FILED June 14, 2021 No. 20-20319 Lyle W. Cayce Clerk L.A. Public Insurance Adjusters, Incorporated,

Plaintiff—Appellee,

versus Timothy John Nelson,

Defendant—Appellant.

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:18-CV-950

Before Owen, Jolly, and Dennis, Circuit Judges. James L. Dennis, Circuit Judge: Timothy John Nelson worked for L.A. Public Insurance Adjusters, Inc. (“LAPIA”) as a public insurance adjuster. After their business relationship soured as a result of a dispute over the amount of commissions Nelson was owed, LAPIA terminated Nelson’s employment and filed suit against him in state court. Nelson counterclaimed, seeking to recover the unpaid commissions, and then removed the case to federal court. For nearly two years, LAPIA failed to file an answer to Nelson’s counterclaims, only finally seeking leave to file the document after the parties No. 20-20319

had fully briefed cross summary judgment motions. The district court accepted LAPIA’s answer without explanation, then granted the company summary judgment based on a new defense theory that had been raised for the first time in LAPIA’s belated answer. Because LAPIA failed to demonstrate that its failure to initially file an answer was the product of “excusable neglect,” as is required to obtain an extension of time once a filing period has elapsed under the Federal Rules of Civil Procedure, we REVERSE the district court’s grant of summary judgment to LAPIA and its denial of Nelson’s motion for partial summary judgment and REMAND this case for further proceedings. I. Facts and Procedural History LAPIA entered into a contract with Nelson to employ him as a public insurance adjuster, a professional who handles claims made with insurance companies on behalf of policy holders. Nelson began working for LAPIA on November 18, 2017, but after a dispute arose over the amount of the commissions Nelson was due, the company terminated his employment only 79 days later on February 5, 2018. LAPIA then filed suit against Nelson in Texas state court, seeking damages for disparaging comments Nelson allegedly made about the company while soliciting his former clients, as well as an injunction enforcing a non-compete clause in Nelson’s employment contract. On March 26, 2018, Nelson filed an answer in the state court and asserted counterclaims against LAPIA and LAPIA’s owner Eric Ramirez for the unpaid commissions Nelson was allegedly owed.1 The same day, Nelson removed the suit to the

1 Nelson later voluntarily dismissed his counterclaim against Ramierz, LAPIA voluntarily dismissed its claims against Nelson, and only Nelson’s counterclaim against LAPIA is at issue in this appeal.

2 No. 20-20319

United States District Court for the Southern District of Texas based on the federal court’s diversity jurisdiction. LAPIA did not file an answer to Nelson’s counterclaim within the time specified by Federal Rule of Civil Procedure 81(c)(2),2 a fact that the district court orally noted during a February 9, 2019 hearing at which Ramirez was present when the court stated that Nelson could move for a default judgment based on LAPIA’s failure to answer. Without first attempting to file a belated answer, LAPIA moved for partial summary judgment on Nelson’s counterclai