United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-2932

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First Union National Bank, as Trustee *

of the Southeast Timber Leasing *

Statutory Trust, *

*

Appellant, * Appeal from the United States

* District Court for the

v. * Eastern District of Arkansas.

*

Pictet Overseas Trust Corp., Ltd., *

Trustee of Henrietta Y. Jones Trust, *

*

Appellee. *

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Submitted: September 25, 2006

Filed: January 22, 2007

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Before WOLLMAN, BRIGHT, and BOWMAN, Circuit Judges.

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WOLLMAN, Circuit Judge.

This case is once again before us. In our prior ruling, we reversed and

remanded for further proceedings. First Union Nat’l Bank v. Pictet Overseas Trust

Corp., Ltd., 351 F.3d 810, 816 (8th Cir. 2003) (Pictet I) (hereinafter we refer to the

parties as First Union and Pictet). On remand, the district court entered summary

judgment in favor of Pictet, holding that First Union breached a fiduciary duty it owed

in its individual capacity to Pictet. First Union appeals, contending that the district

court erred in holding that the law of the case doctrine requires a finding of fiduciary
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duty, urging us to hold that no fiduciary duty existed, and further requesting that we

remand with instructions to grant it summary judgment on the basis of a statutory

defense barring individual liability that was not addressed by the district court. We

hold that the law of the case doctrine does not apply and that the defense has been

constructively pled, and we thus reverse and remand for further proceedings.

I. Facts and Posture

The factual and procedural background of this case is detailed in Pictet I, and

we recount and supplement that background as follows. On May 1, 1998, the

Southeast Timber Leasing Statutory Trust (Trust) was formed as a business trust

organized under the Connecticut Statutory Trust Act, see Conn. Gen. Stat. Ann. §§ 34-

500 et seq., with First Union as trustee. The Trust was formed to purchase First Land

and Timber (FLT), an Arkansas corporation, and then, through a series of mergers

with other entities, merge the surviving entity into the Trust itself and distribute its

assets to the Trust beneficiaries. The trust agreement narrowly circumscribed the

trustee’s control of trust assets. 

Pictet, in its capacity as trustee of the Henrietta Y. Jones Trust, held shares of

FLT at the time of the merger. Pictet exercised its statutory right to dissent from the

merger and recover fair value for its shares by following the procedures enumerated

in the Arkansas Business Corporation Act (Arkansas Act). See Ark. Code Ann. § 4-

27-1301 et seq. This included notifying First Union of its dissent, tendering its shares,

and providing its own estimate of fair value–$5.1 million.

First Union set $3.8 million aside in a Golden Gate Bank account, which

represented the pro rata value of Pictet’s shares under the merger agreement. The

remaining merger consideration, including money placed in a holdback escrow

account intended to indemnify or reimburse “loss parties,” was distributed to the nondissenting shareholders in accordance with the merger agreement and associated
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exchange agreement. At specified intervals, in accordance with the exchange

agreement, the holdback monies were released by the escrow agent to another bank

for distribution to former shareholders. The last such distribution occurred in

December 1999. 

In March 1999, First Union filed suit against Pictet in an Arkansas state court

to determine the fair value of Pictet’s shares. Pictet removed the case to federal court

and filed a counterclaim alleging that First Union’s untimely lawsuit fixed the value

of Pictet’s shares at $5.1 million plus interest. On May 8, 2000, by consent order,

First Union was required to pay Pictet the $3.8 million held for it in the Golden Gate

Bank account. Upon realizing that First Union no longer had sufficient assets to pay

the $5.1 million plus interest Pictet sought, Pictet amended its counterclaim to include

claims for conversion and breach of fiduciary duty. On February 9, 2001, the district

court issued a judgment in the appraisal action in Pictet’s favor for $5.1 million. On

March 15, 2002, the district court held that First Union also owed 6% interest on the

money due to Pictet (Interest Rate Decision). Pictet moved for reconsideration,

arguing that the court had not disposed of its breach of fiduciary duty claim. In

response to the motion, First Union specifically cited § 34-523(b) of the Connecticut

Statutory Trust Act (Connecticut Act) as barring Pictet from holding First Union

individually liable for the alleged breach of fiduciary duty. Although the court

mentioned in its Interest Rate Decision that “First Union owed a duty,” in its

subsequent order denying Pictet’s motion for reconsideration the court stated that it

would not reach Pictet’s breach of fiduciary duty claim because it did not believe that

First Union had been sued in its individual capacity. Following the denial of the

motion for reconsideration, Pictet appealed, arguing that First Union in its individual

capacity was a proper party to the action. First Union again asserted its Connecticut

Act defense in its appellee’s brief. We held that First Union had been individually
1

In Pictet I, we expressly limited our decision to the issue of whether First

Union had been sued in its individual or representative capacity and did not address

whether First Union, in any capacity, owed a fiduciary duty to Pictet.

