Appellate Judges

Attorneys Fees Award by Fifth Circuit as a Sanction “Definitely Unusual” Claims Texas Trial Lawyer Eric Wood

The opinion does not address all the real parties and the details of who was counsel when and who is liable for this very unusual sanction.


Judge Gregg Costa for the 3-panel issues ‘unusual’ and direct appellate court sanction against Automation Support, invoking “28 U.S. Code § 1927.  Counsel’s liability for excessive costs.” However, there is great debate on this code, let alone for an appellate circuit to issue this sanction directly.

To add more contention to this ‘sanction’, it appears from LIT’s review of the docket over the years that the counsel or as quoted “legal representative” for Automation Support comprised of a disbarred “former” Texas attorney by the name of Todd Phillippi.

In relation to this civil action at N.D. Tex., and this current appeal, an active Texas lawyer, in good standing with the Texas Bar by the name of Timothy Hardesty is counsel of record for Automation Support.

So who’s being sanctioned?

The players in this case are several. First you have the corporation, Automation Support. The ‘owners’, the corp. are Renee and Bill McElheney.

Then there’s Todd Phillippi who appears and claims to be the ‘legal representative’ for Automation after they lost the first time and the court then awarded $69k in legal fees (according to his supreme court petition (den.)).

This was appealed by Automation who were then billed an additional $34k after the 5th Circuit affimed the lower court award of attorney fees.

Then you have the current case, where there is counsel, Timothy Hardesty.

Is he and/or his law firm liable for the anticipated $20k in legal fees and santion for bringing this ‘frivolous and vexatious’ lawsuit?

Or is it the company, Automation Support? Are the director(s) e.g. the McElheney’s liable?

The opinion does not address all the ‘real parties’ and the details of who was ‘counsel’ when and who is liable for this very unusual sanction.

It’s important in a case like this where the 5th Circuit is directly sanctioning litigants and/or their companies and/or their counsel and/or legal representatives and the details are obscure. Especially when there is so much controversy about this type of sanction.

28 U.S. Code § 1927.  Counsel’s liability for excessive costs

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”

(June 25, 1948, ch. 646, 62 Stat. 957; Pub. L. 96–349, § 3, Sept. 12, 1980, 94 Stat. 1156.)

Despite common firm-wide involvement in a lawsuit, the most well-supported interpretation of § 1927 does not support law firm sanctions. Much of the court’s reasoning in Kaass Law undermines the argument from tradition by offering a close reading of the statute as well as incorporating significant updates in the sanctioning power more generally under the 1993 Amendment to Rule 11.

As law firms do not constitute “persons” for purposes of § 1927, they do not fall within the sanctioning power of the court under § 1927.

Given the alternative means for sanctioning law firms that do not require strained statutory interpretation, the federal circuits should definitively reject the possibility of § 1927 law firm sanctions.

That would also require appellate courts to overturn lower courts’ imposition of sanctions against law firms that do not explicitly acknowledge the appropriate basis for those sanctions, such as inherent powers or Rule 11.

Litigants may then rest easier with clear guidance on the types of sanctions they may request under the circumstances of a given case and which types of sanctions they themselves may face.

Kevin C. Kifer (2017)


“At the time plaintiffs filed their motion to dismiss the case was effectively terminated.The court had no power or discretion to deny plaintiffs’ right to dismiss or to attach any condition or burden to that right. That was the end of the case and the attempt to deny relief on the merits and dismiss with prejudice was void. Likewise, except for determining appealability, the subsequent orders granting attorneys fees were a nullity.” – Williams v. Ezell, 531 F.2d 1261, 1263-64 (5th Cir. 1976)

5th Circ. Says It ‘Meant What We Said’ About Bad-Faith Appeal

Dec. 8, 2020

The Fifth Circuit on Tuesday once again slapped down a “stubborn, bad-faith” effort from Automation Support to undo a ruling in a trade secrets case against a former employee, saying the company is refusing “to recognize what we held three years ago.”

U.S. Circuit Judge Gregg Costa blasted Automation — which does business as Technical Support — for its “rounds of frivolous filings” and for not accepting the court’s earlier ruling in favor of former employee Warren Humble and his company Humble Design LLC. The Fifth Circuit held that because of that refusal, Humble can now seek appellate attorney fees from the court.

“We meant what we said, and we said what we meant,” Judge Costa, invoking Dr. Seuss’ “Horton Hatches the Egg,” wrote for the court in a four-page opinion. “We once again affirm the judgment of the district court.”

