F I L E D

United States Court of Appeals

Tenth Circuit

FEB 18 1998

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

FEDERAL DEPOSIT INSURANCE

CORPORATION,

Plaintiff - Appellee and

Cross - Appellant,

v.

UMIC, INC, a Tennessee corporation;

CHARLES ALEX DENNEY, 

Defendants - Appellants

and Cross - Appellees,

and

ARTHUR A. WALLACE; BRYAN F.

GREEN,

Defendants.

Nos. 96-6089

 96-6123

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

(D. Ct. No. CIV-89-609-T)

Robert A. McLean, Wolff Ardis, P.C., Memphis, Tennessee (George Dahnke,

Abowitz & Rhodes, Oklahoma City, Oklahoma, and James W. McDonnell, Jr.,

Wyatt, Tarrant & Combs, Memphis, Tennessee, with him on the briefs), for

Defendants-Appellants-Cross-Appellees.

Jaclyn C. Taner, Counsel (Ann S. DuRoss, Assistant General Counsel, Colleen B.

Bombardier, Senior Counsel, and Lawrence E. Richmond, Counsel, with her on
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the briefs), Federal Deposit Insurance Corporation, Washington, DC, for PlaintiffAppellee-Cross-Appellant.

Before PORFILIO, ANDERSON, and TACHA, Circuit Judges.

TACHA, Circuit Judge.

The Federal Deposit Insurance Corporation (FDIC) brought this case to

recover losses sustained by Universal Savings Association, F.A. (Universal), in

trading financial futures and options between 1984 and 1986. The FDIC, as

successor to the Federal Savings and Loan Insurance Corporation (FSLIC),

Universal’s receiver, filed suit against a number of parties, including the brokers

who executed trades on Universal’s behalf. One of the broker defendants settled,

but the FDIC’s case against the remaining defendants went to trial on theories of

violations of the Commodities Exchange Act (CEA), common law fraud, and

breach of fiduciary duty. The jury returned verdicts against the introducing

broker, UMIC, and its sales representative, Alex Charles Denney, for breach of

fiduciary duty, and against Denney for violating the CEA. The jury found in

favor of the defendants on all other counts. Denney and UMIC now appeal the

verdicts against them. The FDIC cross-appeals to recover prejudgment interest. 

We affirm in part and reverse in part.
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I. BACKGROUND

Universal was a savings and loan located in Chickasha, Oklahoma. In early

1987, the Federal Home Loan Bank Board closed Universal and appointed the

FSLIC as receiver. Subsequently, the FSLIC, which had acquired rights to all

known and unknown claims against Universal’s officers and directors and against

persons who performed services on Universal’s behalf, transferred those rights to

the FDIC in its corporate capacity as manager of the FSLIC Resolution Fund. See

12 U.S.C. § 1821a(a) (requiring this transfer).

The conduct that is the basis for this action occurred several years earlier,

beginning in March, 1984. At that time, Universal held a large quantity of

Treasury bonds that were declining in value as a result of rising interest rates. 

Alex Charles Denney, an employee of UMIC, a full-service brokerage firm

located in Memphis, Tennessee, made a presentation to Universal’s board of

directors on the use of futures and options to hedge against the risk of further

interest rate increases.

Employing a hedging strategy is not unlike buying an insurance policy. For

example, by purchasing long-term put options on Treasury bonds, an investor can

hedge against potential losses in his bond portfolio. As interest rates rise, the

value of the investor’s bonds fall. A put option permits the investor to sell a

commodity, in this case a bond, at a fixed price within a stated period. The
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investor pays a small fee to the person who agrees to accept the bond if it is

offered at the fixed price. If interest rates rise, the market price of the bond falls,

and the investor exercises his option, delivering the bond (i.e., the put) at a profit. 

This profit offsets at least some of the losses that the investor incurs in his bond

portfolio because of the interest rate increase. On the other hand, if interest rates

fall, the price of the bond rises, and the investor does not exercise the option; the

investor has paid a relatively small price for security against an interest rate

increase. 

After Denney’s presentation, the Universal board voted to institute the

hedging program and opened a commodities account with Geldermann, the firm

that executed the trade orders, and with UMIC, the “introducing broker.” 

Universal signed a customer agreement specifying that the account was to be used

only for hedging. UMIC policy also restricted the accounts of financial

institutions to hedging. Furthermore, Denney and UMIC were aware that

Universal was subject to federal regulations limiting speculative trading by

insured institutions. Universal’s board authorized Bryan Green to manage the

hedging program. Green reported directly to Universal’s president Arthur

Wallace, among others. He worked closely with Denney and UMIC, relying on

them for trading advice. Green eventually moved to Memphis, the location of

UMIC’s offices, in order to work even more closely with Denney and UMIC. 
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While Universal’s account was open, however, trading in it was not limited

to hedging. In an attempt to improve its cash position, Universal, at Green’s

direction, began to use its futures and options program to speculate. Rather than

buying contracts to counterbalance its bond holdings, Universal bought contracts

that increased its exposure to interest rate fluctuations. Speculative trading

increased steadily during the two years the account was open. In the end, only

one-fifth of the 73,000 commodities contracts traded in Universal’s account were

hedge trades. The speculative trading in Universal’s account resulted in losses of

$6.2 million, over $3.4 million of which constituted commissions to Denney,

UMIC, and Geldermann. 

