## IN THE SUPREME COURT O F TEX AS

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. 15-0968

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### L O N G V IE W 

### E N E R G Y 

### C O M P A N Y 

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### T H E 

### H U F F 

### E N E R G Y 

### F U N D 

### L P , W R H E N E R G Y 

### P A R T N E R S 

### L L C , W IL L IA M 

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. “ B IL L 

### ” H U F F 

### , R IC K 

### D ’ 

### A N G E L O A N D 

### R IL E Y


### - H U F F 

### E N E R G Y 

### G R O U P 

### L L C , R E S P O N D E N T S

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O N P E T I T I O N F O R R E V I E W F R O M T H E C O U R T O F A P P E A L S F O R T H E F O U R T H D I S T R I C T O F T E X A S

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Argued F ebruary 9, 2017

J U S T I C E J O H N S O N delivere d the opinion of the Court.
J U S T I C E G U Z M A N did not participate in the de cision.

This case involves the questions of whether two direc tors brea ched their fiduciar y duties to

a corpor ation, and if so, whether the evidenc e and jury finding s support the reme dies imposed by the trial court.
L ong view Energ y Company sued two of its direc tors and entities associate d with them afte r discovering one of the entities, Riley -Huff Energ y Group L L C, purcha sed mineral lease s in an are a wher e L ong view had been investiga ting the possibili ty of buy ing lease s. The case was tried to a jury , which found that the direc tors brea ched their fiduciar y duties to L ong view in two way s: by usurping

a corpor ate opportunity , and by competing with the corpor ation without disclosing the competitionto L ong view’s B oard of Direc tors. The jury

also found that R iley -Huff acquir ed leases as a result of the b re ac h es . The trial court rende red judgme nt awa rding a constructive trust to L ong view on
most of t he lea ses in question and re lated prope rty . The judg ment also require d the di sg org ement of money derive d from past lea se produc tion revenue s. The court of appe als reve rsed and rende red judgme nt f or the defe ndants. I t c oncluded that (1) the evidenc e was leg ally insufficient to support the jury ’s finding that the direc tors brea ched their fiduciar y duties by usurping a corpor ate opportunity , and (2) the pleadi n g s wer e not sufficie nt to support a cla im for bre ach of fiduciar y duty by undisclosed competition with the corpor ation. We affir m. I. Background
L on gv i ew Energ y Company is an oil and g as exploration and production company incorpora ted in Delaw are and headqua rtere d in Dallas. During the time rele vant to this matter, L ong view had investments in mineral opera tions in Arka nsas , California, L ouisiana, Mississ ippi, and Oklahoma. The Huff Energ y Fund L P ( HEF ) is a Delaw are limit ed partne rship that invests in

ener g y companies. I n 2 0 0 6 , HEF purcha sed share s in L ong view for $19 milli on, then purcha sed

more share s for $20 milli on in 2007. Pursuant t o t h e p urcha se ag ree ment and its position as the major share holder owning approximately 39% of L ong view’s share s, HEF had Bill Huff and Rick D’Ang elo—HEF ’s Chief Ex ecutive Offic er and lead investment evalua tor, respe ctively —appo in te d
to serve a s two of L ong view’s nine- member boa rd of dire ctors. As drilling and mineral rec overy technolog ies develope d and beca me more eff

icient, cer tain ty pes of mineral-c ontaining formations beca me more valuable. The Eag le For d Shale (t h e E agl e
2For d) was one such formation. Many investors and companies beca m e fo cu s ed o n South Texas, wher e the formation, estimated to encompa ss as many as thirteen milli on acr es, was mainly located.
HEF asked its portfolio companies, includin g L o n gv i ew, to look into investment opportunities rela ted to the Eag le For d. During the summer of 2009, HEF beg an discussions with Bobby Riley about possible investment opportunities rela ted to the Eag le For d. I n S eptember 2009, Riley and HEF consummated a deal wher eby they purcha sed some minera l le ases in a rea s wher e production from the Eag le For d was anticipated. I n October 2 0 09, HEF and Riley joined forc es and cre ated Riley -Huff Energ y Group L L C (Riley -Huff ). Riley -Huff continued investiga ting i n v es tments in Eag le For d acr eag e pursua nt to the interest both Riley and HEF had in the for

mation. Also in September 2009, HEF repr esenta tives, including both Huff and D’Ang elo, met with
L ong vi ew an d en coura g ed it to consider investing in Eag le For d acr eag e. L ong view claims Huff stated that i f i t located an i nvestment in Eag le Ford acr eag e that Rick Pearc e—a senior petrole um
eng ineer and L ong view’s Chief O pera ting Of fice r—liked, HEF would fund the investment. Following the September meeting , L ong view foc used a substantial pa rt of its resourc es on investiga ting possible investments in Eag le For d acr eag e. As part of that proce ss, L ong view hired
g eolog ist and g eophy sicist Mark L ober as a consultant. L ober identified and advised L ong view of

an oil “window” in E ag le For d acr eag e that he believed would be productive (the L ober window).
L ong view also be g an wor king w ith lea se broker s Tamar a For d and Pat G ooden to de termine wha t Eag le For d acr eag e might be available

