IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18-10755

MIDWESTERN CATTLE MARKETING, L.L.C., 

 Plaintiff - Appellant

v.

LEGEND BANK, N. A., 

 Defendant - Appellee

Appeal from the United States District Court 

Northern District of Texas, Fort Worth

USDC No. 4:17-CV-375

Before BARKSDALE, STEWART, and COSTA, Circuit Judges.1

PER CURIAM:*

The pending petitions for panel rehearing are hereby DENIED. The 

panel opinion, Midwestern Cattle Mktg., L.L.C. v. Legend Bank, N.A., ––– Fed. 

Appx. ––––, 2019 WL 6834031 (5th Cir. Dec. 13, 2019), is WITHDRAWN, and 

the following is substituted:

1 Judge Costa concurs in the judgment only.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

March 3, 2020

Lyle W. Cayce

Clerk

 Case: 18-10755 Document: 00515330073 Page: 1 Date Filed: 03/03/2020
No. 18-10755

2

This diversity action stems from a check-kiting scheme in North Texas. 

Plaintiff-Appellant Midwestern Cattle Marketing, L.L.C. (“MCM”) appeals the 

two summary judgment rulings in favor of Defendant-Appellee Legend Bank, 

N.A. (“Legend”). For the reasons stated herein, we AFFIRM in part and 

REVERSE and REMAND in part.

I.

At the heart of this action is a checking-kiting scheme2 within the 

livestock industry that grew to be “one of the largest cattle fraud cases in Texas 

history.”3 

Tony Lyon was the perpetrator of this fraudulent scheme that eventually

caused MCM to go out of business. MCM was a cattle brokerage company in 

the business of buying cattle from producers, picking the cattle up from 

producers, and delivering the cattle to a buyer for a commission. Jason 

O’Connell and his uncle operated MCM. During the relevant period, MCM 

banked with Points West Bank (“Points West”). 

To facilitate the check-kiting, Tony Lyon used his parents’, Owen and 

Monna Lyon (the “Lyons”)4, business account with Legend. The bank account 

(the “Lyons’ account”) was opened at Legend in 2005 at Legend’s Decatur, 

Texas, branch office. The Lyons’ account was used for the Lyons’ ranching

2 Check-kiting is a fraudulent scheme designed to trick banks into honoring checks 

drawn against an account with insufficient funds and extending a line of credit to honor that 

check on the accountholder’s behalf. United States v. Frydenlund, 990 F.2d 822, 824 (5th Cir. 

1993) (citations omitted).

3 Natalie Posgate and Mark Curriden, Jack Co. Family Hit with $23M Cattle Fraud 

Verdict, THE TEXAS LAWBOOK (Jan. 24, 2017), 

https://www.bellnunnally.com/27F299/assets/files/Documents/1-24-17%20-

%20The%20Texas%20Lawbook%20-%20Trowbridge%20and%20Cheek.pdf.

4 To be clear, this shorthand reference only includes Owen and Monna Lyon, not Tony 

Lyon.

 Case: 18-10755 Document: 00515330073 Page: 2 Date Filed: 03/03/2020
No. 18-10755

3

company, Lyon Farms. During the relevant period, Brennan Williams was the 

branch president.5 

Tony Lyon assisted his parents with Lyon Farms, but the record is 

unclear how much assistance Tony Lyon provided in operating the business.6

Brennan Williams and other Legend employees were aware that Tony Lyon 

helped with the Lyons’ cattle business. There is no evidence indicating 

Brennan Williams and other Legend employees were aware that Tony Lyon

had access or was otherwise using the Lyons’ account for fraudulent purposes. 

Brennan Williams testified, in a 2017 trial7, that he met and communicated 

with Tony Lyon a handful of times, once at a Decatur Livestock Market and a 

“time or two” at the branch office.8 

A.

MCM’s and Tony Lyon’s Business Relationship

5 Brennan Williams and his father have also engaged in a cattle transaction with 

Owen Lyon. Brennan Williams testified by deposition twice regarding this cattle purchase. 

Initially, he testified that he was unaware of this cattle agreement with Owen Lyon, and he 

later recanted that deposition testimony in a subsequent deposition and acknowledged the 

transaction. 

6 MCM’s first amended complaint states that Tony Lyon operated the business and 

Owen Lyon was only a “part time rancher”. However, the affidavits of Tony Lyon, Owen 

Lyon, and Monna Lyon do not acknowledge that Tony Lyon was involved in Lyon Farms and 

Brennan Williams testified, in a 2017 trial (see, infra, Sect.II), that Owen Lyon informed him 

that Tony Lyon “had been helping him a time or two”.

 

7 He testified in a related case, Midwestern Cattle Marketing, LLC v. Tony Lyon d/b/a 

Lyon Farms, Owen Lyon, and Manna Lyon, Case No. 15—07—061 in the 271st Judicial 

District Court of Jack County, Texas. See, infra, Sect.II.