The Fifth Circuit, in its third opinion issued in the dispute, wrote that the case started about six years ago as a trade secrets case but has “mutated into a protracted dispute over attorney’s fees — a dispute we already resolved.”

According to court documents, Technical Support sued Humble and his business, alleging breach of contract, breach of fiduciary duty, tortious interference with contract, misappropriation of trade secrets and violations of the Texas Theft Liability Act.

The parties agreed to try the case before a magistrate judge, and they eventually entered a joint stipulation of dismissal with prejudice in August 2016. Because it was dismissed with prejudice, and because there’s a mandatory loser-pays provision under the TTLA, the magistrate judge awarded fees to Humble as the prevailing party.

The Fifth Circuit explained Tuesday that Technical Support’s “new attack,” in which it claimed that the joint dismissal deprived the district court of its authority to later award attorney fees, “is wrong.”

“This latest effort to undo the fee award flies in the face of well-established law that a court can award attorney’s fees after a voluntary dismissal,” the court held.

In March, the Fifth Circuit declined to undo the magistrate judge’s award of attorney fees to Humble, ruling that it didn’t have authority to hear the appeal and that the deadline to bring the appeal had passed.

When the court initially weighed in on the dispute between Technical Support and Humble, it rejected an argument that the roughly $70,000 in fees were awarded improperly after the case was dismissed. In March, the panel doubled down on its May 2018 ruling, holding once again that the award would not be undone.

The panel explained that the appeal of the magistrate judge’s ruling was wrongly lodged with a chief district court judge, who correctly determined there was no authority to hear the appeal that should have been filed with the Fifth Circuit. By the time the appeal was lodged with the Fifth Circuit, it was “well beyond the 30-day deadline,” the panel wrote.

Technical Support appealed the ruling, and at issue in that first appeal before the Fifth Circuit was whether Humble should legally be considered a prevailing party. The appellate court held it should be and sent the case back to the magistrate judge to award additional fees incurred in the appeal.

The court awarded Humble about $34,000 in additional fees, according to court documents.

Eric C. Wood of Brown Fox PLLC, who represents Humble, told Law360 on Tuesday it’s “definitely unusual” that the Fifth Circuit is allowing him to seek attorney fees from Technical Support. He estimated the fees his client has incurred total around $20,000.

“My client is pleased, and we’re hoping that this time the other side will actually take the Fifth Circuit’s warning and stop all the filings,” he said. “And hopefully my client will be able to recoup all, if not some, of his attorney’s fees from the past five years.”

Counsel for Technical Support did not return a message seeking comment Tuesday.

U.S. Circuit Judges Jacques L. Wiener Jr., Gregg Costa and Don Willett sat on the panel for the Fifth Circuit.

Technical Support is represented by Timothy J. Hardesty of Hardesty Law Office.

Humble Design and Warren Humble are represented by Eric C. Wood of Brown Fox PLLC and Richard James Wallace III of Scheef & Stone LLP.

The case is Automation Support Inc. dba Technical Support v. Humble Design LLC and Warren David Humble, case number 20-10386, in the U.S. Court of Appeals for the Fifth Circuit.

United States Court of Appeals

for the Fifth Circuit

No. 20-10386

United States Court of Appeals Fifth Circuit


December 8, 2020

Lyle W. Cayce Clerk

Automation Support, Incorporated, doing business as Technical Support,


Todd Phillippi,



Humble Design, L.L.C.; Warren David Humble,


Appeal from the United States District Court for the Northern District of Texas

USDC No. 3:14-CV-04455


Judge Gregg Jeffrey Costa

was born June 19, 1972 (Gemini)

Age: 48


Judge Don Ray Willett

was born July 16, 1966 (Cancer)

Age: 54


Judge Jacques Loeb Wiener Jr

was born  2 Oct., 1934 (Libra)

Age: 85

Automation Support, Inc. and Soyokaze, Inc. sued their former employees Becky Wallace and Warren Humble, as well as Humble’s new business, Humble Design, L.L.C. ” Automation Support, Inc. v. Humble Design, L.L.C., No. 19-10769, at *1 (5th Cir. Mar. 3, 2020)
“Todd Phillippi, an attorney [disbarred since 2011], and Billy and Renee McElheney, the plaintiff corporations’ owners, then filed a Rule 60 motion for relief from the judgment.” Automation Support, Inc. v. Humble Design, L.L.C., No. 19-10769, at *2 (5th Cir. Mar. 3, 2020)

Before Wiener, Costa, and Willett, Circuit Judges. Gregg Costa, Circuit Judge:

This case began almost six years ago when Automation Support, Inc., sued former employees and one employee’s new company, Humble Design, L.L.C., under the Texas Theft Liability Act (TTLA). But what started as a case about theft of trade secrets has mutated into a protracted dispute over attorney’s fees—a dispute we already resolved.