. I n Dec ember 2009, L ong view’s manag ement and L ober met with broker s For d and Goode n, who g ener ally descr ibed trac ts available for l ease , discussed l ease
3terms, and g ave L ong view a map with circ les noted on it locating g ener al are as of available acr eag e

called “blobs.” The amount of acr eag e located within the blobs is descr ibed variously in the rec ord

as rang ing from 235,000 to 254,000 acr es. The broker s would not identify specific acr eag e or lease locations in order to protec t their interests with reg ard to any future leasing transac tions. D’Ang elo
reque sted that L ong view mail copies of the broker s’ map to him, which it did on Dec ember 23, 2009. During this time D’Ang elo continued to expres s en t h u s i asm about the possibili ty of L ong view investing in Ea g le For d acr eag e. L ong view schedule d a board of direc tors’ meeting for J an u ary 28, 2010, to revie w the materia ls its investiga tion had produce d, and for its board to consider whether to invest in Eag le For d

acr eag e. Shortly befor e the meeting L ong view provided materia ls to the board members, including a proposed investment and development strateg y and ec o n o mic projec tions. The proposal was to invest up to $40 milli on to lease 7,000 acr es in eac h of three differ ent locations for a total of 21,000

acr es, drill one well per lease trac t to prove up its minera l-producing capa bility , then sell packa g es of lease s in the are as that produce d. The proposal neither identified nor targ eted any specific acr eag e

or lease s in the larg e blobs descr ibed by broker s For d and Gooden. The proposal was to partne r with another entity in acquir ing the lease s and drilling the wells. L ong view was counting on the promise Huff ma de in September

2009 to fund its part of the pr oject.
A f te r L o n g v ie w p r e s ented its proposal at the J anuar y 28 board meeting , D’Ang elo announce d that HEF would not support an investment in Eag le For d acr eag e. As a result, the board did not vote

on whether to pursue the proposed strateg y . After the meeting , a L ong view repr esenta tive informed
L ober and Gooden that the board decide d not to invest in Eag le For d acr eag e. Gooden asked if

4L ong view objected to his submitt ing lease acr eag e to other HEF portfolio companies, which

L ong view did not. At the n ex t m eeting of L ong view’s board on Fe bruar y 1, 2010, the pos sibili ty of using source s of funding other than HEF for investing in Eag le For d acr eag e was discussed. The other possibili ties included using internally g ene ra t ed cash flow and selling assets such as those
L ong view owned in Oklahoma. L ong view claims that D’Ang elo strong ly objected to sel l i n g t h e Oklahoma assets. After minutes of the board meeting wer e circ ulated, D’Ang elo emailed L ong view, stating that he did not ag ree with the minutes. I n the email D’Ang elo explained that his opposition
to selling the Oklahoma assets was due to the lack of a formal proce ss for appra i s i n g t h e as s ets befor e off ering them for sa le.
I n light of D’Ang elo’s position and the board’ s conce rn about possible leg al action by HEF if the proposal to sell assets and invest in Eag le For d acr eag e proce eded, the L ong view board did not pursue investing in the Eag le For d.
L ong view later lear

ned that HEF and Riley had formed Riley -Huff in October 2009 to locate and fund oil and g as investments, including investing in Ea g le For d acr eag e; that D’Ang elo was a
manag er of Riley -Huff

; and that HEF was a limit ed partne r with a 99% owner ship interest. Neither Huff n o r D’ An gelo had disclosed Riley -Huff ’s exis tence to L ong view’s board. L ong view also l ea rn ed that three day s befor e its J anuar y 28 board meeting , Riley -Huff ag ree d to purcha se E agl e For d lease s from For d’s company , Wy ldfire, which was one of the lease broker s L ong view consulted in developing the proposal it prese nted to its board. Riley -Huff eventua lly acquir ed mineral lease s
to approximately 50,000 Eag le For d acr es, approximately 5,200 of which wer e within the blobs on maps L ong view’s boa

rd had c onsidered.