The FDIC instituted this action to recover those losses from Denney,

UMIC, Geldermann, Wallace, Green, and Gregg Crosby, a former officer of a

Universal subsidiary. Prior to trial, the FDIC dismissed all claims against Crosby

and its breach of fiduciary duty claims against Geldermann. On the first day of

trial, Geldermann settled for $600,000 on the FDIC’s remaining claim against it. 

At the conclusion of the trial, the jury awarded the FDIC damages of $288,000

against Denney for violating the CEA, $288,000 against Denney for breach of

fiduciary duty, and $624,000 against UMIC for breach of fiduciary duty. In a

post-trial motion, UMIC and Denney sought to reduce the judgment against them

by the amount already paid to the FDIC in related settlements: $600,000 from the
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Geldermann settlement and $725,000 from a settlement in a prior FDIC action

against Universal’s board of directors for their conduct in managing Universal. 

The district court denied that motion. The FDIC then moved for prejudgment

interest on the damages award under 12 U.S.C. § 1821(l), but the district court

denied that motion also.

II. DISCUSSION

Denney and UMIC appeal the judgments against them. They raise five

issues on appeal, arguing that: (1) they are entitled to credits for the two previous

settlements; (2) the FDIC’s claims were barred by the statute of limitations; (3)

the district court should have considered the defenses of ratification, waiver, and

estoppel; (4) no fiduciary duty was ever established between Universal and its

brokers; and (5) the FDIC’s CEA claims against UMIC and Denney fail as a

matter of law. The FDIC cross-appeals to recover prejudgment interest.

A. Credit for Prior Settlements

The defendants assert that the Geldermann settlement with the FDIC and

the Universal directors’ settlement with the FDIC must be applied as credits

against the jury awards against Denney and UMIC. The defendants base their

argument on the “one-satisfaction rule.” See U.S. Industries, Inc. v. Touche Ross

& Co., 854 F.2d 1223, 1236 (10th Cir. 1988). Because a party is entitled to only
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one satisfaction, “[w]hen a plaintiff receives an amount from a settling defendant,

. . . it is normally applied as a credit against the amount recovered by the plaintiff

from a non-settling defendant, provided both the settlement and the judgment

represent common damages.” Id. The one-satisfaction rule “applies only where

the defendants’ conduct resulted in a single injury.” Touche Ross, 854 F.2d at

1236. 

The jury’s award and the two earlier settlements do not represent common

damages for a single injury. Rather, we conclude that the jury awarded damages

against Denney and UMIC only for the injuries that they caused. In making this

determination, we examine the instructions that the district court gave the jury. 

Instruction number 40 is particularly relevant. That instruction read:

Consider Each Defendant Separately

As the plaintiff sues several defendants in this case and claims

that each is liable to it in damages, the jury is instructed that it must

consider separately the liability of each defendant to the plaintiff

under the evidence and the Court’s instructions as to the law of the

case. The fact that one defendant may be found liable to the plaintiff

should not control your verdict with respect to the other defendant

unless the jury finds, under the evidence and these instructions, that

the plaintiff has also proven its case against the other defendant.

Appellant’s App. at 295. Universal allegedly sustained losses of $6.2 million

from its venture into the futures and options market. More than half of those

losses were paid in commissions to Geldermann, UMIC, and Denney. The

remainder of the losses represent a decrease in the value of Universal’s futures
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and options account with UMIC. Presented with this information, including the

specific amount of commissions each defendant received, the jury returned its

verdict after “consider[ing] separately the liability of each defendant.” Id. 

The verdict forms that the jury returned demonstrate that it understood its

task. See Appellant’s App. at 393-403. On the last page of “Verdict Form III:

Commodity Exchange Act Claims,” in the space for fixing the dollar amount of

compensatory damages, the jury wrote, “$288,000.00 against Charles Denney.” 

On the last page of “Verdict Form III: Claims of Fraud and Breach of Fiduciary

Duties,” in the damages space, the jury wrote, “an additional $288,000.00 against

Charles Denney and $624,000.00 against UMIC.” 

The jury returned a damages award specific to each defendant. It did not

attempt to award damages for the total losses that Universal incurred through the

unauthorized futures and options trading. Thus, there is no basis for us to

conclude that the prior settlements with Geldermann and the Universal directors

cover any portion of the damages assessed against Denney and UMIC. See

Touche Ross & Co., 854 F.3d at 1261 (“[A] party seeking credit for an amount

received in settlement bears the burden of proving that the damages assessed

against him have . . . been previously covered in a prior settlement.”). The jury’s

award and the prior settlements do not constitute common damages.

B. Statute of Limitations Defense
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The defendants raise a statute of limitations defense, asserting that the

FDIC’s claims are barred because the limitations period began running more than

two years before February 13, 1987, the date that Universal went into

receivership. After trial, the defendants made this argument to the district court

in a motion for judgment as a matter of law, see Fed. R. Civ. P. 50(b);

Appellant’s App. at 230, which the district court denied. We review de novo the

district court’s denial of a Rule 50(b) motion, applying the same standard as the

district court. See Mason v. Oklahoma Turnpike Auth., 115 F.3d 1442, 1450

(10th Cir. 1997). Under that standard, we must hold in favor of the defendants if

there is no legally sufficient evidentiary basis for a reasonable jury to have found

that the statute of limitations barred the FDIC’s claims in this action. See id. 