After a year and a half of litigation in the district court, the parties agreed to voluntarily dismiss all claims with prejudice. In the joint stipulation, defendants Humble Design and Warren Humble reserved the right to seek attorney’s fees under the TTLA, which is a “loser pays” law. See Tex. Civ. Prac. & Rem. Code Ann. § 134.005(b). The magistrate judge later awarded those fees.

Multiple rounds of appeals and motions to vacate the judgment ensued. In 2018, we affirmed the magistrate judge’s decision and remanded for the district court to award appellate attorney’s fees. Automation Support, Inc. v. Humble Design, L.L.C., 734 F. App’x 211, 216 (5th Cir. 2018).

When Automation Support and associated individuals1 tried, belatedly, to appeal again, we dismissed for lack of jurisdiction. Automation Support, Inc. v. Humble Design, L.L.C., 796 F. App’x 223, 224 (5th Cir. 2020).

Automation Support is appealing once more. The current appeal concerns its most recent motion for relief from judgment under Rule 60(b), in which it again argued that the magistrate judge did not have jurisdiction to award attorney’s fees.

The magistrate judge denied the motion in March 2020, and this appeal is timely only as to the order denying that Rule 60 motion. Automation Support cannot appeal the underlying judgment that issued years ago.

To the extent Automation Support argues that the defendants were not prevailing parties, we have already rejected that argument. See Automation Support, 734 F. App’x at 215–16.

1 The plaintiffs in this case also include Automation Support’s owners, Renee and Bill McElheney, and former attorney Todd Phillippi, all of whom purport to act on behalf of the company. We refer to the plaintiffs collectively as “Automation Support.”

2012 Gene Rodgers Community Service Award

Garcia presented the 2012 Gene Rodgers Community Service Award in Danny Rodgers place, as he was unable to attend the awards celebration. This year’s recipient was McElheney of Soyokaze, Technical Support and MidTex Machine Services. Garcia noted that not only is McElheney an outstanding businesswoman, who owns and successfully runs three businesses, she is also a steadfast volunteer assisting in chamber and community events. The Gene Rodgers Community Service Awards recognizes those who share Gene Rodgers’ exceptional dedication to the Midlothian community through service above and beyond the norm.

2013 Chairman of the Board

Marley also recognized McElheney as the 2013 Chairman of the Board. McElheney will take leadership of the Chairman of the Chamber Board of Directors for this year.

Renee McElheney

CEO/ Technical Support

Midlothian, Texas


Daily Manager, Midlothian Civic Center
Jan 2013 – Present (8 years)

Midlothian, Texas

COMMUNITY: The Midlothian Civic Center may not bring up much on a Google search, but it has been a community staple since its inception in 1958. It was built for the community and by the community, using recycled bricks from an old school building down the street that was being torn down.

The Civic Center Board purchased the bricks for a single dollar from the city and then went to work reclaiming them. Every evening, families would gather to sift through the usable bricks, cleaning them and setting them aside to build something magnificent from the rubble.

Through the years, endless throngs of people have made their way through the old doors of the Civic Center, coming together with loved ones for reunions, weddings, receptions, anniversaries, retirement parties, birthday parties and baby showers. It was home to many proms and 8th grade graduation dances. It served as the meeting place for the Midlothian Home Economics Club from the 1950’s through the 1980’s.

Currently, along with the community rentals, the Girl Scouts, the Rotary Club, the Chris Kyle Post 388 of the American Legion, and the Lion’s Club are just a few of the organizations that utilize the Civic Center on a weekly and monthly basis. This building has seen nearly every face of our tiny town as it has evolved and has been a memory for them all.

As of 2014, it has been remodeled and given new life to serve our community for years to come.

President, Soyokaze
Apr 2010 – Present
(10 years 9 months)

Midlothian, Texas

Massage Studio:
The inspiration for Soyokaze grew from our love of massage and its ability, once turned over to the hands of a truly gifted therapist, to provide an “escape” from the day to day world.
Our desire is to provide you with the best relaxation experience possible. We invite you to experience the difference, enjoy the moment, relax and breathe deep….

CEO, Automation Support, Inc. / DBA-Technical Support
Jan 1997 – Present (24 years)

Midlothian Texas

Industrial Automation / Integration / Consulting:
Technical Support is an industrial automation company that is made up of highly motivated individuals working together to form an extremely efficient team. With the vast experience of our staff and abundance of resources, we can provide you with quality and service that is second to none.

