Court Opinion

ID: 2656810
Source: CourtListenerOpinion
Date Created: 2014-03-15 05:26:35.778658+00
Date Added: 2024-06-11T12:37:04.235770
License: Public Domain

Case: 13-40456      Document: 00512561845         Page: 1    Date Filed: 03/14/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                       Fifth Circuit

                                                                                  FILED
                                                                               March 14, 2014
                                      No. 13-40456
                                                                               Lyle W. Cayce
                                                                                    Clerk
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
    Case: 13-40456     Document: 00512561845    Page: 2   Date Filed: 03/14/2014

                                 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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Case: 13-40456   Document: 00512561845      Page: 3   Date Filed: 03/14/2014

                            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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