When a financial institution enters receivership, federal law gives the FDIC

three years from the date of receivership to file suit on the institution’s behalf so

long as the asserted claims are still alive under the applicable statute of

limitations. 28 U.S.C. § 2415. There is no question in this case that the FDIC

filed suit within three years of its becoming the receiver of Universal on February

13, 1987. The only question is whether the FDIC’s claims were time-barred on

that date. Here, the applicable statute of limitations on both the state law breach

of fiduciary duty claims and the federal CEA claims is two years. Okla. Stat. tit.

12, § 95(3) (Supp. 1997); 7 U.S.C. § 25(c). 
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The two-year period under the CEA begins to run when trading ceases in an

account in which unauthorized trades occurred. See Indemnified Capital Invs. v.

R.J. O’Brien & Assocs., 12 F.3d 1406, 1411 (7th Cir. 1993). Here, trading in

Universal’s account did not cease until 1986, and thus, there is no question that

the limitations period had not expired when Universal went into receivership.

 Under Oklahoma law, the two-year period for the breach of fiduciary duty

claims does not begin to run until the wrongdoing has been or, in the exercise of

reasonable diligence, should have been discovered. See Resolution Trust Corp. v.

Grant, 901 P.2d 807, 813 (Okla. 1995). The limitations period may be tolled if an

agent charged with informing his principal of unauthorized acts fraudulently

conceals the wrongdoing from his principal. See Stephens v. General Motors

Corp., 905 P.2d 797, 799 (Okla. 1995) (quoting Kansas City Life Ins. Co. v.

Nipper, 51 P.2d 741 (Okla. 1935)). Where there has been fraudulent concealment

of actionable wrongdoing, the statute of limitations begins to run when the

wrongdoing is actually discovered. With respect to the breach of fiduciary duty

claims, then, the question is whether the FDIC presented sufficient evidence to

support a factual finding that (1) Universal’s board of directors did not discover

the unauthorized trading before February 13, 1985 and could not have done so

even in the exercise of reasonable diligence before February 13, 1985, or (2) the

unauthorized trading was fraudulently concealed from Universal’s board of
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directors such and they did not discover the unauthorized trading until after

February 13, 1985. 

According to the defendants, Universal should be deemed to have had full

knowledge, prior to February 13, 1985, of the speculative trading because

Wallace and Green had daily involvement in the trading, both were officers of

Universal, and neither one fraudulently concealed the nature of the trading from

the board of directors. The FDIC responds by arguing that the jury made a

finding that this suit was timely and that the evidence supports that finding. The

district court instructed the jury on the defendants’ statute of limitations defense. 

Appellant’s App. at 293-94 (Instruction No. 39). That instruction fairly

represented Oklahoma law. 

From the record we have before us, it does not appear that the district court

required the jury to provide a written verdict on the statute of limitations defense. 

Nevertheless, because the jury returned a verdict in favor of the FDIC on some of

its claims, it implicitly rejected the defense and made one of the above-mentioned

factual findings.

Because we conclude that there was sufficient evidence to support both of

those findings, we reject the defendants’ statute of limitations defense. 

Unauthorized trading continued until April, 1986. Each of the directors who

testified stated that Universal’s board never authorized speculative trading. 
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UMIC and Denney presented no evidence that the board authorized speculative

trading. In fact, Green testified that he had never seen any board resolution

authorizing such trading. 

In addition, there is no evidence that Wallace or Green ever affirmatively

informed the board of directors that Universal was engaging in speculative

trading. The defendants counter that the board received information regarding

speculative trading from independent sources, and therefore, it should have

discovered the unauthorized trading before February 13, 1985. Those sources

include, among others, written confirmations of specific trades, monthly reports

of trading activity, detailed ledgers of trading activity, and monthly and quarterly

reports to the Federal Home Loan Bank Board (FHLBB). The nature of these

sources, however, would not indicate to the reader that the trading was

speculative unless the reader of those sources had a sophisticated understanding

of the futures and options commodities market. The evidence fully supports the

conclusion that none of the directors possessed that sophisticated knowledge. 

Thus, there was sufficient evidence for a jury finding that Universal’s board of

directors did not know and could not have discovered the unauthorized trading.

Furthermore, as officers of Universal, Wallace and Green could only take

actions that were authorized by the board of directors. Sufficient evidence was

presented at trial for the jury to conclude that Wallace and Green approved
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transactions that they knew the board had not authorized and that they then failed

to adequately inform the board of these facts. The jury could reasonably have

treated this nondisclosure as fraudulent because the district court instructed the

jury that nondisclosure may constitute fraud if, “[w]hen dealing with another, a

person has a duty to disclose a material fact . . . known to him and . . . he knows

the fact is peculiarly within his knowledge and the other person is not in a

position to discover the fact for himself . . . .” Appellant’s App. at 263-64

(Instruction No. 17). The defendants do not challenge this instruction, and

therefore, we treat it as a correct statement of the law. We also conclude that

sufficient facts existed for a jury to find that Wallace and Green fraudulently

concealed their knowledge of the speculative trading despite a duty to disclose. 

