IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-40456

TOBY SHOR; SEASHORE INVESTMENTS MANAGEMENT TRUST,

Plaintiffs - Appellees

v.

THE ZEPHYRUS CORPORATION

Defendant - Appellant

Appeal from the United States District Court

for the Southern District of Texas

U.S.D.C. No. 2:11-CV-329

Before WIENER, HAYNES, and HIGGINSON, Circuit Judges.

PER CURIAM:*

Zephyrus Corporation (“Zephyrus”) appeals an adverse judgment 

entered on a jury verdict in a case where plaintiffs Toby Shor and Seashore 

Investments Management Trust (“Plaintiffs”) sought to impress a constructive 

trust on a boat titled in Zephyrus. Plaintiffs alleged that Paul Black had 

created Zephyrus (owned by Black’s father) and used funds fraudulently 

procured from Seashore Investments Management Trust to purchase the boat. 

* 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 14, 2014

Lyle W. Cayce

Clerk

 

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No. 13-40456

The jury agreed, and a judgment was entered in Plaintiffs’ favor essentially 

awarding title to the boat to Plaintiffs. Zephyrus timely appealed.

We have carefully considered the pertinent portions of the record in light 

of the parties’ arguments presented in their brief and at oral argument. We 

conclude as follows:

1. The jury was not erroneously charged, and the jury’s verdict is 

supported by sufficient evidence. See Flournoy v. Wilz, 201 S.W.3d 

833, 836–37 (Tex. App.—Waco 2006), review granted, judgment rev’d 

on other grounds, 228 S.W.3d 674 (Tex. 2007).

2. Zephyrus’s standing challenge that Shor did not have authority to 

bring the bankruptcy trustee’s claims against Zephyrus, even if 

correct, would not change the outcome of the case and, therefore, 

would be harmless error. See Anchor Cas. Co. v. McGowan, 168 F.2d 

323, 325–26 (5th Cir. 1948). Because the jury separately found that 

Black had breached his fiduciary duty to Shor in her role as trustee 

of Seashore Investments Management Trust, any error does not affect 

the final judgment and is harmless.

3. Zephyrus’s argument, made for the first time on appeal, that Shor

ratified Black’s tortious conduct by entering into a restructure 

agreement, is waived for failing to plead it as an affirmative defense

in the district court and obtain a jury finding on it. See Allied Chem. 

Corp. v. Mackay, 695 F.2d 854, 855–56 (5th Cir. 1983). Even if not 

waived, it is not supported by any evidence showing that Shor was 

aware of Black’s fraud at the time she entered into the restructure 

agreement. See Wise v. Pena, 552 S.W.2d 196, 200 (Tex. Civ. App.—

Corpus Christi 1977, no writ) (“Unquestionably, the key element 

which must be proven to establish ratification and waiver of the 

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No. 13-40456

fraudulent conduct is that the ratifying party had full knowledge of 

the fraudulent acts at the time he ratified these acts.”).

AFFIRMED. 

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