We minimize project start-ups and production down time and also ensure that you have 24 hour access to our project coordinators. For over a decade our exceptional service and system installations have set up apart in the industry.

We all agree that industrial automation is driven by complex issues. We believe that ingenuity and creativity, mixed with experience and hard work, can help you reach simple solutions that result in big benefits… benefits like increased productivity and greater profitability.

Under the law of the case doctrine, “ordinarily an issue of fact or law decided on appeal may not be reexamined either by the district court on remand or by the appellate court on subsequent appeal.”

United States v. Lee, 358 F.3d 315, 320 (5th Cir. 2004) (citation and quotation marks omitted); see Musacchio v. United States, 136 S. Ct. 709, 716 (2016). We held in 2018 that the defendants were entitled to attorney’s fees. Automation Support, 734 F. App’x at 216.

Our ruling was final then and remains so today.

Automation Support’s new attack—that the Rule 41 joint dismissal deprived the district court of jurisdiction to later award fees—is wrong.

This latest effort to undo the fee award flies in the face of well-established law that a court can award attorney’s fees after a voluntary dismissal.

See, e.g., Zimmerman v. City of Austin, 969 F.3d 564, 568–69 (5th Cir. 2020) (“Ancillary enforcement jurisdiction extends to fees.”);

Qureshi v. United States, 600 F.3d 523, 525 (5th Cir. 2010) (explaining that a court retains authority to award attorney’s fees after a Rule 41 dismissal);

See also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990) (noting it is “well established that a federal court may consider collateral issues after an action is no longer pending” and listing attorney’s fees as an example).2

District courts routinely award fees after an entry of final judgment. Cooter, 496 U.S. at 395 (recognizing that “even ‘years after the entry of a judgment on the merits,’ a federal court could consider an award of counsel fees” (quoting White v. N.H. Dept of Emp. Sec., 455 U.S. 445, 451 n.13 (1982))).

2 An old Fifth Circuit decision holds that a district court lacks jurisdiction to enter a fee award once the plaintiff files a self-executing dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A)(i). See Williams v. Ezell, 531 F.2d 1261, 1264 (5th Cir. 1976).

Although the Supreme Court rejected that view in Cooter, 496 U.S. at 395, Williams continues to cause confusion about a district court’s ability to consider fee motions after a Rule 41 dismissal.

See, e.g., Lightsource Analytics, LLC v. Great Stuff, Inc., 2014 WL 4744789 (W.D. Tex. Sept. 23, 2014).

Today we make explicit what our cases like Qureshi have long recognized: the Supreme Court overruled Williams v. Ezell to the extent it states that a Rule 41 dismissal deprives a court of jurisdiction to rule on a fee request or other ancillary matter.

See Qureshi, 600 F.3d at 525;

See also Dunster Live, LLC v. LoneStar Logos Mgmt. Co., 908 F.3d 948, 951 (5th Cir. 2018) (reviewing order, entered after Rule 41 dismissal, that denied fee request and affirming because a dismissal without prejudice does not produce a prevailing party).

Instead of accepting our earlier ruling, Automation Support has inundated the district court and our court with rounds of frivolous filings attempting to secure a different outcome.

Because of Automation Support’s stubborn, bad-faith refusal to recognize what we held three years ago, defendants may file a motion with this court for appellate attorney’s fees under 28 U.S.C. § 1927.

* * *

“We meant what we said, and we said what we meant.”  See DR. Seuss, Horton Hatches the Egg (1940).

We once again AFFIRM the judgment of the district court.

“The defendants then sought attorney’s fees under the Texas Theft Liability Act and the Texas Uniform Trade Secrets Act, both of which entitle a prevailing defendant to fees and costs. TEX. CIV. PRAC. & REM. CODE §§ 134.005(b), 134A.005(1). The magistrate judge granted the motion and ordered the plaintiffs to pay $69,204.12.”

“Automation Support appealed that ruling as well as the denial of requests to vacate the judgment under Federal Rule of Civil Procedure 60. We affirmed and remanded for an award of appellate attorneys’ fees. Automation Support, Inc. v. Humble Design, LLC, 734 F. App’x 211, 216 (5th Cir. 2018). The magistrate judge entered an additional fee award of $33,997.58.”