Accordingly, the defendants’ statute of limitations defense fails.

We note that although the jury could have found that Wallace and Green

fraudulently concealed their knowledge of the speculative trading from

Universal’s board of directors, the jury also found in their favor on the FDIC’s

claims against them. We express no opinion on this possible inconsistency 

because the defendants do not raise that issue on appeal. See State Farm Fire &

Cas. Co. v. Mhoon, 31 F.3d 979, 984 n.7 (10th Cir. 1994). 
1

 Although the current version of Rule 50 uses the term “judgment as a matter of

law” rather than “directed verdict,” the difference is in name only; there is no difference

in substantive meaning between the two terms. See Fed. R. Civ. P. 50 advisory

committee’s note (1991).

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C. Ratification, Waiver, and Estoppel Defenses

The defendants next argue that the district court erred (1) in not directing a

verdict1

 in their favor based on the defenses of ratification and waiver, and (2) in

failing to instruct the jury on the defenses of ratification, waiver, and estoppel. 

Because the defendant did not meet the evidentiary threshold to justify a

jury instruction on these defenses--which is much lower than that required for a

directed verdict--we reject both arguments. Although state law would have

governed the substance of the proposed instructions, federal law determines

whether the denial of the jury instructions was proper. See Dillard & Sons Const.

Inc. v. Burnup & Simms Comtec, Inc., 51 F.3d 910, 915 (10th Cir. 1995). Jury

instructions should be given only if they are supported by competent evidence. 

See Farrell v. Klein Tools, Inc., 866 F.2d 1294, 1297 (10th Cir. 1989). Our cases

are not in complete accord on the proper standard under which to review a district

court’s determination that a party has not presented sufficient evidence to justify a

jury instruction. Compare United States v. Wolny, 1998 WL 2480, at *8 (10th

Cir. Jan. 6, 1998) (suggesting review is de novo), with Wilson v. Union Pacific

Railroad Co., 56 F.3d 1226, 1232 (10th Cir. 1995) (suggesting review is for abuse
- 15 -

of discretion). Nonetheless, because the district court’s decision was correct even

when reviewed de novo, we uphold it.

A successful ratification defense would require evidence that Universal’s

board intentionally treated the unauthorized speculative trading as authorized, or

knowingly accepted the benefits of such unauthorized trading. See Outboard

Marine Ctr. v. Little Glasses Corp., 338 P.2d 1101, 1104 (Okla. 1959). A

successful estoppel defense would require evidence that the Universal board’s

words or conduct led the defendants to believe that the trading in the UMIC

account was authorized and that the defendants changed their position on the

basis of the board’s words or conduct to their detriment. See Bay Petroleum

Corp. v. May, 264 P.2d 734, 736 (Okla. 1953). A successful waiver defense

would require evidence that Universal’s board intentionally relinquished the right

to complain about the speculative trading. See id. at 736. There was simply no

evidence presented at trial to support any of these three defenses.

As we stated above, none of the members of the board of directors

possessed a sophisticated knowledge of the futures and options commodities

market. Further, it is undisputed that the board never adopted any resolution

authorizing trading for speculative purposes. While the evidence suggests that

some of the directors knew that the trading in the UMIC account would earn

Universal profits, this could not lead one to conclude that the board knew or
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approved of the speculative trading. Indeed, the design of the hedging strategy

that the Universal’s board adopted was to earn profits in case rising interest rates

cut further into the value of Universal’s bond portfolio. There was no evidence

presented that the board knew and understood that speculative, non-hedge trading

was occurring. Accordingly, there was no evidence to support a finding of the

defenses of ratification, estoppel, or waiver. The district court properly denied

the defendants’ directed verdict motion and proposed jury instructions. 

D. Breach of Fiduciary Duty Claims

The defendants assert that the district court erred in denying their motion

for judgment as a matter of law on the breach of fiduciary duty claims against

UMIC and Denney. Furthermore, the defendants argue that even if there was

sufficient evidence to send those claims to a jury, the district court committed

reversible error by failing to properly instruct the jury on the burden of proof

required to establish a fiduciary duty. 

“We review de novo the district court’s determination of a motion for

judgment as a matter of law, applying the same standard as the district court.” 

Mason v. Oklahoma Turnpike Auth., 115 F.3d 1442, 1450 (10th Cir. 1997). 

Judgment as a matter of law is appropriate only if no reasonable juror could find

in favor of the opposing party. See id. We review the evidence and all

reasonable inferences drawn from that evidence in the light most favorable to the
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jury’s verdict. See MidAmerica Fed. S & L v. Shearson/American Express, 886

F.2d 1249, 1251 (10th Cir. 1989).

The defendants base their argument on the fact that there was insufficient

proof that they were fiduciaries of Universal. Under Oklahoma law, a fiduciary

relationship exists whenever trust is placed by one person in the “integrity and

fidelity” of another. In re Beal, 769 P.2d 150, 154 (Okla. 1989). The relationship

is based on either an express or implied agreement where it can be said the minds

have met to create a mutual obligation. See Lowrance v. Patton, 710 P.2d 108,

111-12 (Okla. 1985). Before a court will declare a relationship fiduciary, there

must be a weakness on one side and a strength on the other, resulting in trust

justifiably reposed in the other. See Beal, 969 P.2d at 155. 

