’s proposed findings of fact and conclusions of law without an eviden-tiary hearing. Ex Parte Shore, No. WR78133-01, 2013 WL 173017, at *1 (Tex. Crim. App. Jan. 16, 2013) (not designated for publication). The Texas Court of Criminal Appeals also rejected Shore’s habeas petition, adopting the trial court’s findings and conclusions. Id.

Shore then filed a federal habeas petition supported by seven new exhibits. The district court denied Shore relief on his habeas petition and declined to issue a COA. Shore, 2016 WL 687563, at *20. The district court rejected Shore’s claim that the trial court failed to obtain a valid waiver of his right to challenge the State’s punishment case. It reasoned that no Supreme Court precedent required trial courts to obtain a knowing waiver on the record and that Shore had provided no basis for challenging the state courts’ finding of a valid waiver, which was supported by the record. Id. at *8-10. The district court rejected Shore’s Strickland claims regarding trial counsel’s failure to conduct a reasonable investigation into mitigating evidence, failure to present evidence of organic brain damage, and failure to contest the State’s punishment case because Shore’s waiver barred these claims. It reasoned that these claims relied on evidence barred by Pinholster and that, even with the benefit of his newly-proffered evidence, Shore could not show that counsel was deficient or that counsel’s alleged deficiencies prejudiced his defense. Id. at *10-18. Finally, the district court rejected Shore’s claim that his brain damage made his execution unconstitutional under the Eighth and Fourteenth Amendments. It reasoned that this claim was unexhausted and therefore not properly before the court and that this claim sought to create and apply a new rule of constitutional law in violation of Teague. Id. at *19. Shore applied to this court for a COA in order to appeal the denial of his federal habeas petition. After thorough review of the briefing and careful consideration of the positions taken at oral argument, we conclude that Shore’s application must be denied.

II.

Section 2254 of the Antiterrorism and Effective Death Penalty Act (AED-PA), 28 U.S.C. § 2254, governs this court’s consideration of Shore’s request for a COA. Under AEDPA, a state habeas petitioner must obtain a COA before he can appeal the federal district court’s denial of habeas relief. 28 U.S.C. § 2253(c)(1)(A). A COA is warranted upon a “substantial showing of the denial of a constitutional right.” 28 U.S.C. § 2258(c)(2). This is a showing that “reasonable jurists would find the district court’s assessment of the constitutional claims debatable or wrong.” Miller-El v. Cockrell, 537 U.S. 322, 338, 123 S.Ct. 1029, 154 L.Ed.2d 931 (2003). To obtain a COA after a district court has denied relief on procedural grounds, a petitioner must show both a debatable claim on the merits and that the district court’s procedural ruling is debatable. See id. at 349, 123 S.Ct. 1029. “This threshold inquiry does not require full consideration of the factual or legal bases adduced in support of the claims. In fact, the statute forbids it.” Id. at 336,123 S.Ct. 1029.

The court evaluates the debatability of Shore’s constitutional claims through the lens of AEDPA’s highly deferential standard, which “demands that state-court decisions be given the benefit of the doubt.” Renico v. Lett, 559 U.S. 766, 773, 130 S.Ct. 1855, 176 L.Ed.2d 678 (2010). A federal court may not grant habeas relief unless the petitioner has first exhausted state remedies with respect to the claim at issue. 28 U.S.C. § 2254(b). A habeas petitioner must prove that the state court’s constitutional adjudication “resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established [fjederal law, as determined by the Supreme Court of the United States,” 28 U.S.C. § 2254(d)(1), or “resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding,” 28 U.S.C. § 2254(d)(2). Clearly established federal law is comprised of “the holdings, as opposed to the dicta, of [the Supreme] Court’s decisions as of the time of the relevant state-court decision.” Williams v. Taylor, 529 U.S. 362, 412, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000). A state-court decision is contrary to clearly established federal law if it “identifies the correct governing legal rule from [the Supreme Court’s] cases but unreasonably applies it to the facts of the particular state prisoner’s case” or “extends a legal principle from [Supreme Court] precedent to a new context where it should not apply or unreasonably refuses to extend that principle to a new context where it should apply.” Id. at 407, 413,120 S.Ct. 1495.