5I n September 2011, L ong view sued the parties involved in Riley -Huff ’s acquisition of Eag le
For d acr eag e lease s (collec tively , the Huff Def endants). L ong view alleg ed various cause s of action,

1 including fra

ud, brea ch of fiduciar

y duty , usurpation of corpor ate opportunity , tortious interfe renc e with business rela tionships, misappropriation of trade secr ets, aiding and abetting , and conspirac y . The case was tried to a jury , with two liability questions submitt ed in the char g e. I n response to Question 1, the jury

found that Huff

and D’ Ang elo bre ache d their fiducia ry duties to L ong view by taking a corpor ate opportunity

. I n response to Question 2, the jury found that Huff and D’Ang elo brea ched their fiduciar

y duties to L ong view by eng ag ing in competition with L ong view without the informed approva l of its board of direc tors. The jury also found that Riley -Huff wrong fully obtained
assets in the Eag le For d as a result of brea ches of fiduciar y duties by Huff and D’Ang elo. Ba sed on aff irmative answe rs to the brea ch of fiduciar y duty questions, the jury answe red questions reg arding the marke t value of the Eag le For d assets Riley -Huff acquir ed as a result of the brea ches of fiduciar y duties; the amount Riley -Huff paid for its Eag le For d assets; the amount of past production reve nues acquir ed fr o m the Eag le For d assets as a result of the brea ches of fiduciar y duties by Huff and D’Ang elo; and the amount Riley -Huff paid to develop its Eag le For d assets. The trial court rende red judgme nt awa

rding L ong view $95.5 milli on; imposing a constructive trust in L ong view’s favor on substantially all Riley -Huff ’s Eag le For d acr eag e lease s and associate d proper ties, toge ther with future production from the lease s; and ordering Riley -Huff to t ra n sfer the l ease s and properties t o L ong view.

D e f e n d a n t s i n c l u d e d t h e H u f f E n e r g y F u n d , L P , W R H E n e r g y P a r t n e r s , L L C , W

. R

. H u f f A s s e t M a n a g e m e n t 1 C o . , W i l l i a m R

. “ B i l l ” H u f f , R i c k D ’ A n g e l o , E d D a r t l e y , B r y a n B l o o m , R i l e y - H u f f E n e r g y G r o u p , L L C , a n d B o b b y R i l e y . L o n g v i e w a l s o s u e d T a m a r a F o r d a n d W y l d f i r e E n e r g y , I n c . , b u t l a t e r n o n s u i t e d t h e m . 6The Huff Def en d an t s appea led. I n a plurality opinion, the court of appea ls reve rsed and rende re d a take- nothing judgme nt in favor of the Huff Def endants. 482 S.W .3d 184 (Tex. App.—San Antonio 2015). First, the court deter mined that the evidenc e was leg ally insufficient to support the “y es” answe r to jury Question 1 reg arding the claim for taking a corpor ate opportunity

. I d

. a t 1 9 3

– 9 4

. Although acr eag e wher e L ong view considere d buy ing lease s partially overla p p e d w it h

acr eag e Riley -Huff lease d, the court rea soned that L ong view had not ide ntified any specific lease s in the proposal to its direc tors, and Riley -Huff ’s acquisitions did not “hinder or defe at the plans and
purposes of the corpor ation.” Id. at 191–93. Be cause milli ons of acr es in the Eag le For d wer e still available to be lease d, the court conclude d that le g ally sufficie nt evidenc e did not support the implied finding that L ong view had “an interest or a rea sonabl e expectancy in the opportunity .” Id. at 193–94. Next, the court held that the petition on which L ong view went to trial did not plead a claim for brea ch of the fiducia

ry duty of loy alty by competition w ithout disclosure to L ong view’s board, and thus a judgme nt could not be based on the jury ’s finding that Huff and D’Ang elo brea ched their fiduciar y duties by undisclosed competition with L ong view. Id. at 197.
Be cause of its deter

minations reg arding the brea ches of fiduciar y duties, the court of appea ls did not addre ss other issues raised by the parties. I n this Court, the parties addre ss all the issues and cross-issues raised. The Huff Def endants urg e that if we deter mine the court of appea ls err ed, then
to avoid delay and in the interest of judicial economy we should addre ss the rema ining issues rathe r than rema nding to the co u rt of appea ls for it to do so. See G. T. Leach Builders LLC v. Sapphire V.P., LP , 458 S.W .3d 502, 511 (Tex

. 2 0 1 5 ); Rusk State Hosp. v. Black , 392 S.W .3d 88, 97 (Tex. 2012). We ag ree i n p ri n ci p le with that approa ch. And as we explain below, we conclude that a
7cross-issue urg ed by the Huff Def endants is d i s p ositive. I n order to addre ss that issue, we will
assume, without deciding , that a claim ag ainst direc tors for competing with the corpor ation without disclosure to and approva l by the corpor ation’s board is viable under Delaw are law and that the court of appea ls err ed by holding that L ong view’s pleading s wer e not sufficie nt to support such a claim.
We will further assume that the evidenc e is sufficie nt to support the jury ’s finding that Hu ff and D’Ang elo brea ched both that duty and their du t y t o n o t t ake a corpor ate opportunity