From the day that Denney made his March 1984 presentation to the

Universal board, he held himself and his company, UMIC, out as experts in

financial commodities trading. There was testimony that Denney provided

substantial guidance to Green and Wallace in trading in Universal’s account at

UMIC. Denney and UMIC did not just execute trade orders at the direction of

Universal’s officers. They actively provided advice and direction to Universal. 

These facts provide sufficient evidence from which a reasonable jury could

conclude that the defendants owed Universal fiduciary obligations.

We next turn to the defendants’ assertion that the district court should have
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instructed the jury that the existence of a fiduciary duty had to be established by

clear and convincing evidence. “[W]e conduct a de novo review to determine

whether, as a whole, [the jury instructions] correctly state the governing law and

provided the jury with an ample understanding of the issues and applicable

standards.” Harrison v. Eddy Potash, Inc., 112 F.3d 1437, 1442 (10th Cir. 1997)

(citations omitted). 

The only case that the defendants rely upon for their proposed clear and

convincing standard of proof is Devery Implement Co. v. J.I. Case Co., 944 F.2d

724 (10th Cir. 1991). In that case, the district court instructed the jury that it had

to find by clear and convincing evidence that a fiduciary relationship existed

between two parties that had entered into a dealership agreement. Because

neither party to the appeal objected to the instruction, this court reviewed only for

plain error. See United States v. Voss, 82 F.3d 1521, 1530 (10th Cir.), cert.

Denied, 117 S. Ct. 226 (1997). We merely determined that the instruction

“provided the jury with a reasonable picture of the Oklahoma requirements for a

fiduciary relationship,” particularly in light of the fact that a “fiduciary

relationship is atypical in a contract setting.” Id. at 731. This case does not

involve such an atypical setting, and thus, we conclude that there is no need for

the higher threshold for finding a fiduciary relationship between Universal and

the defendants. The district court did not err in instructing the jury about breach
2

 Except for minor changes that are not relevant here, section 4b of the CEA is the

same today as it was in 1984.

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of fiduciary duty. 

E. CEA Claims

Denney finally argues that the district court erred in refusing to grant it

judgment as a matter of law on FDIC’s fraud claims against him under sections 4b

and 4c(b) of the CEA. As stated above, we review the district court’s denial de

novo. See Mason, 115 F.3d at 1450. Judgment as a matter of law is appropriate

only if no reasonable juror could have found in favor of the FDIC. See id. We

review the evidence in the light most favorable to the jury’s verdict. See

MidAmerica Fed. S&L, 886 F.2d at 1251. 

Section 4b of the CEA provides, in relevant part: 

It shall be unlawful . . . for any person, . . . in connection with

any order to make, or the making of, . . . any contract of sale of any

commodity for future delivery . . . on behalf of any other person if

such contract for future delivery is or may be used for (A) hedging

any transaction in interstate commerce in such commodity . . . (i) to

cheat or defraud or attempt to cheat or defraud such other person; (ii)

willfully to make or cause to be made to such other person any false

report . . . .

7 U.S.C. § 6b(a)2

 (emphasis added). Section 4c(b) of the CEA and the

corresponding rules promulgated by the Commodities Futures Trading

Commission contain similar prohibitions with reference to commodity option
3

 There have been no significant changes to either the statutory section or the

regulations promulgated thereunder since 1984.

4

 We note that courts faced with interpreting the anti-fraud provisions of the

Commodities Exchange Act look to the more developed body of law addressing section

10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. 

See Saxe v. E.F. Hutton & Co., 789 F.2d 105, 109 (2d Cir. 1986). 

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contracts. See 7 U.S.C. § 6c(b); 17 C.F.R. §§ 32.9 & 33.10 (1997).

3

 

Denney asserts that the record does not contain evidence from which a jury

could determine that, “in connection with” an order of the sale of a futures

contract, he misrepresented material facts and executed unauthorized trades and

that Universal relied upon his misrepresentations. The “in connection with”

language of section 4b of the CEA requires the alleged fraud to concern the

fundamental nature of the futures contract; that is, the fraud must involve the

quality of or the risks associated with the investment.4 See Kearney v. PrudentialBache Securities, Inc., 701 F. Supp. 416, 424, 425 (S.D.N.Y. 1988) (citing Rule

10b-5 cases in which brokers’ representations were actionable because they led

investors to believe that broker had proper experience and financial stability to

handle account or that investments were less risky than they actually were). 

Evidence was presented at trial that Universal’s board of directors relied on

Denney’s representations at the March 1984 presentation. At the presentation,

Denney and other UMIC personnel explained to Universal’s board how a low-risk

hedging program using financial futures and options could help the S&L offset
- 21 -

large potential losses in its treasury bond portfolio. Although the board only

authorized hedge trades, Denney recommended and executed high risk trades that

he knew were speculative. There was also evidence that Universal’s board did

not have a sophisticated understanding of the commodities market. 