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sued on the conversion and breach of fiduciary duty claims and remanded the case for

further proceedings.1

 Pictet I, 351 F.3d at 815.

On remand, Pictet moved for summary judgment. In its response and renewal

of its own summary judgment motion, First Union incorporated by reference its

Connecticut Act defense. The district court granted Pictet’s motion for summary

judgment on the breach of fiduciary duty claim (Fiduciary Duty Decision). It held,

inter alia, that it had already ruled that First Union owed Pictet a fiduciary duty, and

that it would not reconsider its position because the existence of a fiduciary duty was

the law of the case. It further held that because First Union knew that Pictet valued

its shares at $5.1 million, First Union breached its fiduciary duty by allowing

disbursements that encroached upon that amount. The decision said nothing of the

Connecticut Act defense.

II. Discussion

We review the district court’s grant of summary judgment de novo, applying

the same standards as the district court. Schwan’s IP, LLC v. Kraft Pizza Co., 460

F.3d 971, 974 (8th Cir. 2006). We view the facts in the light most favorable to the

nonmoving party and will affirm if the record demonstrates that there are no genuine

issues of material fact and the moving party is entitled to judgment as a matter of law.

Id. at 975. 

We address on appeal two central issues: whether the law of the case doctrine

requires a finding of fiduciary duty, and whether the Connecticut Act was sufficiently

pled to preclude a summary judgment in the absence of additional legal

determinations. We address each in turn.
2

The district court additionally enumerated other considerations which it

believed bolstered its conclusion. Even if a fiduciary duty existed, the justifying

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A. The Law of the Case

Pictet contends that the law of the case doctrine mandates a holding that First

Union owed a fiduciary duty in its individual capacity. We conclude that the law of

the case doctrine does not apply because the existence of the fiduciary duty was never

previously established. 

We have described the law of the case doctrine as providing that “when a court

decides upon a rule of law, that decision should continue to govern the same issues in

subsequent stages in the same case.” Morris v. American Nat’l Can Corp., 988 F.2d

50, 52 (8th Cir. 1993) (quoting Arizona v. California, 460 U.S. 605, 618 (1983)). The

underlying intent of the doctrine is to “prevent[] the relitigation of settled issues in a

case, thus protecting the settled expectations of parties, ensuring uniformity of

decisions, and promoting judicial efficiency.” Little Earth of the United Tribes, Inc.

v. United States Dep’t of Hous. & Urban Dev., 807 F.2d 1433, 1441 (8th Cir. 1986).

The doctrine applies to appellate decisions, see Mosley v. City of Northwoods, 415

F.3d 908, 911 (8th Cir. 2005), as well as to final decisions by the district court that

have not been appealed. Little Earth, 807 F.2d at 1441 (citing In re Design Classics,

Inc., 788 F.2d 1384, 1386 (8th Cir. 1986)). It does not apply to interlocutory orders,

however, “for they can always be reconsidered and modified by a district court prior

to entry of a final judgment.” United States v. Hivley, 437 F.3d 752, 766 (8th Cir.

2006) (citing Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066,

1070 (8th Cir. 1995)). 

In its Fiduciary Duty Decision, the district court established First Union’s

fiduciary duty in part based on its determination that the law of the case doctrine

applied.2

 Implicitly, this would require the district court to have already issued a final
considerations, however, did not address why the duty should extend to First Union

in its individual capacity. In any event, the district court would not allow First Union

to take issue with these considerations or the court’s conclusion in light of the court’s

belief that the law of the case doctrine precluded any challenge to its earlier decision.

3

Pictet’s analysis is based on the court’s statement that “although first Union

owed a duty to Pictet, any damage awarded to Pictet in excess of the interest awarded

would be duplicative and contrary to equitable principles.” (Appellant’s App. at 649).

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order in which it had held that First Union owed a fiduciary duty in its individual

capacity. We see no evidence of such an order in the court’s Interest Rate Decision,

and the district court’s “postjudgment interpretation of [its prior] judgment is

irrelevant to an appellate court’s determination of the judgment’s meaning.” Kerndt

v. Ronan, 458 N.W.2d 466, 471 (Neb. 1990); see also Neujahr v. Neujahr, 393

N.W.2d 47, 49 (Neb. 1986); Crofts v. Crofts, 445 P.2d 701, 702-03 (Utah 1968). 

