IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 98-10212
Summary Calendar
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COLONIAL PENN INSURANCE,
Plaintiff-Appellee,
versus
MARKET PLANNERS INSURANCE AGENCY INC.; JIMMY WHITED,
Defendants-Appellants.
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Appeal from the United States District Court
for the Northern District of Texas, Dallas Division
_________________________________________________________________
October 28, 1998
Before EMILIO M. GARZA, DEMOSS and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
Defendants Market Planners Insurance Agency Inc. (“Market
Planners”) and Jimmy Whited appeal from a judgment against them for
approximately $150,000 in unremitted insurance premiums plus
interest. We affirm.
I
This Circuit has seen this case before, and our prior
opinion sets forth the relevant facts. See Colonial Penn Ins. Co.
v. Market Planners Inc., 1 F.3d 374 (5th Cir. 1993). In September
1992, following a two-day bench trial, the Northern District of
Texas, the Honorable Joe Fish presiding, entered judgment for the
plaintiff, Colonial Penn Insurance Co. (“Colonial Penn”), on its
claim that Market Planners and Jimmy Whited, Market Planners’
president, failed to remit premiums collected on the sale of
Colonial Penn insurance policies. The district court held that
the statute of limitations did not bar Colonial Penn’s suit
because Market Planners fraudulently concealed facts material to
the cause of action. Defendants appealed to this Court, arguing
inter alia that Colonial Penn pleaded neither the “discovery
rule” nor fraudulent concealment, giving the district court no
basis for its ruling on the statute of limitations, and that the
district court ignored evidence that Colonial Penn knew or should
have known of its cause of action in 1986. This Court found that
Colonial Penn met its pleading burden in countering the
defendants’ affirmative statute of limitations defense, see id.
at 376, but that the district court made inconsistent statements
concerning, and possibly misinterpreted, Texas law. We therefore
remanded to the district court for a determination “whether and
when Colonial Penn learned ‘of facts, conditions, or
circumstances which would cause a reasonably prudent person to
make inquiry, which, if pursued, would lead to discovery of the
concealed cause of action.’” Id. at 378 (citation omitted).
On remand, the district court stated that “the question
presented . . . is whether Colonial first knew, or in the
exercise of reasonable diligence should have known, of facts
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giving rise to a cause of action against Market Planners outside
of the prescriptive period. The court finds that Colonial did
not.” Colonial Penn Ins. Co. v. Market Planners Ins. Agency Inc.,
1998 WL 51359, *1 (N.D. Tex. Jan. 23, 1998). Accordingly, the
district court entered judgment for Colonial Penn. Defendants now
appeal that judgment, contending (1) that the district court
again has misinterpreted the statute of limitations and (2) that
the district court’s findings of fact and conclusions of law do
not support a judgment against defendant Jimmy Whited
individually.
II
Defendants argue that the district court on remand again has
made erroneous factual findings and misinterpreted Texas law as
to when the statute of limitations began to run. This issue
requires us to examine two statute of limitations doctrines under
Texas law: the discovery rule and fraudulent concealment.
The discovery rule provides a “very limited exception” to
statutes of limitations. Computer Assocs. Int’l, Inc. v. Altai,
Inc., 918 S.W.2d 453, 455 (Tex. 1994). The rule postpones the
running of the statutory limitation period until such time as the
claimant discovers, or in exercising reasonable diligence should
have discovered, facts that indicate he has been injured. See,
e.g., Willis v. Maverick, 760 S.W.2d 642, 643, 644 (Tex. 1988);
Seibert v. General Motors Corp., 853 S.W.2d 773, 776 (Tex.
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App.—Houston [14th Dist.] 1993, no writ). The discovery rule
applies only in cases where the claimant’s injury was “inherently
undiscoverable,” i.e., where the plaintiff did not and could not
know of the injury. Seibert, 853 S.W.2d at 776; see also Velsicol
Chemical Corp. v. Winograd, 956 S.W.2d 529, 531 (Tex. 1997). The
rule delays the statute of limitations only until the claimant
knows or should know the facts that could support a cause of
action, not until she realizes that the facts do support a cause
of action: “It does not operate to toll the running of the
limitation period until such time as plaintiff discovers all of
the elements of a cause of action. Once [a claimant learns] that
she [has] been injured, the burden [is] on her to determine
whether she should file suit.” Coody v. A.H. Robins Co., 696
S.W.2d 154, 156 (Tex. App.—San Antonio 1985, writ dism’d by
agr.); see also Tennimon v. Bell Helicopter Textron, Inc., 823
F.2d 68, 72 (5th Cir. 1987) (per curiam) (citing Coody); Seibert,
853 S.W.2d at 777 (“Texas law makes it clear that it is the
discovery of the injury, and not the discovery of the cause of
action, which starts the running of the clock . . . .”).