Statements about the risk associated with a particular investment are “in

connection with the making” of that investment because they concern the basic

question of whether or not a person should invest her money. See Saxe, 789 F.2d

at 110 (holding that misrepresentations regarding the type of trading for which a

client’s funds would be used is actionable under the CEA). Denney did not have

merely peripheral contact with Universal and its futures and options account. He

promoted the hedging program, made recommendations to Universal’s

management, supervised the trading activity in the account, and executed orders

on Universal’s behalf.

To counter the assertion that he never executed unauthorized trades and that

Universal did not rely upon his alleged misrepresentations, Denney asserts that he

merely implemented the decisions of Universal’s managers in charge of the

hedging account, Wallace and Green. This assertion is contradicted by evidence

that demonstrates that Denney was actively involved in Universal’s hedge account

and made speculative trade recommendations almost daily, most of which Wallace

and Green followed. This case is not one of a detached broker who, while sitting
- 22 -

in his office one day, received a call from a client who wanted to make a couple

of investments. This case involved an aggressive campaign, clothed as a low-risk

hedge program, to trade speculatively in the commodities market, with the

possibility of huge return but with the concomitant risk of huge losses. We find

that sufficient evidence existed to support the jury’s verdict on the CEA claims.

F. Prejudgment Interest

Following the jury’s damages award, the FDIC sought prejudgment interest

under section 1821(l) of the Financial Institutions Reform, Recovery, and

Enforcement Act of 1989 (FIRREA). That section provides, in relevant part:

In any proceeding related to any claim against [an S&L’s]

director, officer, . . . or any other party employed by or providing

services to [the S&L], recoverable damages determined to result from

the improvident or otherwise improper use or investment of [the

S&L’s] assets shall include principal losses and appropriate interest.

12 U.S.C. § 1821(l) (emphasis added). The district court held that section

1821(l), enacted four months after this suit was filed, should not be applied to this

case. See Order, at 7 (May 31, 1995). We affirm that finding, and hold that

prejudgment interest cannot be awarded under section 1821(l) when the conduct

upon which the judgment is based occurred before enactment of FIRREA.

The Supreme Court’s decision in Landgraf v. USI Film Products, 114 S. Ct.

1522 (1994), set forth the basic calculus for analyzing whether a court should

apply newly enacted legislation to a pending case. The first question is whether
- 23 -

Congress has expressly prescribed the law’s temporal reach. See Lennox v.

Evans, 87 F.3d 431, 432 (10th Cir. 1996) (applying Landgraf), rev’d on other

grounds by United States v. Kunzman, 125 F.3d 1363 (10th Cir. 1997). If

Congress has included an express command in the statute, that command governs

the question. See Landgraf, 114 S. Ct. at 1505. 

If no express command exists, Landgraf directs the court to ask a second

question: does the statute have “retroactive effect”? See Landgraf, 114 S. Ct. at

1505. If it does have such an effect, the court cannot apply the law to the case

before it. A statute does not have retroactive effect merely because it is applied

to conduct, or a complaint, that predates the law’s enactment. See id. Rather, a

new statute has “retroactive effect” when applied to a pending case “if ‘it would

impair rights a party possessed when he acted, increase a party’s liability for past

conduct, or impose new duties with respect to transactions already completed.’”

Id. The Supreme Court recently reaffirmed Landgraf’s holding and underscored

that there exists a strong presumption against retroactivity. See Hughes Aircraft

Co. v. United States, 117 S. Ct. 1871, 1876 (1997); Lindh v. Murphy, 117 S. Ct.

2059, 2062 (1997).

The Supreme Court in Lindh did not strictly follow the Landgraf calculus. 

Nor did it, however, alter Landgraf’s holding or general applicability to

retroactivity determinations. In Lindh, the Court examined whether Chapter 153
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of the Anti-Terrorism and Effective Death Penalty Act (AEDPA) applies to cases

pending at the time of its enactment. After concluding that Chapter 153 does not

contain an express command regarding its temporal reach, the Court drew the

following negative inference: because Chapter 154 of the AEDPA includes an

express command that its provisions should apply to pending cases and because

Congress passed Chapters 153 and 154 simultaneously, the absence of such a

command in Chapter 153 means that Congress intended for Chapter 153's

provisions to apply only to subsequently filed cases. See id. at 2063-2068. 

Lindh merely clarified that Landgraf does not make traditional rules of

statutory construction completely irrelevant to retroactivity problems. See Lindh,

117 S. Ct. at 2063. If the district court, using normal rules of construction, can

conclude that a statute should not be applied to the case before the court, there is

no need to address Landgraf’s question of whether the statute would have a

retroactive effect. See Lindh, 117 S. Ct. at 2063 (“Although Landgraf’s default

rule would deny application when a retroactive effect would otherwise result,

other construction rules may apply to remove even the possibility of retroactivity .

. . .”); United States v. Perez, 129 F.3d 255, 259 (2d Cir. 1997) (interpreting

Lindh to mean that “[i]f the customary rules of statutory construction suggest that

a new provision does not apply, the new provision is inapplicable.”).