The district court’s introductory remarks in its Interest Rate Decision

summarized its holding and said that First Union owed a duty, but the court never

mentioned the word “fiduciary,” specified the capacity in which First Union may have

owed the duty, or described the basis for finding the existence of such duty.

Accordingly, the district court’s reference to First Union’s duty was irrelevant to

Pictet’s breach of fiduciary duty claim against First Union. Ambiguous orders are to

be construed by examining the record and proceedings, the findings and opinion of

the court, and the respective contentions of the parties. See Oklahoma v. Texas, 256

U.S. 70, 88 (1921). Pictet contends that the words the district court chose to use to

establish the interest rate on the payments withheld indicate that a finding of fiduciary

duty was subsumed within the rate selected – rendering it a necessary part of its

decision rather than constituting mere dicta.3

 As indicated in Pictet I, however, “the

appropriate value of Pictet’s shares and the applicable interest thereon is distinct from

whether First Union is liable for mismanaging or converting the proceeds from the

sale of those shares . . . .” Pictet I, 351 F.3d at 816. This statement reflects our
4

Instead, we interpret the court’s March 15 language as referring to a general

duty to pay the money owed under the statute in a timely fashion. In any case, the

duty mentioned by the court only applied to First Union in its representative capacity

because the district court did not believe itself to have jurisdiction over First Union

individually when it issued its Interest Rate Decision. 

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conclusion that the district court’s interest rate determination had no bearing on the

potential existence of a fiduciary duty. 

We did not then, nor do we now, consider the duty the court found tangentially

relevant to the interest rate determination to be related to the fiduciary duty presently

relevant to Pictet’s claim.4

 In the in-depth discussion following the court’s

introductory summary of its Interest Rate Decision, the court abandoned the duty

language altogether – replacing it instead with a discussion centered predominately

on First Union’s unjustifiable payment delays. (Appellant’s App. at 654-56). Nothing

in the Interest Rate Decision’s treatment of its interest rate determination begins to

approach in detail the fiduciary duty considerations and findings that the district

court’s Fiduciary Duty Decision alludes to as having been previously weighed and

decided. Even though First Union had argued in the pre-Interest Rate Decision

proceeding that it did not owe Pictet a fiduciary duty, and even though the court

expressed a readiness to resolve all issues with finality, the district court addressed the

breach of fiduciary duty claim by effectively dismissing it as moot. See Pictet I, 351

F.3d at 813. Even had the district court intended to resolve the fiduciary duty issue

in its Interest Rate Decision, it failed to do so with sufficient directness and clarity to

establish the settled expectations of the parties necessary for the subsequent

application of the law of the case doctrine. Accordingly, we conclude that the law of

the case doctrine cannot apply and that the Interest Rate Decision requires neither the

district court, nor us, to find that a fiduciary duty existed.
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B. The Connecticut Act Defense

We next turn to the relevance of the Connecticut Act defense to the case. There

are two issues relevant to our inquiry: whether the Connecticut Act represents an

affirmative defense, and, if so, whether the affirmative defense was inadequately pled

and therefore waived. We conclude that the Connecticut Act is an affirmative defense

under Arkansas law, and we consider it constructively pled and not waived.

The Connecticut Act states in relevant part:

(b) Except to the extent otherwise provided in the governing instrument

of a statutory trust, a trustee, when acting in such capacity, shall not be

personally liable to any person other than the statutory trust or a

beneficial owner for any act, omission or obligation of the statutory trust

or any trustee thereof.

C.G.S.A. § 34-523.

We believe that the Connecticut Act represents an affirmative defense under

Arkansas law. Whether the Connecticut Act is an affirmative defense is a question of

Arkansas state law. Cf. Troxler v. Owens-Illinois Inc., 717 F.2d 530, 532 (11th Cir.

1983); Williams v. Jader Fuel Co., 944 F.2d 1388, 1400 (7th Cir. 1991) (“In a

diversity case, the legal and factual sufficiency of an affirmative defense is examined

with reference to state law.”). First Union asserts that the Connecticut Act is not an

affirmative defense because the Act restricts the duties owed to all but those specified,

and therefore does not simply limit recovery. This argument echoes our holding that

“[when] the defense involved is one that merely negates an element of the plaintiff’s

prima facie case . . . it is not truly an affirmative defense and need not be pleaded

despite rule 8(c).” Masuen v. E.L. Lien & Sons, Inc., 714 F.2d 55, 57 (8th Cir. 1983)

(per curiam) (quoting Sanden v. Mayo Clinic, 495 F.2d 221, 224 (8th Cir. 1974)).

