1Pursuant 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this opinion should not be published and is not precedent except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.

 

2Although we have considered all of the numerous issues

presented, we discuss only the most colorable. In sum, the postremand findings of fact are not clearly erroneous; nor do we find

reversible error in the conclusions of law.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 98-40237

____________________

NCNB TEXAS NATIONAL BANK,

Plaintiff-Appellant/Cross-Appellee,

versus

PERRY BROTHERS, INC., 

Defendant-Appellee/Cross-Appellant.

_________________________________________________________________

Appeals from the United States District Court

for the Eastern District of Texas

(9:91-CV-181)

_________________________________________________________________

June 17, 1999

Before REYNALDO G. GARZA, POLITZ, and BARKSDALE, Circuit Judges.

PER CURIAM:1

Chiefly at issue in this second appeal for an action involving

NationsBank’s loan to Perry Brothers and its counterclaims are the

relationship of a fraud claim to the parol evidence rule; whether

the loan was executed under duress; and the availability under

Texas law of prejudgment interest for future economic damages. We

AFFIRM.

2
- 2 -

I.

The following facts are distilled from the exhaustive, postremand district court opinion. In addition, they are tailored to

our court’s opinion for the first appeal. See NationsBank v. Perry

Brothers, Inc., No. 97-40630 (5th Cir. Aug. 24, 1995)(unpublished).

First RepublicBank (40 separate banks in Texas, including the

one at issue at Lufkin) was declared insolvent at the end of July

1988. The Federal Deposit Insurance Corporation was appointed

receiver, transferred to NationsBank most of First RepublicBank’s

assets and all its deposit liabilities, and agreed to provide

financial assistance to NationsBank to the extent that those

liabilities exceeded the value of the assets. In this regard,

NationsBank was required to purchase all of First RepublicBank’s

loans, and to administer them and seek repayment to the greatest

extent possible, in order to minimize the financial assistance from

the FDIC.

One of the acquired loans was with Perry Brothers, which owned

and operated approximately 160 retail stores in Texas and three

adjoining States. Perry Brothers was an established and valued

customer of First RepublicBank Lufkin. At the time that bank

failed, it and Perry Brothers were working on restructuring Perry

Brothers’ line of credit (loan), to include reducing the amount of

available credit. In late August 1988, Perry Brothers paid a

substantial portion of its loan and entered into a $3 million

revolving line of credit with NationsBank (1988 Loan). Renewal of
- 3 -

the 1988 Loan, scheduled to mature on 31 July 1989, was in

NationsBank’s discretion.

Unknown to Perry Brothers, the subsequent NationsBank/FDIC

November 1988 contract allowed NationsBank to transfer back to the

FDIC loans assumed before 28 August 1988 (thus protecting

NationsBank against risk), but only if NationsBank sufficiently

altered the terms at renewal. Accordingly, NationsBank had an

incentive to modify the terms of the 1988 Loan when it matured in

July 1989.

In March 1989, an internal NationsBank “Scheduled Asset

Report” reclassified Perry Brothers as a “decrease” debtor (one of

four NationsBank strategies, besides “increase the line”,

“maintain”, and “out”) and reclassified the loan as a “watch”

credit (the type loan which “would rarely be accepted as a new

customer”). The Report recommended adopting several changes, such

as requiring Perry Brothers’ inventory as collateral, when the loan

matured.

The next month, in April 1989, Perry Brothers and NationsBank

met to discuss a violation of the net worth requirements for the

1988 Loan. NationsBank was represented by branch senior vicepresident Mark Reily. In addition to waiving the net worth

requirement, NationsBank (through Reily) discouraged Perry

Brothers, which had inquired specifically about the bank’s

continuing comfort level with the loan, from seeking or

investigating alternative credit. Reassured, Perry Brothers did

not seek an alternative loan.
- 4 -

An April 1989 memo from Reily to higher NationsBank management

memorialized NationsBank’s discouragement of Perry Brothers from

alternative financing:

Mr. Baldwin [Perry Brothers’ chairman and CEO]

has indicated that several months ago First

City was willing to offer a $5 [million]

commitment on a secured basis. He has also

indicated that if NCNB Lufkin is uncomfortable

with its present position, he can solicit an

offer for financing from them again. NCNB

Lufkin has requested that Mr. Baldwin not

attempt [to] secure alternative financing at

this time, preferring that the company and the

bank wait until the maturity date in July to

assess the situation at that time.