In essence, Lindh adds one step to the Landgraf test to produce a three-part
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test. In the first step, as stated above, the court determines whether Congress

included an express statement in the statute regarding its temporal reach. See

Landgraf, 114 S. Ct. at 1505. If Congress has expressly addressed the question,

the analysis is over. If not, the court proceeds to the second step and employs

normal rules of statutory interpretation to determine whether the statute should be

applied to the case before the court. See Lindh, 117 S. Ct. at 2063. If the court

determines, even after employing these interpretive techniques, that Congress did

not address the temporal reach of the statute, the court must then proceed to

Landgraf’s question of whether the statute would have retroactive effect. See

Landgraf, 114 S. Ct. at 1505. 

We now apply the three-step Landgraf/Lindh test. Under step one, it is

clear that FIRREA, and section 1821(l) in particular, contains no express

command regarding its applicability to pending cases. See Oklahoma Radio

Associates v. FDIC, 987 F.2d 685, 696 (10th Cir. 1993). Under step two, we

conclude that FIRREA, unlike Chapter 153 of the AEDPA at issue in Lindh, is

devoid of trustworthy indications from Congress regarding the statute’s

applicability to pending cases. Neither the text of the statute nor its structure

speaks to the matter. Furthermore, “there appears to be a consensus among the

courts that clear indications on retroactivity cannot be found in the legislative

history.” Id. (collecting cases). 
- 26 -

Because the usual modes of statutory construction do not shed light on

FIRREA’s temporal reach, we necessarily turn to step three, the Landgraf

retroactive effect question. See Turkhan v. INS, 123 F.3d 487, 489 (7th Cir.

1997); In re Hanserd, 123 F.3d 922, 934 (6th Cir. 1997). We must determine

whether application of section 1821(l) in this case would give the law “retroactive

effect.” Denney and UMIC state that if the court applies section 1821(l) in this

case, thereby imposing prejudgment interest on the damages they must pay the

FDIC, the law would materially increase their liability for past conduct. Such a

penalty, they argue, is inconsistent with Landgraf. The FDIC counters by

asserting that prejudgment interest involves a procedural question that, although

increasing the losing party’s total liability, does not implicate that party’s

substantive rights or upset any settled expectations. 

Prejudgment interest presents a difficult question for purposes of

retroactivity analysis. Cf. Landgraf, 114 S. Ct. 1522, 1526 (Scalia, J., concurring)

(“[A] statutory provision for attorney’s fees presents a difficult case.”). On the

one hand, Landgraf states that a new statute has retroactive effect if it

“increase[s] a party’s liability for past conduct.” Id. at 1483. There is no

question that imposing prejudgment interest on Denney and UMIC here will

increase their liability, and that the compensatory damages on which the interest

would be imposed are for conduct predating the enactment of FIRREA. It is
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immaterial that the prejudgment interest rule merely increases the liability of a

party rather than making conduct unlawful that was lawful when it took place. 

“The extent of a party’s liability, in the civil context as well as the criminal, is an

important legal consequence that cannot be ignored.” Id. at 1507. The Court has

never “read a statute substantially increasing the monetary liability of a private

party to apply to conduct occurring before the statute’s enactment.” Landgraf,

114 S. Ct. at 1507. 

On the other hand, prejudgment interest is quite analogous to attorney’s

fees, and Landgraf reaffirmed a prior holding of the Court that an attorney’s fee

statute could be applied to a case pending during its enactment. See Bradley v.

Richmond School Board, 416 U.S. 718, 724 (1974), discussed in Landgraf, 114 S.

Ct. at 1502-03; but see Landgraf, 114 S. Ct. at 1523, 1526 (Scalia, J., concurring)

(“I see nothing to be gained by overruling [Bradley], but neither do I think the

indefensible should be defended”). Both attorney’s fees and prejudgment interest

provisions seem to increase a party’s liability for past conduct (i.e., the conduct

that is the subject of the lawsuit). They are both available only after the court has

determined that the party is entitled, by virtue of some other law, to compensatory

or injunctive relief. 

In Landgraf, the Court gave two reasons why the attorney’s fees statute at

issue in Bradley did not have a “genuinely ‘retroactive’” effect on the litigants. 
- 28 -

Neither rationale applies to the prejudgment interest provision at issue in this

case. The first reason given is that attorney’s fees are “‘collateral to the main

cause of action’ and ‘uniquely separable from the cause of action to be proved at

trial.’” Landgraf, 114 S. Ct. at 1503 (quoting White v. New Hampshire Dept. Of

Employment Security, 455 U.S. 445, 451-52 (1982)). Based on White, the Court

found attorney’s fees similar to procedural rules, which do not have a retroactive

effect when applied to pending cases. See Landgraf, 114 S. Ct. at 1502-03. 

White held that a postjudgment motion for attorney’s fees was not a motion to

alter or amend judgment under Fed. R. Civ. P. 59(e). Central to White’s

reasoning was the fact that attorney’s fees have never been considered

compensation for the conduct giving rise to the suit. See White, 455 U.S. at 452. 

However, “unlike attorney’s fees, which at common law were regarded as an

element of costs and therefore not part of the merits judgment, prejudgment

interest traditionally has been considered part of the compensation due plaintiff.” 

Osterneck v. Ernst & Whinney, 489 U.S. 173, 175 (1989) (citation omitted)

(holding that a postjudgment motion for attorney’s fees is a motion to alter or

amend judgment under Fed. R. Civ. P 59(e)). Thus, because prejudgment interest,

unlike attorney’s fees, is tied so intimately to the substance and merits of the case

itself, see id., it cannot be said that it belongs to the family of procedural rules.