Nevertheless, the statutory language of the relevant Connecticut Act section is entirely

silent as to whom a trustee may owe duties. It does not preclude other sources of law
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from imposing duties on the trustee, and therefore does not negate an essential

element of Pictet’s prima facie case. Instead it limits the population of individuals to

whom a trustee may be individually liable irrespective of those to whom the trustee

owes duties. Although we have not found an Arkansas case directly on point, the

Arkansas Supreme Court has previously held that statutory exemptions must be

affirmatively pled as affirmative defenses. See Marine Servs. Unlimited, Inc. v.

Rakes, 918 S.W.2d 132, 136 (Ark. 1996). In light of the statute’s silence as to duties,

we consider the liability-limiting language of the Connecticut Act sufficiently

analogous to a statutory exemption from Arkansas law. Accordingly, we believe the

Act represents an “avoidance or affirmative defense” within the meaning of Ark. R.

Civ. P. 8(c).

We turn, then, to the question whether the affirmative defense provided by the

Act has been waived. Generally, failure to plead an affirmative defense results in a

waiver of that defense. Fed. R. Civ. P. 8(c); see also Jacobs Mfg. Co. v. Sam Brown

Co., 19 F.3d 1259, 1266 (8th Cir. 1994) (applying Missouri law); Bissett v. Burlington

N. R.R. Co., 969 F.2d 727, 731 (8th Cir. 1992); Piekarski v. Home Owners Sav. Bank,

F.S.B., 956 F.2d 1484, 1489 (8th Cir. 1992) (applying the Minnesota rules of

procedure). The Supreme Court has indicated that the Rule 8(c) pleading requirement

is intended to give the opposing party both notice of the affirmative defense and an

opportunity to rebut it. Grant v. Preferred Research, Inc., 885 F.2d 795, 797-98 (11th

Cir. 1989) (citing Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313,

350 (1971)). We have, therefore, eschewed a literal interpretation of the Rule that

places form over substance, Thomas v. St. Luke’s Health Sys., Inc., 869 F. Supp.

1413, 1428-29 (N.D. Iowa, 1994), aff’d per curiam, 61 F.3d 908 (8th Cir. 1995)

(unpublished table decision), and instead have held that “[w]hen an affirmative

defense ‘is raised in the trial court in a manner that does not result in unfair surprise,

. . . technical failure to comply with Rule 8(c) is not fatal.’” Financial Timing Publ’ns,
5

Consequently, where the circumstances merit it, we have accepted and

favorably cited affirmative defenses first raised at various stages of litigation. See,

e.g., Sanders v. Dep’t of the Army, 981 F.2d 990, 991 (8th Cir. 1992) (per curiam)

(finding that the district court did not abuse its discretion by allowing an affirmative

defense to be raised for the first time in a motion to dismiss); Stoebner v. Parry,

Murray, Ward & Moxley, 91 F.3d 1091, 1093-94 (8th Cir. 1996) (per curiam) (citing

favorably a 9th Circuit opinion allowing an affirmative defense to be raised for the

first time in a summary judgment motion when there is no prejudice); Coohey v.

United States, 172 F.3d 1060, 1064 n.8 (8th Cir. 1999) (recognizing that “an

affirmative defense can even be raised on appeal where the evidence supports that

defense.”). 

6

Pictet addressed the defense by inaccurately arguing there that it should be

ignored because it had never been raised prior to appeal. 

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Inc. v. Compugraphic Corp., 893 F.2d 936, 944 n.9 (8th Cir. 1990) (quoting Allied

Chem. Corp. v. Mackay, 695 F.2d 854, 855 (5th Cir. 1983)).5 

Pictet has not shown that he would be unfairly surprised or prejudiced by

inclusion of the defense and so we construe First Union’s assertions of the affirmative

defense as constructively amending its pleadings. First Union twice informed Pictet

of its intent to use the Connecticut Act as a defense against Pictet’s breach of fiduciary

duty claim prior to Pictet’s motion for summary judgment that prompted the Fiduciary

Duty Decision. It did so first in its April 2, 2002 response to Pictet’s motion for

reconsideration following the district court’s Interest Rate Decision and then in its

subsequent appellee’s brief filed in this court in Pictet I. In these filings, First Union

not only specified and paraphrased the relevant code sections but also described why

they precluded individual liability for Pictet’s claim. Pictet demonstrated its

awareness of the defense by addressing it in its reply brief in Pictet I.