8 MCM points to several dozen phone records to indicate that Brennan Williams and 

Tony Lyon frequently communicated. Upon review, only phone numbers are listed in these 

records. There is no verification that these numbers belong to Brennan Williams or Tony 

Lyon. The records that contain the actual text messages only show several messages that 

reference Owen Lyon. Moreover, no testimony corroborates this texting history between 

them. Because there is nothing more to suggest that these individuals communicated often, 

we do not reach the same conclusion as MCM. 

 Case: 18-10755 Document: 00515330073 Page: 3 Date Filed: 03/03/2020
No. 18-10755

4

Tony Lyon was in the business of buying, selling, and grazing cattle. In 

2002, he was convicted of making a false statement to a banking institution, 

Bank of America (“BOA”), concerning cattle loans. The court sentenced him to 

thirty-seven months in prison and awarded BOA just over $6 million in 

restitution. Tony Lyon’s affidavit stated that he resumed running his 

independent cattle business after his release from prison.

In July 2011, at a sale barn in Graham, Texas, Jason O’Connell and Tony

Lyon met and developed a business relationship—which led to an agreement 

where Tony Lyon would buy cattle for MCM.9 Using the Lyons’ account,10 Tony

Lyon bought cattle from local ranchers and sale barns to sell to MCM. MCM 

or Tony Lyon would then find a buyer for the cattle and would split the profits.

From 2011 to 2014, Tony Lyon and MCM completed dozens of cattle sales 

without incident. 

According to Jason O’Connell’s affidavit, as the business relationship 

progressed, Tony Lyon informed Jason O’Connell of his previous conviction in 

defrauding BOA. Jason O’Connell’s knowledge of Tony Lyon’s conviction did 

not deter or otherwise hinder MCM’s business dealings with Tony Lyon. 

According to Jason O’Connell, he believed in giving “second chances.” 

B.

The Exchange of Checkbooks Leads to Check-Kiting

9 There is conflicting affidavit testimony (between Jason O’Connell, his uncle, and 

Tony Lyon) as to whether the business arrangement involved the Lyons and Lyon Farms. 

There is no evidence of MCM directly communicating with Owen or Monna Lyon in 

facilitating this engagement. In turn, we presume that the arrangement only involved Tony 

Lyon and MCM. 

10 Originally, Tony Lyon used his First Financial Bank account to facilitate cattle 

transactions, but BOA soon levied that account. Thus, in an effort to avoid the BOA 

“interference,” Tony Lyon used the Lyons’ account. 

 Case: 18-10755 Document: 00515330073 Page: 4 Date Filed: 03/03/2020
No. 18-10755

5

To accelerate the cattle transactions and transfer of funds, Tony Lyon 

(with authorization from the Lyons) and MCM provided each other with preauthorized checks from their respective banks. MCM provided Tony Lyon with 

blank Points West checks and an MCM authorized signature stamp, and Tony

Lyon (through Monna Lyon’s authorization) provided pre-signed Legend 

checks to MCM. This approach allowed Tony Lyon and MCM to send each 

other invoices for authorization to fill in the blank checks and deposit them in 

Points West or Legend (respectively). This arrangement essentially provided 

Tony Lyon with check-writing control to both accounts.11 

With this authority, Tony Lyon devised a check-kiting scheme. The 

scheme involved a fictitious businessman and company, “John George” and 

George Cattle Company (“GCC”). Tony Lyon informed MCM that he developed 

a relationship with John George and portrayed him to be a wealthy 

businessman interested in making cattle investments. 

Tony Lyon began to falsely claim to purchase cattle using MCM’s line of

credit, then submitted fake invoices to MCM, and would afterward state that 

he resold the cattle to GCC. After brokering this purported deal, Tony Lyon

would have his mother, Monna Lyon, authorize a Legend check to MCM for 

the line of credit and profit on the GCC transaction. Tony Lyon would have 

this Legend check issued with the full understanding that the Lyons’ account 

had insufficient funds to cover the check. But shortly thereafter, Tony Lyon

would receive permission from MCM to deposit a pre-authorized Points West 

check for additional credit to purchase more cattle. That additional credit 

would cover the previously issued check payable to MCM. In essence, these 

11 The record does not reflect that the Lyons informed Legend of Tony Lyon’s new 

authority vis-à-vis the Lyons’ account. The same can be said about Points West as it also 

was not informed of Tony Lyon’s authority in issuing these Points West checks with MCM’s 

signature stamp. 

 Case: 18-10755 Document: 00515330073 Page: 5 Date Filed: 03/03/2020
No. 18-10755

6

two accounts were exchanging and drawing checks on each other, so when 

Points West processed a check and sought payment from Legend, the payee 

bank, there was sufficient provisional credit in the Lyons’ account to cover,

based on a recently deposited Points West check. 

Over the span of the check-kiting scheme (between late 2014 through 

June 2015), a cascade of hundreds of checks rebounded back and forth between 

the Lyons’ account and the MCM’s Points West account. 

C.

Legend’s Oversight of the Lyons’ Account and the Scheme’s Collapse

Nothing in the record suggests that Legend conspired with or assisted 

Tony Lyon in devising and executing this check-kiting scheme. The frequent 

withdrawals and deposits within the Lyons’ account would often incur 

overdrafts and negative balances to the Lyons’ account. Legend understood 

that the increase was due to business dealings with MCM. And in the event of 

an overdraft, Brennan Williams, the branch president, would advance

provisional credit to the Lyons’ account. The overdrafts and provisional credits 

varied from as little as $152,000.00 to $4.4 million over the course of four 

months. 