(Emphasis added.)

Higher NationsBank officials approved both the March 1989

Scheduled Asset Report and the April 1989 waiver, but did not

advise Perry Brothers of NationsBank’s plans.

For the renewal in 1989, as was done in 1988, Perry Brothers

and NationsBank did not begin renewal discussions until subsequent

to the maturity date (31 July 1989). In August 1989, NationsBank

Lufkin officers recommended renewing Perry Brothers’ loan on

“basically ... the same terms” as the 1988 Loan. Higher

NationsBank management rejected this recommendation. Perry

Brothers first learned that renewal was not imminent when

NationsBank refused its mid-August 1989 request for an advance.

An August 1989 internal NationsBank memorandum noted that

Perry Brothers could have obtained alternative financing based on

its balance sheet and that “limited (if any)” loss exposure existed

for NationsBank. On 18 September 1989, however, during renewal

negotiations, NationsBank’s Credit Review Committee reclassified
- 5 -

Perry Brothers’ loan as “substandard”, a credit grade implying a

debtor unable to maintain orderly debt service and the need for

intense effort to protect against loss. Such a precipitous drop

required a “Vulnerable Borrower” status under the NationsBank/FDIC

contract. Perry Brothers would be required to report this

reclassification to any prospective creditors. Perry Brothers

tried, but failed, to obtain alternative credit.

In September 1989, during the 1989 Loan negotiations, Perry

Brothers learned for the first time of the NationsBank/FDIC

November 1988 contract and the incentive it created to modify the

loan.

Although Perry Brothers protested unfairness, it and

NationsBank agreed in September 1989 on a new line of credit. For

this 1989 Loan, the principal was reduced from $3 to $2.5 million;

the maturity was shortened to six months; it was “non-readvancing”

rather than revolving (i.e., limited to borrowing a cumulative $2.5

million rather than setting, as did the 1988 Loan, a limit on the

total balance of indebtedness at any one time); and it was secured

by Perry Brothers’ otherwise-unencumbered inventory, several times

the size of the loan. 

The 1989 Loan, back-dated to be effective as of 31 July 1989,

matured on 31 January 1990. Shortly before maturity, Perry

Brothers drew down the balance; but at maturity, it repaid only the

interest. Workout negotiations began.

In March 1990, NationsBank transferred the 1989 Loan to the

“Special Asset Bank”, a designation created by the FDIC/NationsBank
- 6 -

November 1988 contract, which allowed NationsBank to receive fees

from the FDIC for managing a risky asset and to “put” the loan back

to the FDIC. Following the transfer to the Special Asset Bank,

NationsBank also refused to provide credit information to Perry

Brothers’ vendors, a change from previous practice.

In November 1990, as workout negotiations faltered, and

despite an oral contract not to do so, as well as there being no

written agreement permitting it to do so (at trial, the bank

claimed it was proceeding under its common law right of setoff),

NationsBank setoff over $1.3 million from Perry Brothers’ accounts

with NationsBank; blocked access for 30 days to several other

accounts, with assets totaling several million dollars; and

returned for insufficient funds checks totaling approximately

$134,000. Needless to say, Perry Brothers’ holiday season

operations were dramatically impaired.

As a cumulative result of the changed credit terms and setoff,

Perry Brothers delayed for several years final implementation of a

computerized point-of-sale system (which allows retail stores to

better determine what merchandise is selling at which locations),

installing anti-theft devices, and expanding its number of stores.

The acquisition of systems of such size was also hindered by terms

of the 1989 Loan limiting capital expenditure.

NationsBank was aware in 1989 of Perry Brothers’ capital

improvement plans’ dependence on steadily available credit. And,

NationsBank internal documents indicate that it knew a setoff, just

before the Christmas holidays, would disastrously affect Perry
- 7 -

Brothers, and would therefore be a good way to get Perry Brothers’

attention.

In late 1990, shortly after the setoff, NationsBank sued Perry

Brothers in Texas state court on the 1989 Loan balance. Perry

Brothers counterclaimed in mid-1991 regarding the failure to renew

the 1988 Loan, the change in its credit status, and the setoff.

Later in 1991, the 1989 Loan was transferred to the FDIC, which was

substituted as plaintiff. NationsBank remained a counterclaim

defendant. The case was removed to federal court.

