858 F.3d 927
5th Cir.2017Background
- Jones was beneficiary of four trusts funded from his grandmother’s estate; JPMorgan served as trustee until 2001, then Wells Fargo until trusts terminated on Dec. 31, 2010.
- JPMorgan/Wells Fargo litigated a suit (the “House Suit”) over a defective house the trustee bought for the House Trust; Wells Fargo nonsuited the House Suit in 2009 after concluding it would lose at trial.
- Jones sued JPMorgan and Wells Fargo in 2013 alleging multiple breaches of fiduciary duty and other claims; district court dismissed most claims and tried only the claim that nonsuiting the House Suit breached Wells Fargo’s fiduciary duty.
- At trial Jones’s counsel advanced an unpleaded theory (that Wells Fargo should have nonsuited earlier / that the original filing was frivolous); the jury awarded damages and exemplary damages based on that theory.
- On appeal the Fifth Circuit held Wells Fargo did not consent to trial of the unpleaded theory under Rule 15(b), vacated the jury judgment, rendered dismissal on the tried claims, and affirmed summary judgment dismissing Jones’s other, time-barred claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether nonsuiting the House Suit constituted a breach and supported damages | Nonsuit deprived Jones of potential recovery and wasted trust resources; alternatively, failing to nonsuit earlier was a breach | The trial evidence showed the suit had $0 value at nonsuit; the only successful theory at trial was unpleaded and prejudicial | Judgment vacated: damages based on unpleaded theory improper; dismissal rendered for tried claim |
| Whether judgment could be based on an unpleaded frivolous‑lawsuit theory (Rule 15(b) / consent) | Jones argued pleadings could be conformed to evidence and Wells Fargo had notice | Wells Fargo argued it had no notice or consent; court had told parties only nonsuit claim would go to jury | Held for Wells Fargo: no consent to post‑trial amendment; awarding damages on unpleaded issue improper |
| Timeliness of Jones’s other fiduciary claims (insurance proceeds, paying adversary fees, combining trusts, double‑billing) | Jones argued some injuries were inherently undiscoverable so discovery rule delayed accrual | Banks argued Jones received statements and knew facts well before limitations ran | Held: claims were time‑barred; summary judgment affirmed on cross‑appeal |
| Whether evidence supported exemplary damages / sufficiency of evidence generally | Jones claimed gross negligence/malice justified exemplary damages | Wells Fargo argued insufficient evidence and improper burden shifting; also lack of expert testimony and statute of limitations defenses | Court did not reach all sufficiency arguments because judgment was vacated for reliance on unpleaded theory; overall banks prevail |
Key Cases Cited
- SMI Owen Steel Co., Inc. v. Marsh USA, Inc., 520 F.3d 432 (5th Cir. 2008) (standard for reviewing JML and deference to jury verdict)
- Pineda v. United Parcel Serv., Inc., 360 F.3d 483 (5th Cir. 2004) (view evidence in light most favorable to verdict when testing sufficiency)
- Brady v. Houston Indep. Sch. Dist., 113 F.3d 1419 (5th Cir. 1997) (mere scintilla standard)
- Domar Ocean Transp., Ltd. v. Indep. Ref. Co., 783 F.2d 1185 (5th Cir. 1986) (Rule 15(b) post‑trial amendment requires defendant consent)
- Deere & Co. v. Johnson, 271 F.3d 613 (5th Cir. 2001) (trial of unpled issues by implied consent is disfavored and fact‑specific)
- Presidio Valley Farmers Ass’n v. Brock, 765 F.2d 1353 (5th Cir. 1985) (reversal where damages based on unpleaded, unconsented issue)
- Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) (accrual rule for causes of action)
- S.V. v. R.V., 933 S.W.2d 1 (Tex. 1996) (discussing discovery rule and inherently undiscoverable injuries)
- HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998) (public records are not inherently undiscoverable)