As the volume of transactions escalated, Legend’s internal systems 

(which consist of several check fraud detection monitoring programs) began 

alerting Legend about the Lyons’ account activities as early as January 27, 

2015. The alerts included red flags for check-kiting activity and overdraft 

insufficient notices. Despite the fraud detection system notifications, Legend 

did not report such alerts or otherwise cease advancing its lines of credit until 

June 26, 2015.

On that date, Points West sought payment from Legend for a $5 million

check payable to MCM. At the time, the Lyons’ account only contained the 

credit that Legend floated, and Legend was still waiting on Points West to 

 Case: 18-10755 Document: 00515330073 Page: 6 Date Filed: 03/03/2020
No. 18-10755

7

honor several MCM checks payable to the Lyons. Considering the risks in 

honoring the $5 million check when the Lyons’ account only contained 

provisional credit, Legend placed a stop payment on the check and returned it 

to Points West for insufficient funds. This caused the scheme to collapse, and 

because Legend was the first bank to act and not honor a check, Legend did 

not lose any money in this scheme. In contrast, MCM sustained significant 

loss and went out of business in June 2015.

II.

Considering the foregoing, MCM filed a lawsuit against Tony Lyon, Lyon 

Farms, and Owen and Monna Lyon that resulted in a jury trial verdict in 

MCM’s favor totaling over $23 million. In a separate criminal matter, Tony 

Lyon subsequently pleaded guilty to, inter alia, fraud and the check-kiting 

scheme. He was sentenced to 10 years in prison and ordered to pay over $5

million in restitution. 

In May 2017, MCM initiated this action against Legend because it 

maintains that Legend profited from and was complicit in the check-kiting 

scheme. MCM sought recovery for fraudulent transfer (Count One), money 

had and received (Count Two), unjust enrichment (Count Three), common law 

fraud (Count Four), aiding and abetting (Count Five), conspiracy (Counts Six 

and Seven), violation of the garnishment statute (Count Eight), negligent 

misrepresentation (Count Nine), violations of the Uniform Commercial Code 

(Count Ten), and negligence, negligence per se, and gross negligence (Count 

Eleven). MCM’s prayer of relief included exemplary damages and attorney’s 

fees (Counts Twelve and Thirteen). 

Legend filed a motion for summary judgment. The district court granted 

the motion in part as to counts two through twelve. In a supplemental order, 

it granted summary judgment on the remaining claim. MCM timely appealed 

 Case: 18-10755 Document: 00515330073 Page: 7 Date Filed: 03/03/2020
No. 18-10755

8

the district court’s summary judgment rulings and its evidentiary ruling 

excluding MCM’s three experts.

III.

“We review a [district court’s order] grant[ing] summary judgment de 

novo, viewing all evidence in the light most favorable to the nonmoving party 

and drawing all reasonable inferences in that party’s favor.”12 Pierce v. Dep’t 

of U.S. Air Force, 512 F.3d 184, 186 (5th Cir. 2007). “Summary judgment is 

appropriate when ‘there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.’” Lyda Swinerton Builders, 

Inc. v. Okla. Sur. Co., 903 F.3d 435, 444 (5th Cir. 2018) (quoting FED. R. CIV.

P. 56(a)).

This diversity action relates to check-kiting, overdrafts, and provisional 

credits. Article 4 of the Uniform Commercial Code (“UCC”), found in Texas 

Business and Commerce Code Chapter 4, is the governing body for bank 

deposits and collections, and it serves as the guidepost for our analysis. TEX.

BUS. & COM. CODE § 4.101, et seq.; Am. Airlines Emps. Fed. Credit Union v. 

Martin, 29 S.W.3d 86, 91 (Tex. 2000) (“Article 4 of the UCC . . . establishes the 

rights and duties between banks and their customers regarding deposits and 

collections.”).

“We have jurisdiction over this case owing to the diversity of the parties, 

so we apply Texas substantive law. [citation] In doing so, we are bound by the 

decisions of the Supreme Court of Texas.” DeJoria v. Maghreb Petroleum 

Expl., S.A., 935 F.3d 381, 387 (5th Cir. 2019) (citing Comm’r v. Bosch’s Estate, 

387 U.S. 456, 465 (1967) and Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)).

Money “Had and Received” and Unjust Enrichment

12 Except for the district court’s evidentiary ruling to exclude expert testimony and 

application of an equitable defense, each issue shall be reviewed de novo. 

 Case: 18-10755 Document: 00515330073 Page: 8 Date Filed: 03/03/2020
No. 18-10755

9

In dismissing MCM’s money had and received claim, the district court 

determined that Legend properly asserted an unclean hands defense and that 

MCM failed to demonstrate ownership.13 We disagree.

A legal “action for money had and received arises when [a party] obtains 

money which in equity and good conscience belongs to the plaintiff.” Amoco 

Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.—El Paso 1997, no pet.). 

