Case: 20-50543 Document: 00515812625 Page: 1 Date Filed: 04/07/2021 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED No. 20-50543 April 7, 2021 Lyle W. Cayce Clerk Luis Tejero, Plaintiff—Appellant, versus Portfolio Recovery Associates, L.L.C.; Western Surety Company, Defendants—Appellees. Appeal from the United States District Court for the Western District of Texas USDC No. 1:16-CV-767 Before Higginbotham, Costa, and Oldham, Circuit Judges. Andrew S. Oldham, Circuit Judge: The question presented is whether a private settlement constitutes a “successful action to enforce . . . liability” under the fee-shifting provision of the Fair Debt Collection Practices Act (“FDCPA”). It does not. We therefore affirm the district court’s denial of attorney’s fees. I. We recounted the facts in detail in our previous decision in this case. See Tejero v. Portfolio Recovery Assocs., L.L.C., 955 F.3d 453, 456–57 (5th Cir. Case: 20-50543 Document: 00515812625 Page: 2 Date Filed: 04/07/2021 No. 20-50543 2020) (“Tejero I”). Here we restate only those facts that are relevant to this appeal. Luis Tejero sued Portfolio Recovery Associates under the FDCPA and parallel provisions of Texas state law for unlawful debt-collection practices. On cross-motions for summary judgment, the district court identified triable issues of fact and set the case for trial. Ibid. Before trial, the parties reached a settlement. Id. at 457. In the settlement, Portfolio Recovery disclaimed any liability—but it nonetheless agreed to pay Tejero $1,000 in damages and to forgive his underlying debt of approximately $2,100. Ibid. When the parties notified the district court of the settlement, however, the district court reported Tejero’s lawyers to the disciplinary committee of the Western District of Texas, sanctioned them, and ordered thousands of dollars in costs and fees against Tejero. Ibid. The district court premised this extraordinary discipline on its conclusion that Tejero brought the case in bad faith—notwithstanding the fact that his claims were apparently meritorious enough to warrant a trial. Ibid. We reversed for abuse of discretion. Id. at 458–61. We then remanded so the district court could determine in the first instance whether Tejero’s favorable settlement entitled him to attorney’s fees under the FDCPA. Id. at 462–63. The district court said no. Tejero again timely appealed. II. The only question presented here is whether the district court committed reversible error in refusing Tejero’s fee application under the FDCPA. We review the district court’s denial of “attorney[’s] fees for abuse of discretion, reviewing factual findings for clear error and legal conclusions de novo.” LifeCare Mgmt. Servs. L.L.C. v. Ins. Mgmt. Adm’rs Inc., 703 F.3d 835, 846 (5th Cir. 2013). 2 Case: 20-50543 Document: 00515812625 Page: 3 Date Filed: 04/07/2021 No. 20-50543 A. As a general matter in the United States,“[e]ach litigant pays his own attorney’s fees, win or lose.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 253 (2010). This background principle, known as the “American Rule,” can be altered or amended by statute or contract. Ibid. In creating exceptions to the American Rule, Congress employs varying statutory …
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