. Those

assu m ptions lead to our considering the Huff Def endants’ cross-issue that there is no evidenc e
trac ing Riley -Huff

’s acquisition of any specific lease s to the brea ches. On that cross-issue we ag ree with the Huff D efe ndants, which lea ds us to conclude that ther e is no evidenc e to s upport the trial court’s da mag es aw ard. II. Appl icable Law Under ch o i ce of law principles, Texas courts apply the law of the jurisdiction that has the
most signific ant rela

tionship to the particula

r substantive issue to be resolved. See Sonat Expl. Co.

v. Cudd Pressure Control, Inc. , 271 S.W .3d 228, 233 (Tex. 2008). The parties ag ree that Delaw are law applies to substant i v e i s s u es . The law of Texas, as the forum state, g overns matters of
proce dure. Arkoma Basin Expl. Co. v. FMF Assocs. 1990-A, Ltd. , 249 S.W .3d 380, 387 n.17 (Tex. 2008); see also Calif

ornia v. Copus , 3 0 9 S.W .2d 227, 230 (Tex. 1958). We conduct our revie w

acc ording ly

.

8III. Discussion A. Construct ive Trust
J ury Question 5, which the parties ref ere nce as the basis for the trial court’s imposit ion of a constructive tr

ust on Ril ey -Huff

’s lease s and assoc iated prope rties, was: Did Riley -Huff Energ y Group L L C wrong fully obtain assets in the Eag le For d shale as a result of Ri ck D’Ang elo’s or Bill Huff’ s failure , if any , to comply with his or their fiducia

ry duty ? The jury answe red “ y es.” The Huff Defendants arg ue, among other things, that the constructive trust awa rd is

err oneous beca

use: (1) nothing in the judgme nt trac es the assets in the constructive trust to fiduciar y brea ches, and (2) L ong view failed to submit a jury qu estion trac ing the specific assets to any fiduciar y brea ches.
I n response , L ong view asser ts that the Huff Def

endants did not p reserve err or by their objection, and even if they did, they are wrong on the evidenc e: the evidenc e shows all the lease s on which the constructive trust was imposed wer e acquir ed as a result of Huff’ s or D’Ang elo’s brea ches of t h ei r fi d u ciar

y duties. Thus, L ong view maintains, the evidenc e and jury finding s support the jury ’s answer, and any nece ssary finding s not made by the j u ry are deeme d to have been made by the trial cour t

— o r s h o u l d be made by this Court—in support of the judgme nt. That is beca use a constructive trust is an independe nt g round of rec overy and the jury found an element of it when it

answe red Question 5. L ong view also posits that (1) once it proved that assets wer e commingle d, the burden shifted to the Huff Def endan t s to trac e the assets that wer e acquir ed independe ntly of D’Ang elo’s and Huff’ s brea ches of fiduciar y duties, and (2) the trial court’s equitable power s in clude

9the power to deter mine the scope of a constructive trust and evidenc e supports the trial court’s deter mination. First, we must addre ss L ong view’s contentio n th a t th e Huff Def

endants did not prese rve err or by their objections. The Huff Def endants objected to Question 5 on sever al g rounds, including the
g rounds that (1) there was “no evidenc e of identifiable proper ty belong ing to L ong view which ended
up in Riley -Huff

’s possession,” and (2) “to the extent L ong view seeks to use Question Number 5 as

a basis for constructive trust over Riley -Huff ’s assets, L ong view’s claim for a constructive trust fails beca use it cannot trac e by s t ri ct p ro of or otherwise something misappropriate d from it to an identifiable res.” By those objections, the Huff Def endants clea

rly prese rved err o r as t o the leg al

s ufficie ncy of the evidenc e to support trac ing any specific lease Riley -Huff acquir ed to Huff’ s o r D’Ang elo’s bre ache s of fiducia ry duties. See T E X
. R. C I V
. P. 274. Second, we must decide whether trac ing was require d. Under Delaw are law, “a constructive trust is the reme dial device throug h which prec edenc e of self is c ompelled to g ive way to the stern demands of loy alty .” Guth v. Loft, Inc. , 5 A.2d 503, 510 (De l. 1939); see also Hogg v. W alker , 622 A.2d 648, 652 (De l. 1993) (“The doctrine of constructive trust eff ectua tes the principle of equity that

one who would be unjustly enric hed, if p er mitted to reta in proper ty , is under an equitable duty to
convey it to the rig htful owner .”). A “construc tive trust is a reme dy that rela tes to specific proper ty

or identifiable proce eds of s p ec i fi c p roperty .” Hogg , 622 A.2d at 652 (citing McM ahon v. New Castle Assocs. , 532 A.2d 601, 608 (De l. Ch. 1987)). “The constructive trust co n ce p t has been applied to the rec overy of money , based on trac ing an identifiabl e fu n d t o which plaintiff claims equitable ownership, or where the leg al remedy is inadequa te—such as the di stinctively equitable