Money had and received claims “‘belong[] conceptually to the doctrine of unjust 

enrichment.’” Edwards v. Mid—Continent Office Distribs., L.P., 252 S.W.3d 

833, 837 (Tex. App.—Dallas 2008, writ denied) (quoting Amoco, 946 S.W.2d at 

164). Specifically, it is “an equitable doctrine applied to prevent unjust 

enrichment.” Miller-Rogaska, Inc. v. Bank One, Tex., N.A., 931 S.W.2d 655, 

662 (Tex. App.—Dallas 1996, no writ), superseded on other grounds by TEX.

BUS. & COM. CODE § 3.419. Unjust enrichment results from the “failure to 

make restitution [of benefits] under circumstances that give rise to an implied 

or quasi-contractual obligation to return those benefits.” Edwards, 252 S.W.3d 

at 837 (citations omitted).14

13 Legend also maintains that money had and received claims have been supplanted 

by the UCC. This position contradicts precedent. We have held that the UCC did not displace 

Texas’s money had and received claim, and Texas courts have adopted our reasoning. See 

Peerless Ins. Co. v. Texas Commerce Bank-New Braunfels, N.A., 791 F.2d 1177, 1179–81 (5th 

Cir. 1986); see also Stone v. First City Bank of Plano, N.A., 794 S.W.2d 537, 543 (Tex. App.—

Dallas 1990, writ denied) (“In our view, the opinion of Peerless employs sound reasoning, and 

we adopt it as our own.”). Even a conflict between the UCC and a common law claim like 

money had and received does not necessarily warrant the displacement of the cause of action 

if the two can be reconciled. See Coastal Agric. Supply, Inc. v. JP Morgan Chase Bank, N.A., 

759 F.3d 498, 508 (5th Cir. 2014) (“[T]he conflict between the money had and received claim 

at common law and [Tex. Bus. & Com. Code] § 3.405 can be resolved without entirely 

displacing the money had and received claim. Rather, the money had and received claim as 

applied in this situation must simply incorporate the affirmative defense provided by [Tex. 

Bus. & Com. Code] § 3.405.”). Moreover, Legend does not point to a conflict that would bear 

on this case.

14 Legend claims that Texas does not recognize unjust enrichment as a distinct 

standalone claim. We have held that while unjust enrichment may not be an independent 

 Case: 18-10755 Document: 00515330073 Page: 9 Date Filed: 03/03/2020
No. 18-10755

10

We review application of the unclean hands doctrine for 

abuse of discretion. Radiator Specialty Co. v. Pennzoil-Quaker State Co., 207 

F. App’x 361, 362–63 (5th Cir. 2004) (per curiam).15 “A district court abuses 

its discretion if it: (1) relies on clearly erroneous factual findings; (2) relies on 

erroneous conclusions of law; or (3) misapplies the law to the facts.” Combs v. 

City of Huntington, Tex., 829 F.3d 388, 391 (5th Cir. 2016) (quoting Allen v. C 

& H Distribs., L.L.C., 813 F.3d 566, 572 (5th Cir. 2015)). 

The equitable defense of unclean hands is based on “the common-law 

notion that a plaintiff’s recovery may be barred by his own wrongful conduct.” 

Rogers v. McDorman, 521 F.3d 381, 385 (5th Cir. 2008) (internal quotation 

omitted). “[T]he unclean hands defense is inapplicable altogether where the 

plaintiff’s sins do not affect or prejudice the defendant.” Bank of Saipan v. 

CNG Fin. Corp., 380 F.3d 836, 842 (5th Cir. 2004) (citing Rodgers v. Tracy, 242 

S.W.2d 900, 905–06 (Tex. App.—Amarillo 1951, writ ref’d n.r.e.)). To dismiss 

a money had and received claim under an affirmative unclean hands defense, 

a court should balance “plaintiff’s errors of omission or commission . . . against 

the defendant’s unjust acts.” Id. at 841 (citation omitted). This defense offsets 

a plaintiff’s recovery like comparative negligence would for a negligence claim. 

claim in Texas, “[a] party may [still] recover under the unjust enrichment theory . . . .” Harris 

Cty. Tex. v. MERSCORP Inc., 791 F.3d 545, 561 (5th Cir. 2015) (citing Heldenfels Bros., Inc. 

v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992)). MCM may therefore recover on an 

unjust enrichment theory as long as it proves that Legend obtained a benefit from MCM “by 

fraud, duress, or the taking of an undue advantage.” Forbes v. CitiMortgage Inc., 998 F. 

Supp. 2d 541, 553 (S.D. Tex. 2014) (quoting Heldenfels Bros., 832 S.W.2d at 41). 15 As mentioned, “[w]e review a grant of summary judgment de novo, viewing all 

evidence in the light most favorable to the nonmoving party and drawing all reasonable 

inferences in that party’s favor.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205–06 

(5th Cir. 2007) (citing Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir. 2000)). 

However, because unclean hands “is an equitable doctrine, and the decision whether to 

invoke it [is] within the court’s discretion, we review for abuse of discretion” the district 

court’s decision to invoke it. In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999) 

(discussing standard of review of a determination of judicial estoppel, another equitable 

doctrine) (citation omitted).