In December 1993, following a five-day bench trial, the

district court rendered lengthy findings of fact and conclusions of

law, amended in June 1994 to reflect the findings of a magistrate

judge regarding default-prejudment-interest-rate differential,

attorneys’ fees, and costs. The FDIC was awarded against Perry

Brothers the 1989 Loan balance (approximately $1.2 million),

approximately $400,000 for a default-prejudgment-interest-rate

differential, and $250,000 for attorneys’ fees and costs. 

On the other hand, the district court found NationsBank liable

to Perry Brothers on a variety of legal theories regarding the

nonrenewal of the 1988 Loan, the November 1990 setoff, and the

September 1989/March 1990 credit downgrade; damages were fixed at

$6 million. Also finding the 1989 Loan made under duress, the

district court ordered NationsBank to reimburse Perry Brothers the

above referenced default-prejudgment-interest-rate differential,

fees, and costs owed the FDIC by Perry Brothers. And, the court
- 8 -

awarded approximately $555,000 for Perry Brothers’ attorneys’ fees

and costs.

The FDIC and NationsBank appealed. Perry Brothers satisfied

its liability to the FDIC in November 1994; its appeal was

dismissed.

In August 1995, our court affirmed in part, reversed in part,

vacated in part, and remanded. Regarding the 1989 nonrenewal, our

court found no liability under the oral contract, promissory

estoppel, and duty of good faith and fair dealing claims; but, for

the fraud claim, it vacated and remanded for more specific findings

on liability and what damages were caused.

Regarding the November 1990 setoff, our court affirmed

liability, but remanded for more specific findings on what damages

were caused, including those due to business disparagement related

to the dishonored checks.

Finally, regarding the business-disparagement liability for

the September 1989/March 1990 credit downgrade, our court vacated

and remanded for more specific findings on liability and what

damages were caused.

On remand, neither party desired to present additional

evidence. The district court in July 1997 issued an 85-page

opinion, including much more detailed record citations than had its

first opinion. It found fraud liability for NationsBank’s April

1989 reassurances of comfort to Perry Brothers and discouragement

of alternative financing; added detail regarding fraud by

NationsBank leading to the November 1990 setoff; assessed $3.125
- 9 -

million damages for the delay to the point-of-sale and theftcontrol systems and expansion of stores, cumulatively caused by the

setoff and nonrenewal; again found the 1989 Loan executed under

duress, caused by NationsBank’s wrongful actions hindering Perry

Brothers’ ability to secure an alternative loan, and as a remedy

again ordered NationsBank to reimburse Perry Brothers for the

interest-rate differential and attorneys’ fees and costs it had

paid to the FDIC; found NationsBank liable for business

disparagement related to the September 1989/March 1990 credit

downgrade and dishonored checks, assessing $180,000 damages; and

again awarded Perry Brothers’ attorneys’ fees and costs. 

The amount of Perry Brothers’ requested attorneys’ fees,

however, was divided by three to reflect only the effort spent

pursuing the wrongful setoff claim, the only remaining breach of

contract claim. 

Finally, the district court assessed no prejudgment interest;

it denied Perry Brothers’ motion for reconsideration on this point.

II.

Our well-known standard of review for a bench trial hardly

needs repeating: findings of fact are reviewed for clear error;

conclusions of law, de novo. E.g., Baldwin v. Stalder, 137 F.3d

836, 839 (5th Cir. 1998). A finding is not clearly erroneous when
 

3NationsBank urges even more careful review because the

district court’s findings mirror those proposed post-remand by

Perry Brothers. See, e.g., FDIC v. Texarkana National Bank, 874

F.2d 264, 267 (5th Cir. 1989), cert denied, 493 U.S. 1043 (1990)

(this court considers district court’s “lack of personal attention”

to factual findings in applying clearly erroneous rule). But,

there is more than abundant evidence of the requisite “personal

attention” by the district court, particularly in the addition of

record citations to the proposed findings, reflecting great

familiarity with, and consideration of, the details of the trial.

Moreover, many of Perry Brothers’ proposed findings and conclusions

drew upon the district court’s first opinion, and could be expected

to be likely to be accepted again. More specific fact finding,

which was translated into particularity regarding record citations,

was the district court’s chief task on remand; we detect no

improper delegation of that task.

- 10 -

“plausible in the light of the record read as a whole”.3 United

States v. Cluck, 143 F.3d 174, 180 (5th Cir. 1998).

As noted, on remand, the parties elected not to present new

evidence. And, contrary to NationsBank’s contention, the district

court did not go outside the quite broad remand mandate on the

first appeal.