1 0nature of the rig ht asser ted.” Id. ; see also Trit on Constr. Co. v. E. Shore Elec. Servs., Inc. , No. 3920- VCP, 2009 WL 1387115 (De l. Ch. May 18, 2009) (holding t hat i n order to impose a con s t ructive trust, there must be some “identifiable asset or f und to which equitable title ca n be tra ced” ), aff’d , 988 A.2d 938 (De l. 2010). Thus, to obtain a constructive trust over these prope rties locate d in Texas, L ong view must have proce durally proved that the proper ties, or proce eds from them, wer e wrong fully obtained, or that the party holding them is unjustly enric hed. See KCM Fin. LLC v. Bradshaw , 457 S.W .3d 70, 88 (Tex. 2015). “De finitive, desig nated proper ty , wrong fully withheld from another , is th e v e r y h e a rt and soul of the constructive trust theory .” Id. I mpositi on of a constructive trus t i s n o t s i m p l y a

v eh i cl e fo r co llecting assets as a form of damag es. Id. And the trac ing require ment must b e observe d with “re asonable strictness.” Id. That is, the party seeking a constructive trust on proper ty has the burden to id en t i fy the particula r proper ty on which it seeks to have a constructive trust imposed.
L ong view ar g ues that it did not have t he burden to trac e because that burden shifte d to the Huff Def endants once L ong view proved th e assets wer e commingle d. The authorities L ong view cites in support of its commingling arg ument are exemplified by W ilz v. Flournoy , in which a fathe r

u s ed funds from his incapa citated son’s acc ount to pay the father’s monthl y pay ments on a f

ar m . 228 S.W .3d 674, 676 (Tex. 2007). The mother sued on behalf of her son, and the jury found that the fathe r brea ched his fiduciar y duty

. Id. T h e t ri al co u rt imposed a constructive trust on the entire far m. Id. This Court held that a “par ty seeking to impose a constructive trust has the initial burden of trac ing f

unds to the specific proper ty soug ht to be rec overe d.” Id. Once this burden is met, the

1 1entire proper ty is subject to the constructive trust except for the proper ty the trustee can distinguish

as his or her separ ate proper ty

. Id. The mother prese nted evidenc e of trac ing by proving that sever al chec ks wer e draw n on the son’s acc ount and deposited to the fathe r’s pers o n al ac co unt, then the deposits wer e used to make pay ments on the farm. Id

. As a re sult, the burden then s hifted t o the fathe r to demonstrate what portion of the far m’s purcha se price and monthly pay ments came from his own funds. Id. Howeve r, the fathe r failed to obtain a jury finding on his aff irmative claim that part of the money used to purcha se the far m came from his persona l funds. Id. at 676–77. Thus, the trial court did not abuse its discretion in finding that the son w as entitled to the entire far m. Id.
L ong view’s arg ument fails. W ilz dealt wi th a single proper ty on which pay

ments from differ ent sourc es we re m ade. Simi larly , all of the case s L ong view relies upon conce rn proper ty purcha sed with comming led funds and the courts hold that the trac ing bur den does not shift to the defe ndant until the plaintiff satisfies t he ini tial burden of proving commingle d funds wer e used to purcha se specific proper

ty

. See, e.g. , Logan v. Logan , 156 S.W .2d 507, 511 (Tex. 1941) ; Graham

v. Turner , 472 S.W .2d 831, 840 (Tex. App.—Waco 1971, no writ); Md. Cas. Co. v. Schroede r , 446 S.W

. 2 d 1 1 7 , 121 (Tex. App.—El Paso 1969, writ ref ’d n.r.e.)