 Case: 18-10755 Document: 00515330073 Page: 10 Date Filed: 03/03/2020
No. 18-10755

11

Bank of Saipan, 380 F.3d at 841. Indeed, when the defense “sounds in 

negligence,” the issues of the plaintiff’s negligence and how much it offsets the 

defendant’s conduct raise fact issues usually appropriate for a jury. See id. at 

841–42.

The weighing of the equities is absent from the court’s analysis. The 

district court merely states that “plaintiff contributed to its own predicament 

by giving [a convicted felon,] Tony[,] its checkbook and a signature stamp.” 

Midwestern Cattle Marketing, LLC v. Legend Bank, N.A., Case No. 4:17–CV–

375–A, 2018 WL 2244339, at *5 (N.D. Tex. May 16, 2018). In its supplemental 

order, the district court continues to emphasize that plaintiff’s “own actions 

played a role in the outcome” without balancing the effect this conduct had on 

Legend. Absent a balancing of the comparative equities, neither we nor the 

district court can “say as a matter of law that unclean hands completely bars 

recovery in this case.” Id. at 842. In failing to properly analyze or otherwise 

appropriately assess this defense, we hold that this district court abused its 

discretion. See Williams v. Manitowoc Cranes, L.L.C., 898 F.3d 607, 615 (5th 

Cir. 2018) (“A district court abuses its discretion when its ruling is based on an 

erroneous view of the law or a clearly erroneous assessment of the evidence.”)

(internal quotation marks omitted). For this reason, we reverse and remand 

MCM’s money had and received claim for the district court to properly assess 

the undisputed facts and the equities of both parties and to determine whether 

MCM’s “sins . . . affect or prejudice” Legend, warranting the application of this 

defense. Bank of Saipan, 380 F.3d at 842. 

Legend’s next position is that MCM failed to demonstrate ownership of 

funds held by Legend, which it asserts is necessary to succeed on a claim for 

money had and received. This argument rests on a technical element, but the 

money had and received claim is “less restricted and fettered by technical rules 

and formalities than any other form of action.” Staats v. Miller, 243 S.W.2d 

 Case: 18-10755 Document: 00515330073 Page: 11 Date Filed: 03/03/2020
No. 18-10755

12

686, 687 (Tex. 1951) (internal quotations omitted). “[A]ll that a ‘plaintiff need 

show [to prove a claim for money had and received] is that defendant holds 

money which in equity and good conscience belongs to him.’” Villarreal v. First 

Presidio Bank, 283 F. Supp. 3d 548, 557 (W.D. Tex. 2017) (citing Staats, 243 

S.W.2d at 687). That showing is in dispute here in light of MCM’s evidence 

and position claiming that it is the rightful owner of the disputed funds. See, 

infra, Sect.III (Texas Uniform Fraudulent Transfer Act (“TUFTA”) Claim). 

Thus, to the extent the district court granted summary judgment here for 

failure to demonstrate ownership, these claims are reinstated and remanded. 

The Constructive Trust Remedy

“A constructive trust is an equitable remedy created by the courts to 

prevent unjust enrichment.” Hubbard v. Shankle, 138 S.W.3d 474, 485 (Tex. 

App.—Fort Worth 2004, pet. denied) (citation omitted). It is not an 

independent cause of action under Texas law. In re Moore, 608 F.3d 253, 263 

(5th Cir. 2010). “To obtain a constructive trust, the proponent must prove (1) 

the breach of a special trust, fiduciary relationship, or actual fraud, (2) unjust 

enrichment of the wrongdoer, and (3) tracing to an identifiable res.” In re 

UTSA Apartments 8, L.L.C., 886 F.3d 473, 488 (5th Cir. 2018) (quoting Gray 

v. Sangrey, 428 S.W.3d 311, 315 (Tex. App.—Texarkana 2014, pet. denied)). 

MCM’s money had and received and unjust enrichment theories are 

premised on the fact that the Lyons’ account contained fraudulently obtained

funds that MCM claims to own. Assuming the court or a jury finds this to be 

the case, then the district court will determine whether to impose a 

constructive trust. 

We note that the district court already determined that this is not the 

type of case where a constructive trust is appropriate because there is no 

specific identifiable res. We disagree. First, paragraphs 78 and 81 of the First 

Amended Complaint identify four specific alleged payments to trace. See 

 Case: 18-10755 Document: 00515330073 Page: 12 Date Filed: 03/03/2020
No. 18-10755

13

RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT § 59(1) & cmt. 

c, illus. 1 (2011); Cf. In re Hayward, 480 S.W.3d 48, 52–55 (Tex. App.—Fort 

Worth 2015, no pet.) (concluding imposition of a constructive trust was 

improper where funds were not traceable). Second, it is premature to make 

this determination because “a constructive trust is a remedy generally 

contemplated by the court at the remedies phase of a legal proceeding, only 

after an entitlement to judgment has been ascertained.” 

GE Capital Commercial, Inc. v. Wright & Wright, Inc., No. 3:09–CV–572–L., 

2009 WL 5173954, at *10 (N.D. Tex. Dec. 31, 2009). We therefore reinstate 

this remedy to be evaluated after judgment is determined (either at summary 

judgment or trial).