A.

Fraud, under Texas law, requires (1) a material

misrepresentation; (2) that was false; (3) that the speaker made

knowing of its falsity or made recklessly, without knowledge of its

truth; (4) that the speaker intended the plaintiff to act upon; (5)

that the plaintiff relied upon; and (6) that injured the plaintiff.

E.g., DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990),

cert. denied, 498 U.S. 1048 (1991). NationsBank asserts, first, no

single officer had the requisite scienter to commit fraud; second,

the April 1989 statements were true; third, Perry Brothers could

not have justifiably relied on Reily’s statements and was not
- 11 -

injured by them; fourth, such liability violates the parol evidence

rule; and fifth, by accepting the 1989 Loan, Perry Brothers waived

any fraud claim.

1.

In claiming that none of its officials had both the requisite

scienter and conduct, NationsBank points particularly to Reily, who

reassured Perry Brothers that renewal was likely, that the bank was

comfortable, and that outside credit would not be necessary.

NationsBank stresses his lack of knowledge of the falsity of such

reassurances.

We need not reach Reily’s culpability vel non, because we find

no clear error in the district court’s finding the requisite

knowledge by higher NationsBank officials. Restated, even if Reily

was unwitting, NationsBank is culpable for not correcting the known

material misunderstanding Reily caused on its behalf. “Knowingly

failing to disclose material information necessary to prevent a

statement from being misleading is actionable as fraud under Texas

law.” Rubinstein v. Collins, 20 F.3d 160, 172 n.53 (5th Cir.

1994). NationsBank knew of Reily’s statements on its behalf, knew

that they were incompatible with its overall strategy, and intended

that Perry Brothers not seek outside financing. Yet, it left the

statements uncorrected. 

2.

The 1989 Loan was not a renewal of the 1988 Loan. We find no

clear error in the findings that the 1989 Loan was dramatically

different from what Perry Brothers had been led in April 1989 to
- 12 -

expect, and in a way which NationsBank fully anticipated at that

time. The 1989 Loan had different terms: it had a lower balance,

was non-readvancing rather than revolving, and had collateral

several times the size of the loan. 

3.

Likewise, we find no clear error in finding reliance and

injury: Perry Brothers justifiably regarded Reily as authorized to

communicate NationsBank’s comfort level and justifiably put off

alternative plans as a result. Reily’s own internal memorandum

characterizes the dissuasion from alternate credit as NationsBank’s

official act.

4.

Liability for the April 1989 fraud does not violate the parol

evidence rule. As noted, on this basis, our court reversed the

district court’s initial breach of contract and promissory estoppel

rulings, and remanded for more specific findings and conclusions

regarding fraud. However, unlike the claims reversed on the first

appeal, NationsBank’s fraud liability is not for the

August/September 1989 refusal to renew, but for fraud in April 1989

regarding willingness to renew.

The parol evidence rule, of course, is a device of substantive

state law (i.e., not a rule of evidence) which bars certain claims

based on prior or contemporaneous representations contrary to

contractual language. E.g., FDIC v. Wallace, 975 F.2d 227, 230 (5th

Cir. 1992). Because any August 1988 promise by NationsBank of

its likelihood to renew the 1988 Loan would contradict the 1988
- 13 -

Loan’s disclaimer of any such promise, our court on the first

appeal held this precluded the breach of contract and promissory

estoppel claims. However, because the April 1989 reassurances were

neither prior to, nor contemporaneous with the 1988 Loan, but

obviously subsequent to it, the parol evidence rule does not bar a

fraud claim based upon such reassurances.

Likewise, a fraud claim regarding the April 1989 discussions

simply does not contradict the terms of the 1989 Loan. NationsBank

highlights language of the 1989 Loan which, like the 1988 Loan,

disclaimed renewal obligation. The 1989 Loan disclaimer referred

to the lack of a subsequent obligation (on maturity in January

1990) to renew the 1989 Loan. But, that disclaimer did not

disclaim, waive, or satisfy any claim which might have existed

regarding renewal of the 1988 Loan.

5.

Nor did Perry Brothers waive or abandon its fraud claim by

accepting or ratifying the 1989 Loan. Because, as noted, the 1989

Loan does not contradict April 1989 reassurance regarding the

lending relationship and discouragement of other financing, its

ratification is irrelevant to fraud liability.

B.