. Her e, in contra st, the lease s wer e
separ ately identifiable, wer e not purcha sed wit h co mmingled funds, and wer e identified, lease by lease , in both the evidenc e and the judgme nt. Given those fac ts, L ong view had the burden to prove that, as to eac h lease for which it soug ht equitable relief o f d i sg org ement or imposit ion of a constructive trust, Riley -Huff acquir ed that lease as a result of Huff’ s or D’Ang elo’s brea ches of fiduciar y duties. See KCM Fin. , 457 S.W .3d at 88 (holding that a party must establish that the

1 2p roper

ties it seeks to be disgor g ed wer e wrong fully obtained or that the party holding them i s unjustly enric hed).
A jury does not deter

mine the expediency , nece ssity , or propriety of equitable relief such as disgor g ement or constructive trust. See Burrow v. Arce , 997 S.W .2d 229, 245 (Tex. 1999). Whether “a constructive trust should be imposed mus t be deter mined by a court based on the equity of the circ umstances.” Id. The scope and application of equitable relief such as a constructive trust “within

some limit ations, is g ener ally left to the discretion of the court imposing it.” Bake r Botts, L.L.P. v. Caill oux , 224 S.W .3d 723, 7 36 (Tex. App.—San Antonio 2007, pet. denied)

. I f “conte sted fac t issues must be resolved befor e a court can deter mine the expedi ency , nece ssity , or propriety of equitable relief

, a party is entitled to have a j u ry resolve the disputed fac t issues.” DiGiuseppe v. Lawl er , 269 S.W .3d 588, 596 (Tex. 2008). But uncontrove rted issues do not need to be submitt ed to a jury

. City of Keller v. W ilson , 168 S.W .3d 802, 815 (Tex. 2005). The parties do not disag ree about what ass et s R i l ey -Huff acquir ed; they disag ree about whether there was evidenc e that any of the assets wer e acquir ed as a result of Huff’ s or D’Ang elo’s brea ches of fiduciar

y duties. The Huff Def endants say that there was no evidenc e L ong view considere d any specific lease s, thus there was no evidenc e to support submissi on of Question 5, and no evidenc e to support the jury ’s answe r to it.
L ong view ar g ues that there was e vidence to support a tracing finding , if one wa s require d, and an element of the require ments for a constructive trust was submitt ed to the jury , the jury found in its favor , and the trial court could have, and necessar ily did, deem any other findings necessar

y
to support its ju d gm en t

. S ee T E X
. R. C I V
. P. 279 (ele ments of a g round of rec overy are deeme d

1 3found by the trial court in favor of its judgme nt if (1) an element of an i n d ep en d en t g round of

rec overy was submitt ed to and found by the jury ; (2) elements wer e omitted without objection; and (3) the submitt ed element was “nec essar ily ref era ble” to the same g round of rec overy as the omitted elem en t s ). But even if we assume a deeme d finding on trac ing, and that the Huff Def endants’ objections wer e not sufficie nt to aler t the trial court of the omission of the trac ing element from the char g e, we must still deter mine whether there was evidenc e to support a deeme d finding

. See Serv. Corp. Int’l v. Guerra , 348 S.W .3d 221, 229 (Tex. 2011) (noting that when an element of a claim is omitted from the jury char g e without objec tion a nd no written finding s are made by the trial court, the omitted element is deeme d found if there is leg ally sufficie nt evidenc e to support t h e d eeme d finding ); see a lso Ramos v. Frito-Lay, Inc. , 784 S.W .2d 667, 668 (Tex. 1990) (providing that an omitted element will be dee med found if supporte d by some evidenc e).
L ong view contends that undisputed evidenc e identified t h e lease s the trial court order ed subjected t o a co n s t ru ct i ve trust as having been acquir ed by Riley -Huff as a result of Huff’ s or D’Ang elo’s brea ches of fiduciar y du ties. The Huff Def endants ag ree that the evidenc e was undisputed as to eac h of the lease s Riley -Huff acquir ed, including the location and orig in of eac h of them. But in diametric opposition to L ong view’s position, they contend, as they did in the t ri al court, there was no evidenc e Riley -Huff acquir ed any specific lease as a result of the brea ches of fiduciar y duties by Huff or D’Ang elo. We ag ree with the Huff D efe ndants.
I t is undisputed that the lease broker s identified and prese nted only blobs containing , in the
ag g reg ate, a t least 235,000 acr es for L ong view to consider in deciding whether to purcha se lea ses

o n 21,000 acr es. There must have been evidenc e trac ing a brea ch of fiduciar y duty b y Hu ff o r
1 4D’Ang elo to specific lease s in order to support the imposit ion of a constructive trust on those lease s.