When ruling on a petition for a writ of habeas corpus, the federal district court must defer to the factual findings of state trial and habeas courts. Moody v. Quarterman, 476 F.3d 260, 267-68 (5th Cir. 2007); Young v. Dretke, 356 F.3d 616, 629 (5th Cir. 2004). Federal courts are limited to the record before the state courts. Cullen v. Pinholster, 563 U.S. 170, 181, 131 S.Ct. 1388, 179 L.Ed.2d 557 (2011). The district court reviews “only the ultimate legal determination by the state court — not every link in its reasoning.” Trottie v. Stephens, 720 F.3d 231, 241 (5th Cir. 2013) (citing Neal v. Puckett, 286 F.3d 230, 246 (5th Cir. 2002) (en banc); Catalan v. Cockrell, 315 F.3d 491, 493 (5th Cir. 2002)). Where a state court habeas decision is unaccompanied by explanation, “a federal court must ‘determine what arguments or theories ... could have supported the state court’s decision,’ and then ask ‘whether it is possible fairminded jurists could disagree that those arguments or theories are inconsistent with the holding in a prior decision’ of the Supreme Court.’' Williams v. Thaler, 684 F.3d 597, 603 (5th Cir. 2012) (quoting Harrington v. Richter, 562 U.S. 86, 88,131 S.Ct. 770,178 L.Ed.2d 624 (2011)).

III.

Shore is not entitled to a COA on his claim that he was denied his constitutional right to present mitigation evidence to the jury under Lockett v. Ohio, 438 U.S. 586, 98 S.Ct. 2954, 57 L.Ed.2d 973 (1978). The Supreme Court held in Lockett that the Eighth and Fourteenth Amendments require individualized consideration of mitigating factors. Id. at 604-08, 98 S.Ct. 2954. However, Shore waived the right to present mitigation evidence by instructing trial counsel not to argue against the death penalty. Shore argues that this waiver was invalid because it was not reflected on the record and because he could not have knowingly waived the right to present evidence of brain damage when he was not aware of that evidence. This argument is barred by Teague and is not adequately supported by the evidence.

The Supreme Court’s decision in Teague bars federal courts from applying new constitutional rules to upset state convictions on collateral review. Teague v. Lane, 489 U.S. 288, 310, 109 S.Ct. 1060, 103 L.Ed.2d 334 (1989); see also 28 U.S.C. § 2254(d)(1). Shore’s argument depends on a proposed rule of constitutional law requiring that a waiver of the right to present mitigation evidence be made knowingly and on the record. The district court correctly observed that the Supreme Court has never imposed such a requirement. Shore, 2016 WL 687563, at *10 (quoting Schriro v. Landrigan, 550 U.S. 465, 479, 127 S.Ct. 1933, 167 L.Ed.2d 836 (2007)). It is unde-batable among jurists of reason that to create such a new requirement and impose it here would violate Teague. Therefore, Shore is not entitled to a COA on his Lockett claim.

Even if Shore’s argument were not barred by Teague, reasonable jurists would not debate that Shore has failed to present evidence sufficient to overcome the presumption of correctness afforded to the state habeas courts’ implicit finding that the record shows a knowing, intelligent, and voluntary waiver. See 28 U.S.C. § 2254(e)(1); Dretlce, 356 F.3d at 629. In the face of this presumption of correctness, Shore argues that his waiver was not knowing as to subsequently discovered evidence of brain damage, relying on two reports to show that a subsequent discovery of evidence occurred. Setting aside any questions about the strength of this evidence, Shore’s reports are not properly presented for our consideration on habeas review because they were not presented in state court. See Pinholster, 563 U.S. at 182, 131 S.Ct. 1388; see also 28 U.S.C. § 2254(d)(2). Thus, the evidence Shore cites would be insufficient to displace the state courts’ finding of a valid waiver even if his Lockett claim were not barred by Teague. For this reason also, Shore is not entitled to the relief he seeks under Lock-ett.

