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Click here for the full text of this decision FACTS:The Hobbs family (collectively, the Hobbses) and Alcoa Inc. entered into a settlement agreement in connection with a previous permit application proceeding. First, Alcoa agreed to grant the Hobbses a permanent easement across its land to a county road, and further agreed to bulldoze and blade the easement, build a gate where the easement joined the county road and place a cattle guard at the gate. Second, Alcoa agreed to use its best efforts to acquire an adjacent tract of land from the City Public Services (CPS) of San Antonio within the year and, if it could obtain it, to convey that property to the Hobbses. The settlement agreement specifically provided, however, that the CPS tract was to be acquired “upon terms and conditions satisfactory to Alcoa in its sole and absolute discretion.” The settlement agreement also contained an integration clause, which stated: “This Agreement constitutes the entire agreement between Alcoa and the Hobbs [sic] and supersedes any prior understanding or oral or written agreements between Alcoa and the Hobbs [sic] respecting the subject matter of this agreement.” The magistrate judge granted summary judgment for Alcoa on the fraud claim and granted judgment for Alcoa on two breach of contract claims. The jury returned a verdict in the Hobbses’ favor on three breach of contract claims and awarded them $34,359. The magistrate judge awarded the Hobbses $37,000 in fees and $917.47 in costs. The magistrate judge awarded Alcoa $14,247.88 in taxation of costs under Federal Rule of Civil Procedure 68, because the Hobbses’ recovery was less than Alcoa’s earlier settlement offer of $80,000. HOLDING:Affirmed. On appeal, the Hobbses made four arguments. First, they challenged the magistrate judge’s grant of summary judgment for Alcoa on their fraud claim. The Hobbses argued that Alcoa misrepresented the likelihood of acquiring the CPS tract, thereby fraudulently inducing them to agree to the “sole and absolute discretion” language in the settlement agreement. The court rejected the argument and found that the settlement agreement’s integration clause barred any alleged misrepresentation claim. The integration clause, the court stated, prevented the Hobbses from establishing justifiable reliance, a required element of a fraudulent-inducement claim. Second, the Hobbses challenged the magistrate judge’s decision, post-verdict, to order Alcoa to provide a new easement agreement rather than order Alcoa to convey a permanent easement outright by way of specific performance. The court found that the Hobbses waived such a claim, because they failed to object to the substance of the jury instructions or the verdict form. Third, the Hobbses challenged the magistrate judge’s award of $14,247.88 in taxation of costs under Rule 68. They argued that the court improperly applied Rule 68, primarily because the court did not assign any value to the permanent easement. Rule 68, the court stated, provides that a defendant may present a plaintiff with an offer of judgment against the defendant “for the money or property or to the effect specified in the offer.” If the plaintiff rejects that offer and the judgment later obtained by the plaintiff is not more favorable than the offer, “the offeree must pay the costs incurred after the making of the offer.” There is no dispute, the court stated, that Alcoa made an offer of $80,000 to the Hobbses, which the Hobbses rejected, and the Hobbses later won a judgment of $34,359. The Hobbses disputed that the termination clause’s monetary value was de minimis. They argued that the value of the award of equitable relief � the rescission of the termination clause in the original easement � greatly enhanced the jury’s award, such that the combined award exceeded $80,000 in value. Under the facts and circumstances presented, however, the court found that the magistrate judge did not clearly err in finding that the valuation of the termination clause was de minimis. Therefore, the court affirmed the magistrate judge’s Rule 68 calculations. Finally, the Hobbses argued that the lower court abused its discretion in its award of attorneys’ fees. The magistrate judge granted the Hobbses attorneys’ fees of $37,000. They disputed the judge’s finding and requested more than $140,000 in attorneys’ fees. In diversity cases, the court stated, state law governs the award of attorneys’ fees. The magistrate judge’s determination is reasonable in light of the jury verdict of $34,359, in which the Hobbses were unsuccessful on four breach of contract claims and five noncontract claims. The court found that the magistrate judge reasonably concluded that the unsuccessful claims were not sufficiently intertwined with successful claims to merit an award of attorneys’ fees. OPINION:Per curiam; King, Garza and Benavides, JJ.

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