As noted, on the prior appeal, our court affirmed liability

resulting from the setoff, and remanded regarding what damages were

caused. NationsBank urges that fraud liability for the setoff is

outside the scope of the mandate. However, in affirming liability

arising out of the breach of an oral contract not to setoff the
- 14 -

funds, our court found it “unnecessary to consider” other theories

supporting liability. Accordingly, it was not necessary on remand

for the district court to address fraud regarding the setoff;

liability for the setoff, on another basis, was already affirmed.

C.

NationsBank maintains that the district court’s remedy for

duress is, first, unsupported by sufficient evidence; second,

outside the remand mandate; and third, waived because outside the

pretrial order.

1.

Duress exists under Texas law when an actor (1) threatens an

act he has no right to perform; and (2) performs some illegal

exaction or some fraud or deception, through (3) imminent restraint

destroying another’s free agency without present means of

protection. E.g., Simpson v. MBank Dallas, N.A., 724 S.W.2d 102,

109 (Tex. App. 1987).

NationsBank claims that it made no wrongful threats during the

negotiation of the 1989 Loan. Those negotiations were conducted in

August and September 1989. However, NationsBank’s improper

reclassification of the Perry Brothers loan that September (during

the negotiations) as “substandard” — implicitly published to any

bank from whom Perry Brothers might seek alternative credit — was

an ongoing wrongful act. NationsBank does not dispute the finding

that this reclassification was performed in bad faith. By

threatening to continue this action (and, of course, continuing

it), NationsBank prevented Perry Brothers from obtaining the
- 15 -

outside financing from which NationsBank had dissuaded Perry

Brothers in April 1989. Moreover, Perry Brothers could not protect

itself against this wrongful act. The district court did not

clearly err in finding that Perry Brothers negotiated under duress

in September 1989.

NationsBank also claims subsequent ratification of the 1989

Loan by Perry Brothers. However, removal of duress conditions is

required for such ratification. E.g., Green v. Hopper, 278 S.W.

286, 287 (Tex. Civ. App. 1925). Among other things, the credit

downgrade was never reversed.

 2.

As noted, the September 1989 duress flows from the business

disparagement involved in NationsBank’s downgrade of Perry

Brothers’ credit; accordingly, it was within the remand mandate for

more specific findings and conclusions regarding business

disparagement. Reading our court’s opinion in the light of the

first district court opinion makes plain that court’s reference to

liability for the credit downgrade encompasses the duress

predicated upon it. Duress is the only aspect of the district

court’s first opinion not otherwise addressed in some way in our

court’s opinion. Moreover, read any differently than we do here,

the opinion incomprehensibly omits any rationale for ever vacating

the duress findings.
- 16 -

3.

Generally, claims not listed in the pretrial order are deemed

waived. E.g., Southern Constructors Group, Inc. v. Dynalectric

Co., 2 F.3d 606, 610 (5th Cir. 1993).

The pretrial order includes an extensive discussion of the

duress issue and the associated remedies. While the penalties due

to the FDIC as such were not requested from NationsBank, the

elimination of such penalties is a subset of the standard remedy

for duress, to eliminate obligation entirely. See, e.g., State

Nat’l. Bank of El Paso v. Farah Mfg. Co., 678 S.W.2d 661, 683 (Tex.

App. 1984). Of the 29 contested fact issues in the pretrial order,

six related only to the elements of duress. It asks regarding the

FDIC’s claims: “If Perry Brothers executed the Note and related

agreements under duress, what is the appropriate remedy?” This

obviously proposes that, if duress is established, neither the FDIC

nor Perry Brothers (the parties to the transferred Loan) should

bear the burden of these obligations. The obvious inference is

that, if duress were proved, NationsBank should be required to pay

the penalties.

D.

NationsBank terms the damages awarded by the district court

insufficiently specific; at odds with economic reality; and, for

attorneys’ fees, waived because outside the pretrial order and

outside our mandate. (Concerning the district court’s post-remand

methodology in awarding economic damages of $3.125 million, instead

of the requested $6 million, see part II.E.2.)
- 17 -

1.

Regarding the claim that the damages findings are not

supported by sufficiently specific evidence, it goes without saying

that damages need not be proven with mathematical precision, but

must only be based on the best available evidence. E.g., Patterson

v. A.L. Poss & Sons, Inc., 705 S.W.2d 301, 303 (Tex. App. 1986).

a.