IV.

Shore is also not entitled to a COA on his claims under Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). Shore argues that his trial counsel was constitutionally deficient for faffing to conduct an adequate mitigation investigation, to present evidence of Shore’s brain damage, and to represent Shore during the punishment phase of the trial. These arguments are foreclosed both by Shore’s instructions to his counsel and by the fact that they are based on new evidence and legal theories.

A defendant cannot raise a Strickland claim based on counsel’s compliance with his instructions. See United States v. Masat, 896 F.2d 88, 92 (5th Cir. 1990) (“[A defendant cannot] avoid conviction on the ground that his lawyer did exactly what he asked him to do.”); Autry v. McKaskle, 727 F,2d 358, 361 (5th Cir. 1984) (“By no measure can [a defendant] block his lawyer’s efforts and later claim the resulting performance was constitutionally deficient.”). If a defendant instructs his attorney not to present mitigation evidence, the failure to present this evidence does not give rise to a Strickland claim. Sonnier v, Quarterman, 476 F.3d 349, 362 (5th Cir. 2007). Such an instruction also bars the defendant from raising a Strickland claim based on failure to investigate mitigation evidence. Landrigan, 550 U.S. at 475-76, 127 S.Ct. 1933. In light of Shore’s confirmation that he instructed counsel not to argue against the death penalty, the state habeas courts acted reasonably in rejecting Shore’s claim, and the district court correctly affirmed.

Shore’s Strickland claims also violate the rule prohibiting federal habeas courts from considering evidence that was not presented in state court. See Pinholster, 563 U.S. at 182, 131 S.Ct. 1388; see also 28 U.S.C. § 2254(b). Shore argues that two of his Strickland claims are unexhausted and that Pinholster does not bar consideration of new evidence in connection with unex-hausted claims. Assuming arguendo that this is correct, Shore’s new evidence is admissible only if he can show that his unexhausted claims are properly before this court. To do so, he invokes Trevino v. Thaler, — U.S.-, 133 S.Ct. 1911, 185 L.Ed.2d 1044 (2013) and Martinez v. Ryan, 566 U.S. 1, 132 S.Ct. 1309, 182 L.Ed.2d 272 (2012). However, Shore’s invocation of Trevino and Martinez is unavailing for two reasons. First, the argument is abandoned because it was not raised in Shore’s initial brief on appeal. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994). Second, the briefing provides no factual basis for an allegation that habeas counsel was deficient. See Martinez, 132 S.Ct. at 1318. Because Shore cannot effectively invoke Trevino and Martinez, his unexhausted Strickland claims are not properly before this court. His remaining Strickland claims are subject to Pinhol-ster. Therefore, the new evidence on which Shore seeks to rely is not properly before this court. Shore is not entitled to a COA on his Strickland claims.

V.

Finally, Shore is not entitled to a COA on his Eighth Amendment claim that his execution would be cruel and unusual in light of his brain injury. The district court correctly found that this claim is procedurally barred because it was not raised on state habeas review. Shore, 2016 WL 687563, at *19; see also Duncan v. Henry, 513 U.S. 364, 365-66,115 S.Ct. 887, 130 L.Ed.2d 865 (1995); Coleman v. Thompson, 501 U.S. 722, 735 n.1, 111 S.Ct. 2546, 115 L.Ed.2d 640 (1991); Nobles v. Johnson, 127 F.3d 409, 419-20 (5th Cir. 1997). It is also barred by Teague because it does not rely on the holding of any Supreme Court precedent but instead seeks to extend the reasoning of Atkins v. Virginia, 536 U.S. 304, 122 S.Ct. 2242, 153 L.Ed.2d 335 (2002), and Roper v. Simmons, 543 U.S. 551, 125 S.Ct. 1183, 161 L.Ed.2d 1 (2005). Finally, this argument is foreclosed by the numerous Fifth Circuit precedents rejecting the proposition that the Eighth Amendment prohibits execution of those who have brain problems but are not intellectually disabled, as Shore’s counsel acknowledged at oral argument. See Mays v. Stephens, 757 F.3d 211, 219 (5th Cir. 2014), cert. denied, — U.S.-, 135 S.Ct. 951, 190 L.Ed.2d 844 (2015); ShisInday v. Quarterman, 511 F.3d 514, 521 (5th Cir. 2007); In re Neville, 440 F.3d 220, 221 (5th Cir. 2006).