Negligence and Gross Negligence Claims

The district court granted summary judgment against MCM’s negligence 

theories (i.e., negligence, negligence per se, and gross negligence) because (1) 

Legend did not owe a duty to MCM, a non-customer; and (2) MCM’s injury is 

purely economic, precluding recovery under the economic loss rule. The first 

point warrants summary judgment. 

Negligence encompasses four key elements—the first, owing a duty to 

the plaintiff, is the central issue here. Mission Petroleum Carriers, Inc. v. 

Solomon, 106 S.W.3d 705, 710 (Tex. 2003). “The existence of a duty is a 

question of law.” Id. 

MCM asserts Legend owed it a duty because “if a bank knows or has 

reason to know that its customer is perpetrating a fraud, the bank has a duty 

not to continue to enable the fraud”. 16 

16 MCM points to several cases to support its argument that it is owed a duty, but the 

problem with each case is that it advances a responsibility owed to fiduciary parties or trust 

beneficiaries, not unaffiliated non-customers. Grebe v. First State Bank of Bishop, 150 

S.W.2d 64, 68 (Tex. 1941) (stating that a bank may come under a legal duty to protect the 

third parties when “[t]he bank . . . with full knowledge that the funds on deposit belonged in 

 Case: 18-10755 Document: 00515330073 Page: 13 Date Filed: 03/03/2020
No. 18-10755

14

MCM’s position is foreclosed by Texas law, which maintains that, in the 

absence of a fiduciary or confidential relationship, a bank owes no duty to a 

person with whom the bank has not dealt and otherwise has no relationship. 

Guerra v. Regions Bank, 188 S.W.3d 744, 747 (Tex. App.—Tyler 2006, no pet.)

(“Because he was not a Regions customer and had no other relationship with 

Regions, as a matter of law Regions owed no duty to Appellant.”); Marlin v. 

Moody Nat’l Bank, N.A., 248 F. App’x 534, 540 (5th Cir. 2007) (“Further, a bank 

owes a duty of care to customers but not third parties.”) (citing Guerra, 188 

S.W.3d at 747). Because MCM did not “deal” with the bank and because its 

only relevant relationship was with Tony Lyon—not Legend—the alternative 

“fiduciary or confidential relationship” is absent.

For these reasons, we affirm the dismissal of MCM’s negligence claims. 

We also affirm the district court’s ruling as to MCM’s gross negligence claim 

as it likewise fails to satisfy the duty element. Austin v. Kroger Tex. L.P., 746 

F.3d 191, 196 n.2 (5th Cir. 2014) (“To recover for gross negligence in Texas, a 

plaintiff must satisfy the elements of an ordinary negligence . . . claim.”).

Conspiracy Claim

MCM’s conspiracy claim posits that Legend conspired with Tony Lyon in 

furtherance of the check-kiting fraud scheme. MCM appears to rely on the 

check-kiting scheme as the underlying basis for the conspiracy claim.17 

part to the minor daughter, knowingly permitted the surviving widow [the fiduciary] to check 

them out of the bank and appropriate them to her own personal use and benefit.”); Steere v. 

Stockyards Nat. Bank, 256 S.W. 586, 590–91 (Tex. Comm’n App. 1923) (precluding the bank 

from offsetting the depositor’s debts because the bank was aware that the account contained 

trust funds); U.S. Fid. & Guar. Co. v. Adoue & Lobit, 137 S.W. 648, 652–53 (Tex. 1911) 

(holding a bank liable for allowing a fiduciary to misappropriate the trust funds that were 

held in the bank to pay the trustee’s personal debts). 

17 Conspiracy liability can also be premised on an underlying cause of action or 

wrongful act—here, being fraud vis-à-vis the check-kiting scheme. In re Enron Corp. Sec., 

Derivative & Erisa Litig., 762 F. Supp. 2d 942, 972 (S.D. Tex. 2010) (“Conspiracy is a 

derivative tort because recovery is not based on the conspiracy, i.e., the agreement, but on 

the injury from the underlying tort, here allegedly fraud.”). 

 Case: 18-10755 Document: 00515330073 Page: 14 Date Filed: 03/03/2020
No. 18-10755

15

Because MCM failed to adduce evidence of genuine disputes of material fact 

suggesting Legend and Tony Lyon were co-conspirators, the district court 

granted Legend’s summary judgment motion, dismissing this claim. We 

affirm.

In Texas, civil conspiracy is a theory of liability that allows an injured 

party to recover from a tortfeasor’s coconspirators. See Agar Corp., Inc. v. 

Electro Circuits Int’l, LLC, 580 S.W.3d 136, 141–42 (Tex. 2019). “[A]

civil conspiracy claim is connected to the underlying tort and survives or fails 

alongside it.” Id. at 141. In proving conspiracy, there must be proof of a

combination of two or more persons working in concert to accomplish an 

unlawful purpose. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 

573, 583 (Tex. 2001). The Texas Supreme Court recently defined the elements 

of civil conspiracy as “(1) two or more persons; (2) an object to be accomplished; 

(3) a meeting of minds on the object or course of action; (4) one or more 

unlawful, overt acts; and (5) damages as the proximate result.” Agar, 580 

S.W.3d at 141–42 (quoting Massey v. Armco Steel Co., 652 S.W.2d 932, 934 

(Tex. 1983)).

