Jones v. Wells Fargo Bank, N.A., 858 F.3d 927 (5th Cir. 2017).


Fiduciary Duty


Beneficiary sued Trustee for breach of fiduciary duty in state court and Trustee removed the case to federal court. The district court dismissed all of Beneficiary’s claims except for one which arose out of the trustee’s nonsuiting a case against an inspector for not competently performing a pre-purchase inspection of a house which the trust was purchasing for Beneficiary. The jury found that a breach occurred but determined that the lawsuit had no value. However, the jury awarded damages on a theory not pleaded, that is, that the trustee should have nonsuited the case sooner once it became clear that the trustee would not prevail against the inspector. The jury then awarded damages and the trustees appealed.


The court reversed finding in favor of the trustees. The court explained that because Beneficiary did not plead the claim and Trustee never consented to try the unpleaded claim, it was improper for the court to award damages on the theory that Trustee breached for not non-suiting the case earlier. The court also affirmed the district court’s rejection of Beneficiary’s other claims because they were barred by the Texas statute of limitations on breach of fiduciary duty claims.


Moral:   A beneficiary should ascertain the theories behind a claim for breach of duty and plead them in a timely manner.