VI.

For the reasons stated above, we conclude that the district court’s denial of Shore’s habeas petition would not be debatable among jurists of reason. Accordingly, we DENY Shore’s application for a COA.

      . Shore's trial counsel moved to withdraw. The trial court appointed a new attorney to represent Shore on direct appeal and then appointed a different attorney to represent Shore on state habeas review. See Shore, 2016 WL 687563, at *6.

      . Shore's briefing expressly states that his competence is not at issue and that he is not claiming that he is intellectually disabled. At oral argument, Shore’s counsel again conceded Shore's intelligence and affirmed that Shore’s competence is not at issue.

      . The parties agree that Shore has not exhausted his claim that counsel should have investigated mitigation evidence other than evidence of brain damage. Shore argues that he also has not exhausted his claim that counsel failed to represent him during the punishment phase because his new evidence makes the argument fundamentally different from the one presented to the state habeas courts.

      . Shore argues that the miscarriage of justice exception to the procedural bar on unexhaust-ed claims applies here. This exception requires a petitioner to show that he has a colorable claim of factual innocence. Sawyer v. Whitley, 505 U.S. 333, 339, 112 S.Ct. 2514, 120 L.Ed.2d 269 (1992). Because Shore has not made this showing, the exception does not apply.


author: JAMES L. DENNIS, Circuit Judge:

text:
    IN RE: DEEPWATER HORIZON Lake Eugenie Land & Development, Incorporated; et al, Plaintiffs v. BP Exploration & Production, Incorporated; et al, Defendants Woodbridge Baric Pre-Settlement Funding, L.L.C., Movant-Appellant v. Louis J. Freeh, Special Master, Appellee.
    No. 15-30599
    United States Court of Appeals, Fifth Circuit.
    Filed January 6, 2017

      George Davidson Fagan, Anton L. Ha-senkampf, Esq., Margaret Frohn Swet-man, Esq., Leake & Andersson, L.L.P., New Orleans, LA, for Movant-Appellant.
    Gregory A. Paw, Special Counsel, Pepper Hamilton, L.L.P., Princeton, NJ, for Appellee.
    Before BENAVIDES, DENNIS, and SOUTHWICK, Circuit Judges.
   JAMES L. DENNIS, Circuit Judge:

Woodbridge Baric Pre-Settlement Funding, L.L.C. (Woodbridge Baric), appeals the district court’s order that it pay $20,000 in restitution to the Deepwater Horizon Court-Supervised Settlement Program. In 2012 Woodbridge Baric loaned Jarrod Burrle $24,000. Woodbridge Baric and Burrle agreed that Burrle would not be required to repay the loan if his economic loss claims in connection with the Deepwater Horizon oil spill fail unless he had misrepresented his claim to Wood-bridge Baric, in which case Burrle agreed to indemnify Woodbridge Baric and hold it harmless. In 2013, the settlement program paid over $50,000 on one of Burrle’s claims, and Burrle’s attorneys paid Wood-bridge Baric $20,000 of those funds in partial repayment of the loan. Subsequently, Louis Freeh, appointed by the district court as a special master to investigate misconduct in the administration of the settlement program, determined that Burrle’s claim was fraudulent and moved the court to order Burrle and others, including Woodbridge Baric, to make restitution for the funds paid in connection with that claim. The district court granted the motion as to Woodbridge Baric, finding that Woodbridge Baric would be unjustly enriched if allowed to retain the $20,000 from Burrle. For the following reasons, we reverse the district court’s judgment against Woodbridge Baric.