6

 Yet even had

Pictet not previously acknowledged the defense, First Union’s filings alone would still

have afforded Pictet notice sufficient to undermine any claim of surprise over First

Union’s incorporation of the defense in its response to Pictet’s summary judgment

motion in the pre-Fiduciary Duty Decision proceedings. Indeed, by the time it

renewed its own summary judgment motion after our remand in Pictet I, Pictet had
7

We recognize that in at least one of our sister circuits, “[p]ost-verdict or [post]-

judgment amendments are occasionally allowed, but where they may substantially

prejudice the other party or are merely the result of a long and unreasonable delay,

particularly if the movant was aware of the facts upon which the amendment is

predicated and could have raised the matter before judgment, such amendments

properly may be denied.” Trinity Carton Co. v. Falstaff Brewing Corp., 767 F.2d 184,

194 (5th Cir. 1985). Even were we to consider First Union’s answer amended after

the district court’s initial decision effectively declaring Pictet’s claim moot, we would

not consider Pictet prejudiced. The district court’s initial decision had not dealt with

the claim on its merits. Therefore, Pictet did not suffer prejudice resulting from the

delay because, by effectively declaring the issue moot and not deciding it at that time,

even had First Union amended its answer earlier, the district court would still not have

addressed either party’s substantive arguments on the merits until after our subsequent

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known of the Connecticut Act defense for over a year – certainly a long enough period

to preclude a claim of surprise. See, e.g., Grant, 885 F.2d at 797-98 (finding one

month notice sufficient to preclude unfair surprise); Ball Corp. v. Xidex Corp., 967

F.2d 1440, 1443-44 (10th Cir. 1992) (describing the 10th Circuit’s common law rule

stating that inadequately plead affirmative defenses may still be proven at trial if

notice of intent to raise the defense was provided at least three months prior to trial).

Nor can Pictet credibly claim prejudice. All facts relevant to the defense are

already on the record and not in dispute. Pictet knew of the defense for some time and

even acknowledged First Union’s attempt to raise it. Finally, Pictet had an

opportunity to respond to the defense subsequent to learning of it. Nothing prevented

Pictet from responding to the defense after our remand in Pictet I. We have affirmed

decisions recognizing a constructive amendment in similar circumstances where

affirmative defenses have been raised other than in a responsive pleading, see, e.g.,

Thomas v. St. Luke’s Health Sys., Inc., 849 F. Supp. 1413, 1428-29 (N.D. Iowa), aff’d

per curiam, 61 F.3d 908 (8th Cir. 1995) (unpublished table decision), and likewise

here construe First Union’s multiple assertions of the Connecticut Act in its prior

summary judgment and appellate filings as pleading the affirmative defense.7

 See also
remand. We do consider the pleadings constructively amended prior to the Fiduciary

Duty Decision.

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Pantzer v. Shields Dev. Co., 660 F. Supp. 56 (D.C. Del. 1986) (deeming a seller’s

answer amended to include the affirmative defense of the statute of frauds, despite the

seller’s failure to raise that defense in its answer, because the seller raised the defense

pretrial in a summary judgment motion, and the buyer had fair notice of the defense,

responded to it in the answering brief, and suffered no prejudice, since the facts

underlying the statute of frauds inquiry were not disputed).

We express no opinion regarding the effect of the Connecticut Act defense on

Pictet’s breach of fiduciary duty claim. Cf. Occhino v. United States, 686 F.2d 1302,

1311 (8th Cir. 1982) (“[I]t is not appropriate that this court decide de novo issues

presented to but not decided by the district court.”); Mark v. Nix, 983 F.2d 138, 140

(8th Cir. 1993) (“We generally do not consider an issue not decided by the district

court, particularly when the outcome is debatable and our refusal will not otherwise

produce a plain miscarriage of justice.”). Likewise, because the question whether

First Union owed a fiduciary duty in its individual capacity to Pictet may be rendered

moot depending on how the district court resolves the Connecticut Act’s effect on the

claim, and because our law of the case holding leaves the matter open for further

argument and consideration, we consider it premature at this time for us to decide

whether the fiduciary duty at issue exists. Instead, we expect the final resolution of

the issue to be premised entirely on the district court’s legal determinations informed

by the fully presented legal argument of the parties. Accordingly, as there remain

questions of law that the district court must resolve before ruling on the motion for

summary judgment, we reverse the district court’s summary judgment and remand the

case for further proceedings consistent with this opinion.

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