See KCM Fin. , 457 S.W .3d at 88 (providing that a constructive trust c annot be imposed wher e the
trac ing element is not met). The court of appea ls noted, and we ag ree , that there is no evidenc e any specific lease s or acr eag e for leasing wer e identified by the broker s as possible targ ets for L ong view
to purcha se or lease , nor is there evidenc e that any specific lease s or acr eag e for leasing wer e

rec ommended to or sele cted by L ong view or its board for pursuit or purc hase. See 482 S.W .3d at 191– 9 3

. Thus, the evidenc e in this case is leg ally insufficient to support a finding trac ing any specific lease s Riley -Huff acquir ed to a breac h of fiduciary duty by either Huff or D’Ang elo. See KCM Fin. , 457 S.W .3d at 88 (“I n order to fa s t en a co n s tructive trust on proper ty owned by the defe ndant, som e p ar t i cular proper ty must be identified as to which plaintiff has an equity .”). Acc ording ly , L ong view was not entitled to have a constructive trust imposed on any lease s acquir ed by Riley -Huff or on proper ty associate d with them. Nor was L ong view entitled to have title to any of the lea ses or a ssociated pr operties tra nsfer red to it. The trial court err ed by rende ring judgme nt imposing the constructive trust on and requiring the transfe r of lease s and proper ties to L ong view. B. Money Judgme nt J ury Questions 6 throug h 9 addre ssed monetary values and amounts on which the trial court based its judgme nt awa

rding L ong view $95.5 milli on. The jury was instructed to answe r these questions only if it found in response to either Question 1 or Question 2 that Huff or D’Ang elo failed to comply with a fiducia

ry duty to L ong view. The questions were as follows: Question No. 6 : What is the marke t va lue of the assets in the Eag le For d shale that Riley -Huff Energ y Group L L C acquir ed as a result of Rick D’Ang elo’s or Bill Huff’ s failure to comply

with his fiduciary

duty ?

1 5Answer in dollars and ce nts, if any : Answer: $42,000,000. Question No. 7 : What did Riley -Huff Energ y Group L L C pay fo r t h e as s ets it acquir ed in the Ea g le For d shale? Answer in dollars and ce nts, if any : Answer: $24,500,000. Question No. 8 : What is the amount of past production reve nues Riley -Huff Energ y Group L L C derive d from the assets in the Eag le For d shale it acquir ed as a result of Rick D’Ang elo’s or B ill Huff’s fa ilure to comply with his fiduciary

duty ? Answer in dollars and ce nts, if any : Answer: $120,000,000. Question No. 9 : What did Riley -Huff Energ y Group L L C pay to develop the assets it acquire d in the Eag le For d shale? Answer in dollars and ce nts, if any : Answer: $127,000,000.
I n addre ssing the Huff Def en d ants’ challeng es to these finding s, we will ag ain assume, without deciding , that L ong view’s claim that the Huff Def endants ac q u i re d assets as a result of competition with L ong view without disclosure to and approva l by L ong view’s board of direc tors is

rec og nized under Delaw are law, L ong view’s pleading s wer e sufficie nt to support such a claim, and the evidenc e wa s s ufficie nt to support the jury ’s finding s that the Huff Def endants brea ched that duty , as we ll as the duty

to not take a c orpora te opportunity from L ong view. Addre ssing the Que s t i o n s i n numerica l order , we first consider Question 6. The Huff Def endants challeng ed the evidentiar y support for the question by objecting to it, in p ar t , o n t h e
g rounds that L ong view had the burden to pr ove its e ntitlement to any rec overy on a lea se-by -lea se basis and fa iled to do so. W e ag ree with that positi on. As part of it s task in answe ring Question 6, the jury had to deter mine what assets—i.e., lease s—Riley -Huff acquir ed as a result of brea ches of fiduciar y duties by Huff or D’Ang elo. Absent

1 6finding s as to which individual lease s wer e s o ac q u i re d , the jury could not find the value of the

assets. Additionally , any finding s as to which lease s wer e acqui re d as a result of Huff’ s or D’Ang elo’s brea ches o f fi d u ci ar y duties had to be supported by evidenc e. We have alre ady considere d whether

the evidenc e wa s leg ally

sufficie nt to support the jury ’s answe r to Question 5, wh i ch in substance require d the same finding s as did Question 6 reg arding specific l ea s es . Consist ent with our analy sis and conclusion as to Question 5—that the eviden ce was leg ally insufficient to support such finding s—we conclude no evidenc e supported the finding s require d by Question 6 as to specific lease s or specific acr eag e for leasing that wer e identified by the broker s as possible targ ets for L ong view to invest in, nor was there evidenc e that any specific lease s or acr eag e

wer e recommende d to or selected by its board for pursuit or purchase. Abs ent s uch evidence, the jury ’s answe r to Question 6 was based on l ega l l y i n s u fficie nt evidenc e and cannot support a judgme nt for L ong view. The Huf f De fenda nts did not obj ect to either Question 7 or Que stion 8 on the gr ounds that there was no evidenc e to support its submissi on to the jury