I

In 2010, Burrle filed claims for compensation, including a claim for lost income from commercial fishing, with the Gulf Coast Claims Facility, which was tasked with processing claims related to the Deepwater Horizon oil spill. In early 2012, Burrle entered into three separate “pre-settlement funding contracts” with Wood-bridge Baric. Under these contracts, Woodbridge Baric agreed to loan Burrle a total of $24,000, referred to as an “advance,” at a specified interest rate. Each of the three contracts provided that “[i]n the event [Burrle does] not recover any money from the ‘lawsuit/claim,’ [Burrle] shall not be obligated to repay the advance to [Woodbridge Baric].” The contracts also provided that if Burrle’s representations to Woodbridge Baric regarding his claims were false, he would be required to indemnify Woodbridge Baric for its losses and expenses, including the principal amount of the loan.

In December 2012, the district court approved the Deepwater Horizon Economic and Property Damages Settlement Agreement in a class action concerning the Deepwater Horizon oil spill. In accordance with the settlement agreement, the district court established the Deepwater Horizon Court-Supervised Settlement Program to implement and administer the settlement agreement, including the processing of individual claims for compensation. Shortly after the settlement program began operations, Burrle refiled his claims for compensation with the program.

In 2013, the settlement program approved Burrle’s commercial fishing claim and paid him $50,015.87. Following receipt of the claim payment, Burrle’s attorneys paid Woodbridge Baric $20,000 on Burrle’s behalf as a partial repayment of its loan. Several months later, the district court appointed the special master, directing him to investigate claims submitted to the settlement program and initiate legal action to “clawback” funds paid on fraudulent claims. After investigating Burrle’s claims, the special master determined that they were fraudulent. The special master then filed a motion asking the district court to require Burrle and third parties who bene-fitted from the settlement program’s payment on Burrle’s commercial fishing claim to return that payment.

The district court ultimately granted the special master’s motion, finding that Burrle submitted fraudulent documents and made false statements in connection with his claim. In addition to ordering Burrle to repay all funds paid on his claim to the settlement program, the district court ordered Burrle’s lawyers and Wood-bridge Baric to repay the funds they received in connection with his claim. As to Woodbridge Baric, the district court determined that it would be unjustly enriched if allowed to retain the funds, reasoning that Woodbridge Baric’s right to Burrle’s repayment of the loan was contingent upon the success of Burrle’s claims, which ultimately failed. Thus, the district court entered judgment against Woodbridge Baric in the amount of $20,000.00. Woodbridge Baric appeals.

II

As an initial matter, the parties disagree on the relevant standard of review on appeal. The special master argues that the district court’s judgment was a decision to grant relief from a judgment under Federal Rule of Civil Procedure 60(b), which is reviewed for abuse of discretion. Woodbridge Baric responds that the district court’s entry of a final judgment against it was essentially a grant of summary judgment, and thus review is de novo. However, we need not decide the nature of the district court’s ruling. Even if characterized as a decision to grant relief from a judgment under Rule 60(b), this court reviews de novo any question of law underlying the district court’s decision. See Frazar v. Ladd, 457 F.3d 432, 435 (5th Cir. 2006). Because the parties’ respective arguments pertain only to questions of law, we will review the district court’s determinations as to those questions de novo. See id.

“It is a long-standing legal principle that a person who has conferred a benefit upon another in compliance with a judgment, or whose property has been taken thereunder, is entitled to restitution if the judgment is reversed or set aside, unless restitution would be inequitable.” Mohamed v. Kerr, 91 F.3d 1124, 1126 (8th Cir. 1996) (citations, alteration, and internal quotation marks omitted); accord United States v. Morgan, 307 U.S. 183, 59 S.Ct. 795, 83 L.Ed. 1211 (1939); Atlantic Coast Line R. Co. v. Florida, 295 U.S. 301, 309, 55 S.Ct. 713, 79 L.Ed. 1451 (1935); Restatement (Third) of Restitution & Unjust Enrichment § 18 (“A transfer or taking of property, in compliance with or otherwise in consequence of a judgment that is subsequently reversed or avoided, gives the disadvantaged party a claim in restitution as necessary to avoid unjust enrichment.”). Thus, it is well established that when a prior judgment is invalidated, the district court has inherent equitable power to enforce restitution of what has been done in compliance with its prior judgment. See, e.g., Baltimore & O. R. Co. v. United States, 279 U.S. 781, 786, 49 S.Ct. 492, 73 L.Ed. 954 (1929); Morgan, 307 U.S. at 198, 59 S.Ct. 795.