A fiduciary relationship between parties sometimes makes the
discovery rule applicable where it otherwise would not be. “[I]n
the fiduciary context, it may be said that the nature of the
injury is presumed to be inherently undiscoverable, although a
person owed a fiduciary duty has some responsibility to ascertain
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when an injury occurs.” Computer Assocs., 918 S.W.2d at 456
(citing Courseview, Inc. v. Phillips Petroleum Co., 312 S.W.2d
197, 205 (Tex. 1957)). Therefore, even if Colonial Penn in a
nonfiduciary, common business context perhaps should have known
at an earlier date that it was injured, the fiduciary duty owed
it by Market Planners might nonetheless make the discovery rule
applicable.
In tandem with the discovery rule under Texas law is the
doctrine of fraudulent concealment.1 Fraudulent concealment tolls
the statute of limitations until the claimant discovers or with
reasonable diligence should have discovered the fraud. See, e.g.,
L.C.L. Theatres, Inc. v. Columbia Pictures Indus., Inc., 566 F.2d
494, 496 (5th Cir. 1978); Computer Assocs., 918 S.W.2d at 455;
Ruebeck v. Hunt, 176 S.W.2d 738, 739 (Tex. 1943). Texas law
engenders some confusion as to exactly what discovery starts the
statute running in fraudulent concealment cases. The leading
case, Borderlon v. Peck, 661 S.W.2d 907 (Tex. 1983), offers two
possibilities. First, the statute may begin to run when the
claimant actually deduces that he has a cause of action: “Where a
defendant is under a duty to make disclosure but fraudulently
conceals the existence of a cause of action from the party to
1. The Texas Supreme Court has said that the discovery rule
also applies in cases of fraudulent concealment. See Murphy v.
Campbell, 964 S.W.2d 265, 270 (Tex. 1997). It makes no matter
that we handle the two rules separately for clarity’s sake; the
result in this case is the same.
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whom it belongs, the defendant is estopped from relying on the
defense of limitations until the party learns of the right of
action or should have learned thereof through the exercise of
reasonable diligence.” Id. at 908; see also, e.g., Nichols v.
Smith, 507 S.W.2d 518, 519 (Tex. 1974); Seibert, 853 S.W.2d at
776. Second, the statute may begin to run as soon as the claimant
knows the facts that, upon further examination, would prove to
underlie a cause of action: “The estoppel effect of fraudulent
concealment ends when a party learns of facts, conditions, or
circumstances which would cause a reasonably prudent person to
make inquiry, which, if pursued, would lead to discovery of the
concealed cause of action. Knowledge of such facts is in law
equivalent to knowledge of the cause of action.” Borderlon, 661
S.W.2d at 909. This latter position finds support in older Texas
Supreme Court cases, which emphasize a claimant’s duty to
exercise reasonable diligence to discover a cause of action, see
Ruebeck, 176 S.W.2d at 740; Glenn v. Steele, 61 S.W.2d 810, 810
(Tex. 1933) (per curiam), and it mirrors the rule applicable in
discovery cases. As such, and given Borderlon’s clear statement
that knowing facts equals knowing a cause of action, it appears
that, in fraudulent concealment cases, Texas law starts the
statute of limitations running as soon as the claimant knows the
facts that could support a cause of action.
The district court in its ruling on remand harmonized the
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discovery rule, including its fiduciary relationship component,
and the doctrine of fraudulent concealment. The court wrote:
[T]he court rejects Market Planners’ argument that
Colonial, through the exercise of reasonable diligence,
should have known of the facts giving rise to its cause
of action prior to their actual discovery. As stated in
the initial findings, the court grounds this ruling in
the special agency relationship which existed between
Colonial and Market Planners. This relationship of
trust made it objectively reasonable for Colonial to
rely on Market Planners’ representations until Colonial
discovered evidence contrary to those representations.
Colonial, by conducting the [internal] audit, exercised
due diligence in discovering evidence of Market
Planners’ wrongdoing.