. But they objected to Question 8, in part,

on g rounds that “the valuation should be based on the net of production cost and expenses, including taxes.” L ong view’s counsel responde d, “[That] is taken into acc ount by Question 9.” The trial court

overr uled the objec tion.
L ong view chang ed its position as to Questions 8 and 9 afte r the jury returne d its verdic t. At that point it did not co n t en d i t was entitled to reve nues from the assets as found in response to Question 8 net of the development costs found in response to Question 9. Rather, it contende d that the jury ’s answe r to Question 9 could not be used to calc ulate the net amoun t R i l ey -Huff derive d

1 7from the assets beca use Question 9 was immaterial—it did not limit the jury to considering only those costs nece ssary to develop assets acquir ed t h rough a brea ch of fiduciar y duty by Huff or D’Ang elo, which was what Question 8 asked. Thus, L ong view maintained—and maintains in this Court—that the answe r to Question 9 should be disreg arde d. The trial court first rende red judgme nt that, in part, provided for L ong view to rec over $95.5 milli on, “base d on the jury ’s finding reg arding the value of past-produc tion reve nues derive d from the S u b j ec t P ro p erties minus the amount the jury found that the defe ndants paid to acquir e the Subject P ro p er t i es.” The court later rende red an amende d judgme nt which deleted the above lang uag e and simply order ed that L ong view rec over $95.5 milli on without explaining how it arr ived at the amount. The Huff D efe ndants urg e that the only explanation for the fig ure of $95.5 milli on is that the trial court disreg arde d the answe r to Question 9 and did what it first said it did—reduc ed the $120 milli on answe r to Question 8 by the $24.5 m i l l i o n answe r to Question 7. L ong view
sug g ests the same basis for the $95.5 milli on amount. But L ong view continues to maintain that the trial court could have proper ly considere d Question 8 without also considering Question 9 beca use Question 9 was not limit ed to the assets Riley -Huf f ac q u i re d as a result of brea ches of fiduciar y duties by Huff and D’Ang elo, as was Ques tion 8. We ag ree with L ong view’s position in part: Question 9 was immater ial. But that doe s not mean that L ong view is corr ect in whole. Both parties cite Delaw are law as controlling the amount rec o v e r a b le f o r a brea ch of fiduciar

y duty

. Delaw are law limit s disgor g ement to a fiduciar y ’s profit. Guth , 5 A.2d at 510; see also Thorpe

v. CERBCO, Inc. , 676 A.2d 436, 445 (D el. 1996) (once disloy alty has been proven, “a fiduciar y [m ay ] not profit persona lly from his conduct” (empha sis added) ). Whether the amount rec overa ble

1 8is considere d substantive or reme dial does not matter, beca use Texas law simil arly limit s disgor g ement to a fiduciar y ’s profits. ERI Consulti ng Eng’rs, Inc. v. Swinnea , 318 S.W .3d 867, 873 (Tex. 2010) (cour

ts may “disg org e all ill-gotten pr o f i ts from a fiduciar

y when a fiduciar

y ag ent

u s u rp s an opportunity proper ly belong ing to a principal, or competes with a principal” (empha si s added) ). Thus, under either Delaw are or Texas law, the disgor g ement awa rd must be based on profits Riley -Huff obtained as a result of Huff’ s or D’Ang elo’s brea ches of fiduciar y duties. The
amount of profit resulting from a brea ch of fiduciar y duty will g ener ally be a fac t que stion. I n this instance, neither party contends that it was not. Under the circ umstances, the amount the trial court

was au t h o ri z ed t o order the Huff Def endants to pay L ong view was the amount of profit resulting from Huff’s or D’Ang elo’s breac hes of fiduciar y duties as found by

the jury

. But such a question

was not submitt ed to the jury , even though the Huff Def endants specific ally pointed out the omission by objecting to Question 8. Question 8 did not require the jury to find how much profit Riley -Huff obtained from the assets it acquir ed by means of Huff’ s or D’Ang elo’s brea ches; it require d the jury to f ind only the amount of reve nues Riley -Huff rec eived. And Q uestion 9 did not li mit the jury to finding the expenses require d to produce the reve nues found in answe r to Question 8, as L ong view has maintained post-verdic t. Be cause the answe r to Question 8 submitt ed an incorre ct measure for equitable disgor g ement of profit and there was no other finding which could be used in conjunction with the answe r to Question 8 to calc ulate Riley -Huff ’s profit , Qu es tion 8 and its answe r wer e immaterial.

1 9Be cause there was lega lly insufficient evidence to support the j ury ’s answer to Question 6

and the jury ’s answe r to Q uestion 8 was immaterial, there was no basis for the trial court to r ender judgme nt in favor of

L ong view for

money , and it err ed in doing so. IV. Conclusion
For the re asons set out above , we a ffirm the judg ment of the c ourt of appe als.

________________________________________ Phil J ohnson J ustice

OP INION DELIVERED: J une 9, 2017

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