The court’s power being equitable in nature, restitution pursuant to this power is a matter of equity rather than a matter of right. Atlantic Coast Line, 295 U.S. at 310, 55 S.Ct. 713; Mohamed, 91 F.3d at 1126. To prevail, a party seeking restitution “must show that the money was received in such circumstances that the possessor will give offense to equity and good conscience if permitted to retain it.” Id. at 309, 55 S.Ct. 713. “The question no longer is whether the law would put [the possessor] in possession of the money if the transaction were a new one. The question is whether the law will take it out of his possession after he has been able to collect it.” Id. at 310, 55 S.Ct. 713.

Relevant to the instant case, it is a generally recognized rule of equity that a third party who receives funds in good faith from a judgment creditor in satisfaction of a debt is not liable to repay those funds in restitution. See, e.g., Mohamed, 91 F.3d at 1126 (“[E]quity will not compel restitution from a third party who receives monies, in good faith, from the initial judgment creditor in payment of a debt.”); see also Equilease Corp. v. Hentz, 634 F.2d 850, 853 (5th Cir. 1981) (applying Florida law and stating, “[I]t is patently unfair to require an innocent payee who has received and used the money to satisfy a debt to repay the money”); Restatement § 67(l)(a) (a bona fide payee who “accepts the funds in satisfaction or reduction of the payee’s valid claim as creditor” is not liable to repay the funds). Relying on this rule, Woodbridge Baric argues that it is a bona fide payee who received funds from Burrle in partial satisfaction of a valid claim. In this regard, Woodbridge Baric notes that it made a $24,000 loan to Burrle and that it is undisputed that it had no knowledge of the fraudulent nature of Burrle’s settlement program claim. Woodbridge Baric also highlights that it was not a party to Burrle’s litigation before the settlement program, notwithstanding its expectation of receiving a share of the proceeds of his claims.

The district court concluded that Woodbridge Baric was not entitled to retain the funds because its right to Burrle’s repayment of the loan was contingent upon the successful settlement of Burrle’s claims. Because Burrle’s fraudulent claim ultimately failed, the district court determined that Woodbridge Baric would be unjustly enriched if allowed to retain the funds. In so concluding, the district court relied on an exception, recognized by some courts, to the rule that bona fide third-party payees are not liable in restitution. Under this exception, an attorney who receives a share of a judgment pursuant to a contingency-fee agreement does not take the money as a bona fide payee. E.g., Mohamed, 91 F.3d at 1127; Cox v. Cox, 56 Mass.App.Ct. 864, 780 N.E.2d 951, 962 (2002); see also Restatement § 18 cmt. g. This exception rests on the premise that by conditioning his or her fees on success in litigation, the attorney assumes the risk of non-recovery. E.g., Mohamed, 91 F.3d at 1127; Restatement § 18 cmt. g. Because the initial judgment creditor ultimately collects nothing after the judgment is reversed, the attorney is also entitled to nothing pursuant to the terms of the fee agreement and is therefore liable to repay the funds in restitution. Mohamed, 91 F.3d at 1127. Many authorities have therefore likened an attorney with a contingency fee agreement to a real party in interest or assignee pro tanto of the client’s judgment and thus view the attorney as standing in the client’s shoes. See e.g., Mohamed, 91 F.3d at 1127; Excel Coup. v. Jimenez, 269 Kan. 291, 7 P.3d 1118, 1126 (2000); Abrahami v. UPC Const. Co., 248 A.D.2d 272, 670 N.Y.S.2d 457, 468 (1998).