Secondly, the Landgraf Court pointed out that the award of attorney’s fees
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under the new statute did not increase the defendants’ liability because the

attorney’s fees award was justified under pre-existing common law rules. See

Landgraf, 114 S. Ct. at 1503 (discussing Bradley, 416 U.S. at 721). In fact, the

Court intimated that the trial court would have abused of its discretion if it had

refused to award attorney’s fees under the common law theory. See id. at 1503

(“[I]t would be difficult to imagine a stronger equitable case for an attorney’s fees

award than a lawsuit in which the plaintiff parents would otherwise have to bear

the costs of desegregating their children’s public schools.”). In this case, the

prior availability of prejudgment interest is much less clear. 

In the absence of FIRREA, state law governs the availability of

prejudgment interest on the breach of fiduciary duty claim. See FDIC v.

Oldenburg, 34 F.3d 1529, 1538 (10th Cir. 1994). Oklahoma allows recovery of

prejudgment interest on “damages certain, or capable of being made certain by

calculation.” Okla. Stat. Ann. tit. 23 § 6 (West 1987). While judicial

interpretations of this language do not preclude the FDIC from recovering under

the statute, it is not clear, as it was in Bradley, that a district court would abuse its

discretion by refusing to grant the award. See Liberty Nat'l Bank & Trust Co. v.

Acme Tool Div., 540 F.2d 1375, 1383 (10th Cir.1976) (noting that Oklahoma

courts do not award interest when a trial is necessary to determine the amount

due). In the absence of FIRREA, the federal rule on prejudgment interest governs
- 30 -

the CEA claim. See Touche Ross, 854 F.2d at 1254. Like the grant of interest

under Oklahoma law, it is discretionary, and we cannot say with certainty that the

district court’s decision would have gone one way or the other. 

Thus, neither of the two reasons that the Landgraf Court gave for applying

an attorney’s fee statute to a pending case applies to prejudgment interest. A

prejudgment interest award not only substantially increases monetary liability for

proscribed conduct, but it is also very closely tied to the amount of harm done by

that conduct. It has all the indicia of a substantive rule that cannot be applied

retroactively without an instruction from Congress, either in the form of an

express command or as determined by the court through traditional statutory

construction, to do so. Therefore, FIRREA’s prejudgment interest provision

cannot be applied in this case because the conduct giving rise to prejudgment

interest liability occurred before the passage of FIRREA.

Thus, we agree with the district court’s conclusion on the applicability of

FIRREA to this case, but we find fault with the court’s subsequent legal

conclusions. Because FIRREA is inapplicable, the district court was charged with

deciding whether prejudgment interest was available under pre-existing law. The

opinion below summarily denied the FDIC’s motion for prejudgment interest on

the grounds that “[t]he FDIC offers no persuasive authority that would require the

adoption of a federal common law rule governing prejudgment interest in this
- 31 -

case.” This reasoning is misguided for two reasons. We address separately the

implications of the district court’s statement for the state law claims and the

federal claims.

First, the district court’s statement is incorrect as applied to the state law

breach of fiduciary duty damages awards because we must look to state law, not

federal law, in determining whether to award prejudgment interest on state law

claims. See Oldenburg, 34 F.3d at 1538; Touche Ross, 854 F.2d at 1254-55. On

remand, the district court must determine whether prejudgment interest should be

imposed under Oklahoma law on those jury awards. 

Second, with respect to the federal CEA damages award, contrary to the

district court’s assertions, our precedents do establish that prejudgment interest

normally should be awarded on successful federal claims. See, e.g., Kleier

Advertising, Inc. v. Premier Pontiac Inc., 921 F.2d 1036, 1040-42 (10th Cir.

1990). “[A]n award of prejudgment interest under federal law is governed by a

two-step analysis.” Touche Ross, 854 F.2d at 1257. First, the trial court

determines whether prejudgment interest would compensate the injured party or

duplicate damages already awarded. See id. If the award would compensate, the

“court must still determine whether the equities would preclude the award of

prejudgment interest.” Id. On remand, the district court must engage in the

analysis required by Touche Ross to determine whether prejudgment interest
- 32 -

should be awarded to the FDIC on the successful CEA claim against Denney.

III. CONCLUSION

Because the district court correctly concluded that the defendants are not

entitled to credit for any prior settlements; that the FDIC’s claims were not barred

by the statute of limitations; that no evidence was presented at trial to support the

defenses of ratification, waiver, or estoppel; and that sufficient evidence was

presented at trial to support the jury’s verdict on both the federal CEA claim and

the state law breach of fiduciary duty claims, the district court’s determinations

on those issues are AFFIRMED. 

Because we conclude that application of 12 U.S.C. § 1821(l) in this case

would have an impermissible retroactive effect, we agree with the district court’s

conclusion that section 1821(l) does not apply to this case, but we disagree with

the court’s conclusion that there is no pre-existing law on whether the FDIC is

entitled to prejudgment interest. Accordingly, we VACATE the district court’s

denial of prejudgment interest and REMAND for findings on that issue under the

appropriate state and federal law, as outlined in this opinion.