Automation Support, Inc. v. Humble Design, L.L.C., No. 19-10769, at *2 (5th Cir. Mar. 3, 2020)

Attorney, wife plead guilty to welfare fraud

Originally Published: May 11, 2011 | LIT Republished: Dec. 8, 2020

Midlothian-based attorney Todd Rowland Phillippi, 50, and his wife, Melissa, 40, pleaded guilty Monday in 40th District Court to felony charges of welfare fraud.

Phillippi, whose law license was suspended April 11 under an interlocutory order of suspension issued by the Board of Disciplinary Appeals, pleaded guilty to two counts of tampering with a governmental record.

With the guilty plea, Phillippi judicially confessed to defrauding the state of Texas by falsifying documents submitted to the Department of Health and Human Services, prosecutors said.

As part of the plea agreement, Phillippi was sentenced by visiting Judge Joe Clayton to 180 days in a state jail facility. He is credited with 14 days served.

Phillippi’s wife, Melissa Rios, who also is known as Melissa Phillippi, pleaded guilty to eight counts of tampering with a governmental record.

Four counts stem from her fraudulent welfare applications with the state of Texas and four counts stem from fraudulent student loan applications submitted to the U.S. Department of Education, prosecutors said.

In pleading guilty, she judicially confessed to committing all charged offenses; adjudication of guilt was deferred and she was placed on community supervision for five years.

“There was overwhelming evidence of an elaborate scheme by Todd and Melissa Phillippi to defraud governmental entities,” Ellis County and District Attorney Patrick Wilson said. “The agreement reached allows the state to return stolen money where it belongs – to the taxpayers. Justice has been served.”

Court documents

In preparation for the cases if they had gone to trial, prosecutors had filed volumes of documents with the court’s file, including paperwork and investigative evidence received from the Texas Department of Health and Human Services, the Texas Department of State Health Services Vital Statistics, the state of Nevada, the Ellis County District Clerk’s Office, Ellis Appraisal District, Facebook, Navarro College, U.S. Department of Education, Texas Department of Public Safety, Ellis County Tax Assessor, U.S. Bankruptcy Court of the Northern District, Rusk County District Clerk’s Office, Methodist Mansfield Medical Center, Texas Workforce Commission, Citi Mortgage Inc., Mansfield Cosmetic Surgery Center, the Office of the Secretary of State of Texas, various bank records and utility service records.

The documents indicate the Phillippis married June 26, 2008, in Las Vegas, Nev., marrying a second time in Waxahachie two years later. The documents also indicate Melissa Rios was on food stamps when she married Todd Phillippi, receiving $643 in benefits in June 2008 alone. The monthly food stamp payments continued through September 2010, when $761 was paid out, according to the documents.

During the time frame the food stamp payments were being received, the records also indicate income for both Todd Phillippi and Rios.

During the time frame of October 2007-July 2010, Todd Phillippi wrote Rios checks totaling about $38,000, according to the records, which indicate some of the remittances were paid out of his Interest on Lawyer’s Trust Accounts. In June 2010, from one bank account alone, checks were written to Melissa Rios totaling more than $5,500, according to the bank statements, which also indicate checks written for expenses.

During the time frame of September 2007 through May 2010, the records also indicate Phillippi had income of more than $96,000 through his court-appointed attorney work in Ellis County, with the documents and bank statements indicating receipt of additional income into his law practice as well.

Second felony conviction

This is the second felony conviction for Todd Phillippi, who was previously found guilty in January by an Ellis County jury on a charge of fraudulent use of identifying information.

As part of the plea agreement on the tampering charge addressed Monday, Phillippi withdrew his pending appeal of the January conviction and accepted a sentence of 180 days in a state jail facility on the fraudulent use charge. The two sentences will run concurrently, with Phillippi waiving his right to all appeals in both cases.

The couple must pay restitution, with prosecutors saying the cases totaled about $40,000 in fraud.

As part of their plea agreements, the couple has already paid one-half of the amount, with Melissa Phillippi to pay the remainder as a condition of her community supervision.

The monies will be forwarded to the Texas Department of Health and Human Services, the Texas Workforce Commission and the U.S. Department of Education.

Misdemeanor revocation

Phillippi has been in custody since March 16 at Wayne McCollum Detention Center for a revocation of his probation on a non-related misdemeanor conviction for driving while intoxicated. That matter saw him sentenced to 180 days in the county jail for violating the terms of his community supervision.

It was unclear as of press time when he might be transferred to a state jail facility to serve the sentences assessed during Monday’s hearing.

Attorneys Fees Award by Fifth Circuit as a Sanction “Definitely Unusual” Claims Texas Trial Lawyer Eric Wood
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