While the logic of this exception could arguably extend to non-attorneys, so far, all of the cases that discuss this exception have involved attorneys. See, e.g., Mohamed, 91 F.3d at 1127; Cox, 780 N.E.2d at 962; Excel Corp., 7 P.3d at 1126; Abrahami, 670 N.Y.S.2d at 468; Ehsani v. McCullough Family P’ship, 160 Wash.2d 586, 159 P.3d 407, 411 (2007) (en banc). This is not surprising considering that attorneys are far more likely than anyone else to condition their rights to payment upon the results of litigation. But we need not decide whether this exception applies beyond the context of attorneys’ contingency fees because, even assuming this exception could apply to non-attorneys, it would have no application in this case.

Woodbridge Baric’s right to Burrle’s repayment of the principal amount of its loan did not depend solely on the success of Burrle’s claims: Woodbridge Baric’s contracts with Burrle expressly required Burrle to indemnify and hold Woodbridge Baric harmless for the loss of the principal amount of the loan if his representations to Woodbridge Baric regarding his claims were not accurate and complete in all respects. Although Wood-bridge Baric assumed some of the risks associated with non-recovery in its contracts with Burrle, it specifically disclaimed the risk that Burrle had asserted fraudulent claims and withheld that information from it. Accordingly, Woodbridge Baric was entitled to Burrle’s full repayment of the principal under their contracts. Where, as here, a “bona fide creditor is entitled to payment regardless of the judgment’s validity, that creditor is not unjustly enriched by retention of the payment after the judgment’s reversal.” Cox, 780 N.E.2d at 962, In other words, because Burrle’s payment to Woodbridge Baric discharged an unconditional, bona fide obligation, Woodbridge Baric is not liable in restitution to the settlement program. See id.

Treating an attorney with a contingency fee agreement as standing in his or her client’s shoes is only warranted to the extent the attorney’s claim against the client rests solely upon the now-failed contingency. See Mohamed, 91 F.3d at 1127 (remanding for determination of the portion of proceeds retained by attorney that represented payment of a contingent fee); Abrahami, 670 N.Y.S.2d at 468 (holding that law firm was liable for restitution of contingency, fee but not of other, non-contingent fees following vacatur of judgment); ef. Ehsani, 159 P.3d at 411 (“[T]here is no unjust enrichment vis-a-vis the judgment debtor where a party receives only that to which he is entitled under the terms of a valid, preexisting agreement with the judgment creditor.”). Consider an attorney with a fee-for-service arrangement under which the client is to pay the attorney $1,000, regardless of the result of litigation. In this scenario, if an initially favorable judgment is subsequently overturned or nullified, the attorney would not be liable to repay the fee in restitution. See, e.g., Mohamed, 91 F.3d at 1126; see also Restatement § 67(l)(a). Now assume that the fee agreement also provides that in the event the attorney obtains a favorable result in litigation, the client must pay the attorney a total of $1,500. If the initially favorable judgment is subsequently invalidated, must the attorney forfeit not only the $500 that were contingent upon success in litigation but also the $1,000 he would have been entitled to regardless of the outcome? We see no basis in precedent or in equity for requiring such an odd result. Cf. Ehsani, 159 P.3d at 411; Abrahami, 670 N.Y.S.2d at 468; Cox, 780 N.E.2d at 958 n.12, 962 & n.19 (“[An] attorney is not hable in restitution to the judgment debtor upon reversal of the judgment unless the judgment debt- or ... proves either that the payment did not discharge an unconditional, bona fide obligation the client had to the attorney or that, although the payment did discharge such an obligation, other circumstances exist that make the attorney’s retention of the payment unjust,” such as “breach of some duty, a violation of trust, bad faith, or fraud”).

Because Woodbridge Baric’s claim for the repayment of the loan was not purely contingent upon the success of Burrle’s claims for compensation, the failure of this contingency did not extinguish Wood-bridge Baric’s claim and does not prevent Woodbridge Baric from asserting its valid interest in defense of its right to retain the funds as a bona fide payee. See Abrahami, 670 N.Y.S.2d at 468; see also Cox, 780 N.E.2d at 962. While the special master argues that Burrle did not purport to pay Woodbridge Baric under the warranty provisions of their agreements, Burrle nonetheless paid Woodbridge Baric in partial satisfaction of a valid debt. At bottom, Woodbridge Baric was simply not unjustly enriched by its good faith acceptance of the funds from Burrle in partial repayment of his debt. See Mohamed, 91 F.3d at 1126-27; see also Restatement §§ 18 cmt. g, 67(l)(a) & (c).