Colonial Penn Ins. Co. v. Market Planners Ins. Agency, Inc., 1998
WL 51359, *2 (N.D. Tex. Jan. 23, 1998). The district court thus
found that Market Planners’ fiduciary relationship with Colonial
Penn made the unremitted premiums inherently undiscoverable. Only
when Colonial Penn’s problems with American Owners and Operators
(“AOO”), its middleman, led it in due diligence to conduct an
internal audit did it discover that Market Planners owed almost
$150,000 in previously concealed premiums. Even under a strict
reading of Texas law--one that starts the statute of limitations
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tolling as soon as the claimant discovers facts that could lead
to a cause of action--the district court correctly applied the
law to its findings.
Though we have found that the district court properly
applied the law to its findings, one question remains as to this
point of error: whether the evidence could support the district
court’s factual finding that Colonial Penn had no reason to know
before November 1989 of the unremitted premiums. The evidence
showed that Colonial Penn retrieved most policy files from AOO in
1986. Colonial Penn’s general counsel, Christine Bancherie,
testified that only during the discovery process in Colonial
Penn’s suit against AOO, filed in March 1987, did Colonial Penn
receive the last information it needed in order to reconstruct
premiums. Colonial Penn hired an independent agency, Control Risk
Services, to work on the files; owing to the files’ disheveled
state, Bancherie testified, CRS continued adjusting figures until
May or June 1989. Colonial Penn further alleged that Market
Planners refused to account for premiums it had collected.
Finally, Colonial Penn’s agency financial audit manager testified
that Colonial Penn had “the complete facts, the reconstructed
policy premium from CRS and the receipt document” only just
before it sent the November 1989 demand letter. From this
evidence, it was not clear error for the district court to
conclude that Colonial Penn neither knew nor should have known of
the unremitted premiums before its November 1989 letter to Market
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Planners.
Accordingly, we affirm the district court’s ruling that the
statute of limitations did not bar Colonial Penn’s action.
III
As a second point of error, defendant Jimmy Whited contends
that no evidence presented at trial could support a judgment
against him individually. Whited apparently raises two separate
contentions. First, he argues that none of the district court’s
findings of fact could support a judgment against him
individually. Second, he argues that to the extent any finding
could support a judgment, that finding is clearly erroneous.2
Appellee Colonial Penn argues that, because Whited raises
the issue for the first time on appeal, this Court may review
only for “plain error,” if at all, whether the evidence sufficed
to support a judgment against Whited. We see no reason why
Whited, following a bench trial,3 cannot argue now for the first
2. Federal Rule of Civil Procedure 52(b) allows an appeal
of the district court’s factual findings:
When findings of fact are made in actions tried without
a jury, the sufficiency of the evidence supporting the
findings may later be questioned whether or not in the
district court the party raising the question objected
to the findings, moved to amend them, or moved for
partial findings.
3. In a jury trial, of course, a party must make (and renew
at the trial’s conclusion) a Rule 50(a) motion for judgment as a
matter of law in order to preserve sufficiency of the evidence
for appellate review. See, e.g., Polanco v. City of Austin, 78
F.3d 968, 974 (5th Cir. 1996); MacArthur v. University of Texas
Health Ctr., 45 F.3d 890, 896 (5th Cir. 1995). But nothing
indicates that a similar rule applies to an appeal of the
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time that the court’s findings were clearly erroneous or that
they cannot support the judgment. In Gilbert v. Sterrett, 509
F.2d 1389 (5th Cir. 1975), this Court considered an appeal
contending that a district court, in a bench trial, either
applied the wrong legal standard or made clearly erroneous
factual findings. There we “attach[ed] no significance” to the
appellants’ “failure . . . to file a motion in the district court
for additional findings” that might better support the judgment.
Id. at 1393. The Eleventh Circuit, soon after its split from the
Fifth, considered a case raising for the first time on appeal
whether the facts the district court found amounted as a matter
of law to a protected property interest. See Ogletree v. Chester,
682 F.2d 1366 (11th Cir. 1982). That court wrote, “Throughout his
brief, the appellee has contended that the appellants’ failure to
comply with Fed. R. Civ. Pro. 50 forecloses review of the
‘sufficiency of the evidence’ on the issue presented in this non-
jury case. To the contrary, that rule poses no bar to our
consideration of the issues in this appeal.” Id. at 1368 n.1. We
review for clear error whether the evidence supports the district
court’s factual findings. We review de novo whether those
findings support a judgment against Whited individually, as that
is a legal conclusion.
sufficiency of evidence to support findings or sufficiency of
findings to support a judgment following a bench trial.
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In actions tried upon the facts to a court, the court must
state separately its factual findings and its legal conclusions.