MCM seeks to rely on circumstantial evidence. According to MCM, 

genuine issues of dispute exist as to Legend’s intent, overt actions, and the 

meeting of the minds. MCM points to “Legend’s internal fraud detection 

devices generating repeated check-kiting warnings, Legend’s president 

manually overriding them then advancing substantial sums [of credit] to cover 

seven-figure overdrafts,” and Brennan Williams and his father executing the 

cattle deal with Owen Lyon (that Brennan recanted after initially denying). 

MCM avers that, under this record, a reasonable jury could conclude that 

Legend was a willing participant in the check-kiting scheme with Tony Lyon, 

precluding summary judgment. 

 Case: 18-10755 Document: 00515330073 Page: 15 Date Filed: 03/03/2020
No. 18-10755

16

We disagree because this circumstantial evidence does not raise to a 

genuine issue of material fact as to whether Legend and Tony ever reached a 

“meeting of the minds” over a joint objective to execute this check-kiting 

scheme. Cf. Schlumberger Well Surveying Corp. v. Nortex Oil & Gas, 435 

S.W.2d 854, 858 (Tex. 1968) (“[P]roof of a conspiracy may be, and usually must 

be made by circumstantial evidence, [citation] but vital facts may not be proved 

by unreasonable inferences from other facts and circumstances”.) (citations 

omitted). 

“[A] meeting of the minds on the object or course of action” is one of the 

vital elements required to establish a civil conspiracy. Id. at 857 (internal 

quotation marks and citation omitted). Here, there is no circumstantial 

evidence of two or more parties pursuing a common unlawful objective such as 

(1) Legend being aware that Tony Lyon was intentionally defrauding MCM; (2) 

Tony Lyon informing Legend of essential details to the check-kiting scheme, in 

particular that GCC was fictitious; (3) Brennan Williams directly benefitting 

from Tony Lyon’s fraudulent scheme; or (4) Legend being aware that Monna 

Lyon provided Tony Lyon with pre-authorized checks. MCM instead 

underlines Legend’s internal fraud alert system and Brennan Williams

overriding such alerts. This is proof of Legend’s day-to-day business operations

and Brennan Williams’ day-to-day employment duties, not a tacit meeting of 

the minds connected to Tony Lyon. Cf. Chu v. Hong, 249 S.W.3d 441, 447 (Tex. 

2008) (“[I]nferring an agreement to the ultimate injury generally arises ‘from 

joint participation in the transactions and from enjoyment of the fruits of the 

transactions.’”) (quoting Int’l Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 

567, 582 (Tex. 1963)). MCM’s reliance on Brennan’s cattle transaction with 

Owen Lyon is equally unpersuasive because there are no facts that this cattle 

exchange supported Tony Lyon’s unlawful purpose of check-kiting or was 

otherwise connected to Tony Lyon. We do not see any inferences that can be 

 Case: 18-10755 Document: 00515330073 Page: 16 Date Filed: 03/03/2020
No. 18-10755

17

drawn beyond Legend’s general business operations and an independent cattle 

transaction involving Brennan Williams and his father. Brown v. City of Hou., 

Tex., 337 F.3d 539, 541 (5th Cir. 2003) (“Unsubstantiated assertions, 

improbable inferences, and unsupported speculation are not sufficient to 

defeat a motion for summary judgment.”).

We therefore affirm the district court’s summary judgment ruling to 

dismiss MCM’s conspiracy claim.

Aiding and Abetting

We agree with the district court’s dismissal here but for different reasons 

as the law has changed since the district court’s ruling. MCM contends that 

several events raise genuine disputes of material fact as to whether Legend 

intended to enable Tony Lyon’s scheme via the Lyons’ account. A month after 

the district court ruled on summary judgment, we handed down a decision 

stating that aiding and abetting does not exist as a distinct cause of action in 

Texas. In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 

888 F.3d 753, 781–82 (5th Cir. 2018). In DePuy, the district court “exceeded 

its circumscribed institutional role” by recognizing a cause of action for aiding 

and abetting under Texas law. 888 F.3d at 781. We noted that the “Texas 

Supreme Court ‘has not expressly decided whether Texas recognizes a cause of 

action for aiding and abetting,’” and “[w]hen sitting in diversity, a federal court 

exceeds the bounds of its legitimacy in fashioning novel causes of action not yet 

recognized by the state courts.” Id. (citations omitted). Therefore, we cannot 

recognize a claim that the Texas Supreme Court has yet to expressly adopt. 

Id. For these reasons, we affirm the dismissal of the aiding and abetting claim.