Ill

For these reasons, the judgment of the district court is REVERSED.

      . In an October 2001 opinion, the Office of the Attorney General of the State of Louisiana opined that pre-settlement funding contracts constitute a consumer loan as defined in the Louisiana Consumer Credit Law. La. Atty. Gen. Op. No. 2001-160, 2001 La. AG LEXIS 489. The special master does not dispute that Woodbridge Baric’s pre-settlement funding contracts with Burrle were consumer loan agreements.

      . The contracts purported to “assign[] an interest” in Burrle’s claims to Woodbridge Baric. However, as the special master points out, the Deepwater Horizon settlement agreement prohibits the assignment of rights or claims arising out of the Deepwater Horizon incident and declares any such assignment "void, invalid, and of no force and effect.”

      . Specifically, the pre-settlement funding contracts provided, in relevant part:
      5. Representations and Warranties: To induce “Woodbridge Baric” to pay "Me” [Burrle] the Advance and to take an assignment and or right of first distribution of my “Lawsuit/Claims,” “I” hereby make the following representations and warranties under penalty of perjury ... "I" understand that "Woodbridge Baric” is relying on the below representations and warranties to pay me the Advance. In the event any of my representations and warranties below are untrue, "I” agree to indemnify and hold harmless “WOODBRIDGE BARIC” against all losses, expenses [and] costs (including the Advanced Amount ...).
      As part of his representations and warranties under the contracts, Burrle guaranteed that any information he provided to Woodbridge Baric relating to his claim or to Woodbridge Baric's decision to provide him with funding was "accurate and complete in all respects.”

      . We need not decide whether an attorney would be able to assert bona fide payee status under similar circumstances, as that case is not before us. We note, however, that, unlike lenders, attorneys have both a legal and an ethical duty to reasonably investigate the facts prior to filing pleadings with the court. See, e.g., Callahan v. Schoppe, 864 F.2d 44, 46 (5th Cir. 1989) ("Rule 11 of the Federal Rules of Civil Procedure imposes a duty of reasonable investigation into the facts and the law prior to filing a document with a court.”); Mod. Rules Prof. Cond. § 3.1 ("A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous.”); In re Zohdy, 892 So.2d 1277 (La. 2005) (lawyer who sought to intervene in chemical products liability class action violated rules of professional conduct by failing to investigate whether his clients were exposed to chemical). Courts may wish to consider an attorney’s disregard for these duties in determining whether the attorney's acceptance of payment pursuant to his client’s fraudulent claim was in good faith. Cf. Excel Corp. v. Jimenez, 269 Kan. 291, 7 P.3d 1118, 1126 (2000) (an attorney’s status as an officer of the court "places him on a different legal footing,” and the court could not approve the retention of an attorney’s fees where the client was guilty of fraudulent conduct in procuring the judgment).

      . At oral argument, the special master argued for the first time that Burrle may be able to defend himself from Woodbridge Baric’s claim against him by asserting that the interest rate the parties had agreed upon was usurious under Louisiana law. This argument is forfeited. See Whitehead v. Food Max of Miss., Inc., 163 F.3d 265, 270 (5th Cir. 1998) ("Needless to say, we do not generally consider points raised for the first time at oral argument.”). In any case, as discussed above, Woodbridge Baric had loaned Burrle $24,000 but received only $20,000 in partial repayment of Burrle's debt. The special master has not established that a credit provider’s usurious interest rate relieves the consumer from the obligation to repay the principal under Louisiana state law. Cf. La. Rev. Stat. § 9:3552(A)(l)(a) (providing that a credit provider’s violation of the provisions of this chapter, including by charging an excessive interest rate, entitles the consumer to a refund of all loan finance charges but not a refund of the principal).