Fed. R. Civ. P. 52(a). The findings and conclusions “must be
sufficient in detail and exactness to indicate the factual basis
for the ultimate conclusion reached by the court.” Acme Boat
Rentals, Inc. v. J. Ray McDermott & Co., 407 F.2d 1324, 1325 (5th
Cir. 1969). If the district court’s factual findings are
insufficient to allow this Court to review the judgment below,
then we must vacate the judgment and remand for more detailed
findings. See, e.g., In re Incident Aboard the D/B Ocean King,
758 F.2d 1063, 1072 (5th Cir. 1985). On the other hand, when
considering whether facts support the district court’s judgment,
we construe the court’s findings liberally and find them “to be
in consonance with the judgment, so long as that judgment is
supported by evidence in the record.” Kelleher v. Flawn, 761 F.2d
1079, 1083 n.1 (5th Cir. 1985) (quoting Gilbert, 509 F.2d at 1393
(internal quotes and citations omitted)). Thus, so long as we can
understand the issues completely and the record gives sufficient
basis for this Court to consider the merits of the case, we need
not remand. See, e.g., Gulf Towing Co. v. Steam Tanker, Amoco,
648 F.2d 242, 245 (5th Cir. Unit B 1981).
The parties to this action stipulated that Whited served as
president of Market Planners and that he participated in running
the business, including selling Colonial Penn policies and
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collecting premiums. The district court could have imposed legal
liability upon Whited under two theories: (1) that Market
Planners constituted Whited’s alter ego, so that fairness
required piercing the corporate veil and holding Whited liable
for Market Planners’ wrongdoing, see, e.g., Matthews Constr. Co.
v. Houston Pipe & Supply Co., 796 S.W.2d 692, 693 (Tex. 1990);
Loomis Land & Cattle Co. v. Wood, 699 S.W.2d 594, 597 (Tex.
App.—Texarkana 1985, writ ref’d n.r.e.); or, as Colonial Penn
contends, (2) that Whited himself served along with Market
Planners as a local recording agent for Colonial Penn and as such
personally owed premiums to Colonial Penn, see, e.g., Oakes v.
Guarantee Ins. Co., 573 S.W.2d 899 (Tex. Civ. App.—Eastland 1978,
writ ref’d n.r.e.) (holding local recording agent liable for
unpaid premiums although agent lacked required certificate of
authority from state). Colonial Penn did not argue in pleadings
or at trial for piercing the corporate veil, and the record lacks
any evidence of an alter ego that would have allowed the district
court to pierce the veil. See Elliott v. Tilton, 89 F.3d 260, 264
(5th Cir. 1996) (reversing judgment against individual defendants
where plaintiffs tried to make “piercing the corporate veil”
argument for the first time on appeal and no evidence in the
record supported piercing the veil). Accordingly, the basis for
liability against Whited individually must be that Whited himself
was a local recording agent for Colonial Penn. Because the
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district court recognized the agency question as “paramount in
deciding the outcome of this case” and concluded that it would
impose joint and several liability based on “breach of agency
duty,” we may presume that the court found that Whited was an
agent of Colonial Penn.4 We examine the record in this appeal for
any evidence that lends support to that finding.
On direct examination at trial, Colonial Penn’s general
counsel testified that based on exhibits in evidence, including
local recording agent licenses and agent appointment
applications, she believed Whited was a local recording agent of
Colonial Penn. On cross examination, however, she testified that
Colonial Penn did not receive an appointment form naming Whited
individually as an agent of Colonial Penn. Whited himself, on
cross-examination, stated variously that he either was not
Colonial Penn’s agent or was “probably their agent but not
through a contractual agreement.” Although scarce, this evidence
provides enough that we cannot say the district court was clearly
erroneous to find that Jimmy Whited was an agent of Colonial
Penn.5
4. The district court could hardly have escaped the issue,
given that, in the Consolidated Pretrial Order, the defendants
specifically listed as a contested fact whether Whited was an
agent of Colonial Penn.
5. The court may also have been swayed by closing
arguments, in which Colonial Penn referred to Texas Insurance
Code Article 21.02--which defines who are agents for purposes of
the liabilities, duties, requirements, and penalties that Texas
Insurance Code Chapter 21 imposes on agents--and argued that
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IV
Accordingly, the judgment of the district court against
Market Planners Insurance Agency Inc. and against Jimmy Whited
individually is AFFIRMED.
Whited offered no evidence to rebut his agency status.
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