NationsBank challenges Perry Brothers’ experts regarding the

profitability of its new stores, noting that several had been

closed, and one new store had operated at a loss. We find no clear

error; such closings show only the economically reasonable

practice of closing less profitable stores during an overall

expansion. And, we find no clear error in the finding that

expansion would be profitable for Perry Brothers.

b.

NationsBank contends that the experts’ opinions on the delay

to the computerized point-of-sale and theft control systems and

such systems’ helpfulness to Perry Brothers, as well as the terms

and availability of alternative financing, are too general and

speculative. Again, we find no clear error. While better evidence

of the systems’ value would exist had, for instance, NationsBank

not hindered their installation, and regarding alternative credit,

had NationsBank not prevented it, we find no clear error in the

assessment of the experts’ opinions as the best available evidence.

c.
- 18 -

NationsBank complains that the district court failed to

apportion economic damages between the fraud and the wrongful

setoff. Such apportionment was unnecessary. There is liability on

both claims; therefore, at issue is only what would have happened

had NationsBank not been at fault.

2.

NationsBank claims that its actions could not have delayed the

Perry Brothers’ planned expansion and installation of point-of-sale

and theft-control systems, because, as its experts testified, a

temporary credit line by its nature cannot free up money for

capital expansion. We find no clear error by the district court in

rejecting this approach to temporary lines of credit and in

believing other experts, according to whom the availability of

seasonal credit is an extremely valuable device, obviating the need

to divert capital from long-term projects.

3.

NationsBank contests the method used to compute business

disparagement damages based on the credit downgrade and the

dishonored checks. One of Perry Brothers’ experts used a

percentage of annual revenues, or annual “gross profits”, to

calculate these damages, assuming that the damage to a firm’s

business reputation by a credit downgrade and dishonored checks

tends to reflect a set fraction of its revenues. NationsBank

misinterprets “gross profits” to refer to the company’s net profit,

and asserts that this figure is actually a loss. We find no clear
- 19 -

error by the district court in accepting Perry Brothers’ expert’s

assessment.

4.

NationsBank challenges the award of attorneys’ fees regarding

the setoff as, first, outside the pleadings, pretrial order, and

mandate; and second, based on a speculative fraction of total

attorneys’ fees.

a.

Failure to plead attorneys’ fees and pretrial-order waiver

were necessarily rejected on the first appeal; therefore, this

point is unchallengable as law of the case. “[T]he law of the case

doctrine comprehends things decided by necessary implication as

well as those decided explicitly.” Conkling v. Turner, 138 F.3d

577, 587 (5th Cir. 1998) (quotation and internal quotation marks

omitted).

Despite NationsBank’s contention that the attorneys’ fees

should never have been assessed, because the issue was not in the

pretrial order, our court held that “causation and damages,

including the damages awarded pursuant to the recommendation of the

magistrate judge, must be specifically linked to the predicate for

liability” (emphasis added). The prior panel characterizes such

findings on causation as a sufficient condition for these damages,

but if pretrial-order waiver were still a live issue, this would

not be so. That the panel implicitly rejected the contention

comports with its remand instructions; the district court correctly

dealt only with the questions presented for resolution on remand,
 

4The same quoted language from the prior panel, of course,

encompasses attorneys’ fees within the remand, and sets as law of

the case the propriety of the referral to the magistrate judge,

which NationsBank has also questioned again.

- 20 -

ignoring NationsBank’s reiterated pleas of waiver and the

inadequacy of pleadings.4

b.

Concerning the fraction of attorneys’ fees attributable to the

wrongful setoff, we find no clear error. The fraud and setoff

claims were too tangled for any better measure of attorneys’ fees

than to estimate reasonably the ratio of work spent on the setoff.

Work on the extent of damages, for instance, would be relevant to

both predicates of liability.

E.

Perry Brothers cross-appeals the denial of prejudgment

interest on its economic damages. Such interest was denied in the

district court’s first opinion, which Perry Brothers did not crossappeal. Without an intervening change, the issue is waived.

Brooks v. U.S., 757 F.2d 734, 739 (5th Cir. 1985). However, Perry

Brothers urges, first, Texas law has changed; second, elapsed time

had rendered all damages past.

Of course, we apply state prejudgment interest law, because it

substantively defines litigants’ rights rather than procedurally

enforcing them. E.g., Harris v. Mickel, 15 F.3d 428, 429 (5th Cir.

1994).