Texas Uniform Fraudulent Transfer Act (“TUFTA”) Claim

MCM contends that the Lyons, the debtors, fraudulently transferred 

funds to Legend. According to MCM, the district court erroneously concluded 

that the deposits into the Lyons’ account were not a potential fraudulent 

 Case: 18-10755 Document: 00515330073 Page: 17 Date Filed: 03/03/2020
No. 18-10755

18

transfer under TUFTA. In its supplemental order, the district court dismissed 

this TUFTA claim because the deposits at issue were based on MCM checks 

that were not property of the debtors, the Lyons. Rather, the transferred 

property at issue allegedly belonged to MCM, not the debtors—which MCM 

admitted to in the parties’ joint pretrial order. We agree with the district 

court’s ruling.

TUFTA allows the recovery of property transfers made “with actual 

intent to hinder, delay, or defraud any creditor of the debtor.” TEX. BUS. &

COM. CODE § 24.005(a)(1). “A fraudulent conveyance [under TUFTA] is a 

transfer by a debtor with the intent to hinder, delay, or defraud his creditors 

by placing the debtor’s property beyond the creditor’s reach.” Nobles v. Marcus, 

533 S.W.2d 923, 925 (Tex. 1976). The debtor’s property is also known as an 

asset. TEX. BUS. & COM. CODE § 24.002(2) (stating that “[a]sset means 

property of a debtor”) (internal quotation marks omitted); Nwokedi v. 

Unlimited Restoration Specialists, Inc., 428 S.W.3d 191, 204–05 (Tex. App.—

Houston [1st Dist.] 2014, pet. denied) (“An asset is the property of the debtor, 

which includes anything that may be the subject of ownership.”) (internal 

quotations and citation omitted). “Without an asset, no fraudulent transfer 

can occur under [TUFTA].” Retamco Operating, Inc. v. Republic Drilling Co., 

278 S.W.3d 333, 341 (Tex. 2009). In turn, the transferred property must belong 

to the debtor. 

Here, in the parties’ joint-pretrial order, MCM admitted that it owned 

the transferred property at issue. MCM states that the “funds [transferred] 

never belonged to the Lyons”, rather “the funds in the Legend account belonged 

to [MCM].” Said differently, MCM seeks to recover for the transfers of its 

assets, not the debtors’ (the Lyons’). Because MCM disclosed that the transfers 

at issue were not debtor property, the district court rightfully dismissed this 

claim sua sponte. Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 

 Case: 18-10755 Document: 00515330073 Page: 18 Date Filed: 03/03/2020
No. 18-10755

19

2006) (stating that the court has the authority to consider the sufficiency of a 

complaint and “dismiss an action on its own motion ‘as long as the procedure 

employed is fair’”) (quoting Bazrowx v. Scott, 136 F.3d 1053, 1054 (5th Cir. 

1998)).

IV.

We separately review MCM’s appeal to the district court’s order 

excluding MCM’s expert testimony. 

When navigating the expert-qualification process, the district court has 

“[w]ide latitude.” Roman v. W. Mfg., Inc., 691 F.3d 686, 692 (5th Cir. 2012) 

(stating that the district court was within its wide discretion in making its 

expert testimony rulings). Therefore, “[w]e review the district court’s 

determination of admissibility of expert evidence . . . for abuse of discretion.” 

Pipitone v. Biomatrix, Inc., 288 F.3d 239, 243 (5th Cir. 2002).

“A witness who is qualified as an expert . . . may testify in the form of an 

opinion or otherwise if,” among other things, “the expert’s scientific, technical, 

or other specialized knowledge will help the trier of fact to understand the 

evidence or to determine a fact in issue.” FED. R. EVID. 702. “[W]hether the 

situation is a proper one for the use of expert testimony is to be determined on 

the basis of assisting the trier [of fact].” Peters v. Five Star Marine Serv., 898 

F.2d 448, 449 (5th Cir. 1990) (internal quotation marks omitted). 

The district court’s decision to exclude expert testimony was based on 

the rationale that MCM had one remaining claim for fraudulent transfer under 

TUFTA—which the court later dismissed in a supplemental order. We have 

now affirmed the dismissal of the fraudulent transfer claim and only reinstate 

MCM’s money had and received claim. The balancing of the equities required 

to evaluate money had and received and unclean hands can “sound[] in 

negligence” too. See Bank of Saipan, 380 F.3d at 841–42. In turn, because 

MCM’s banking industry experts were to opine on MCM’s negligence claims 

 Case: 18-10755 Document: 00515330073 Page: 19 Date Filed: 03/03/2020
No. 18-10755

20

(as the district court mentioned), it is necessary for the court to consider 

whether these experts could help a factfinder decide the money had and 

received claim. We therefore remand to the district court to make this expert 

testimony assessment in the first instance.

V.

For the foregoing reasons, we REVERSE the district court’s summary 

judgment order dismissing MCM’s claim for money had and received and 

rejecting MCM’s request for the imposition of a constructive trust. We 

REMAND for further proceedings consistent with this opinion as it relates to 

that claim and remedy. We also REMAND for the district court to consider 

whether MCM’s previously-designated expert witnesses should be allowed to 

testify in relation to the money had and received claim. The district court’s 

ruling is otherwise AFFIRMED. 

Accordingly, the district court’s summary judgment orders are

AFFIRMED in part, and REVERSED and REMANDED in part.

 Case: 18-10755 Document: 00515330073 Page: 20 Date Filed: 03/03/2020