Ordinarily, we review denial of prejudgment interest for abuse

of discretion. E.g., Probo II London v. Isla Santay MV, 92 F.3d
- 21 -

361, 363 (5th Cir. 1996). However, because Perry Brothers’ claim

of intervening change in Texas law was not presented to the

district court, as explained infra, we review it only for plain

error.

1.

We first address an ambiguity in Texas law. Needless to say,

where state law is unsettled, a federal court must make an “Erie

guess” how the State’s supreme court would decide the issue, as per

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). E.g., H.E. Butt

Grocery Co. v. National Union Fire Ins. Co. of Pittsburgh, PA., 150

F.3d 526, 530 (5th Cir. 1998).

Until recently, Texas prejudgment interest law was judge-made,

governed by the rule of Cavnar v. Quality Control Parking, Inc.,

696 S.W.2d 549 (Tex. 1985). Cavnar allows prejudgment interest

only for damages which have accrued by the time of the judgment,

not for damages either entirely future or unsegregated between

accrued and future damages. 696 S.W.2d at 556. Cavnar applies to

economic damages in a business setting. E.g., Perry Roofing Co. v.

Olcott, 744 S.W.2d 929, 930 (Tex. 1988).

In 1987, a Texas statute, initially codified at TEX. REV. CIV.

STAT. ART. 5069-1.05, since 1997 codified at TEX. FIN. CODE 304.103-

.104, modified the prejudgment interest rule in wrongful death,

personal injury, and property damage cases. For such cases, that

statute changed the date from which prejudgment interest runs,

allowed prejudgment interest for still-future damages, and made

several other changes.
- 22 -

On 16 January 1998, after the district court on remand denied

prejudgment interest, and less than two weeks before it denied

reconsideration, Johnson & Higgins of Texas, Inc. v. Kenneco

Energy, Inc., 962 S.W.2d 507 (Tex. 1998), held that, although the

statute applied only to wrongful death, personal injury, and

property damage cases, the statutory date for the running of

prejudgment interest would inform the broader common law applying

to economic damages, modifying Cavnar in this respect. It held

that its rule would apply to judgments issued after 11 December

1997 and any other case in which the issue was preserved. 962

S.W.2d at 533. 

Neither Johnson & Higgins, nor any other contention that

future damages are entitled to prejudgment interest, was brought to

the attention of the district court on remand. Perry Brothers

conceded at oral argument that this omission was, at least in part,

its strategic decision not to burden the district court with

another issue in an already complicated case. Accordingly, we

review only for plain error. E.g., Whitehead v. Food Max of

Mississippi, Inc., 163 F.3d 265, 272 (5th Cir. 1998).

Concerning Cavnar’s expansion of prejudgment interest, Johnson

& Higgins notes that “[i]n Cavnar, this Court overruled

eighty-eight years of judicial precedent”, 962 S.W.2d at 528, and

uses the statute to limit the prejudgment interest allowed by

Cavnar, commenting that under the statute, “the time period during

which prejudgment interest accrues is shorter than under Cavnar”,

962 S.W.2d at 529. Accordingly, we cannot infer that the Johnson
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& Higgins court would use the same statute to overrule Cavnar to

greatly expand the availability of prejudgment interest. The

desired inference is neither clear nor obvious; therefore, there

was no plain error. E.g., U.S. v. Ulloa, 94 F.3d 949, 952 (5th

Cir. 1996) (plain error must, inter alia, be clear or obvious).

2.

Alternatively, Perry Brothers urges that its damages are now

entirely accrued; that, therefore, even under Cavnar it is entitled

to prejudgment interest.

As noted, economic damages were based on an estimate of

profits which would have resulted from the growth and systems

installation delayed by NationsBank. Perry Brothers’ experts

apportioned the damage over several years, including 1999. Based

on its consideration of the evidence, but without explanation, the

district court reduced the experts’ estimate from nearly $6 million

to $3.125 million. Perry Brothers suggests that, in so reducing

the damages, the district court was confining them to their early

years, rather than expressing doubt regarding their size.

But, at least one reasonable interpretation of the economic

damage award is that it covers the same time frame as the expert

opinions, but pursuant to the district court’s considered judgment,

assesses less damage in each year. This interpretation is

confirmed, of course, by the district court’s order denying

prejudgment interest in the face of the contention that it

represents entirely past damages.

III.
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Accordingly, the post-remand judgment is

AFFIRMED.