            IN THE UNITED STATES COURT OF APPEALS

                             FOR THE FIFTH CIRCUIT
                                         _______________

                                           m 99-60431
                                         _______________




                            FIRST TRUST NATIONAL ASSOCIATION,
                                      AS INDENTURE TRUSTEE,


                                                             Plaintiff-Appellant,

                                              VERSUS

                       FIRST NATIONAL BANK OF COMMERCE,

                                                             Defendant-Appellee.


                                   _________________________

                            Appeal from the United States District Court
                              for the Southern District of Mississippi
                                          (1:97-CV-306)
                                  _________________________

                                            May 31, 2000


Before REAVLEY, SMITH, and                              First Trust National Association (“First
  EMILIO M.GARZA, Circuit Judges.                    Trust”) is indenture trustee for a trust the
                                                     assets of which are proceeds of notes sold by
JERRY E. SMITH, Circuit Judge:*                      Belle Casinos, Inc. (“BCI”), and Biloxi Casino
                                                     Belle, Inc. (“BCBI”). Those assets were
                                                     placed by BCI/BCBI into two escrow
                                                     accounts to be employed in building two
   *
     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          (...continued)
limited circumstances set forth in 5TH CIR. R.       47.5.4.
casinos. The casinos ran over budget, and               were sold in October 1993.
BCI/BCBI filed for bankruptcy. First National
Bank of Commerce (“FNBC”), the agent for                   Upon sale of the notes, FNBC was selected
these escrow funds, failed to obtain necessary          as Disbursing Agent for the proceeds, and its
documentation, guaranteeing the cost of                 obligations were defined by the Disbursement
construction, from various sources, therefore           and Escrow Agreement (“Disbursement
contributing to the cost overruns and the               Agreement”). The proceeds from the notes
bankruptcy. Before the bankruptcy, First                were placed into two escrow accounts
Trust became aware of cost overruns and of its          administered by FNBC, which agreed to
failure to receive from FNBC copies of all              distribute the funds from those accounts only
necessary documentation.                                on the occurrence of certain conditions listed
                                                        in the Disbursement Agreement.
   First Trust sued FNBC, claiming breach of            Simultaneously, BCI loaned the net proceeds
various contractual and fiduciary obligations to        of the notes to BCBI, which executed a
the noteholders whom First Trust represents as          Disbursement and Escrow Account Security
indenture trustee. FNBC challenged First                Agreement (“Disbursement Security
Trust’s suit on grounds of standing and the             Agreement”) to BCI in the principal amount of
statute of limitations. The district court found        $75 million. BCBI was to use the net
for FNBC on summary judgment on both                    proceeds of the offering to finance the
grounds. First Trust appeals. Agreeing with             construction and expansion of the projects and
the district court that limitations bars this ac-       thereafter operate the casinos.
tion, we affirm.
                                                           After a draw at closing to pay off the
                       I.                               interim loans and closing costs, BCBI
   Mississippi Riverboat Amusements, Ltd.               deposited almost $60 million into two escrow
(“MRA”), which owned and operated the                   accounts at FNBC. Finally, an Assignment
Biloxi Belle Casino in Biloxi, Mississippi,             Agreement was executed between BCI as
decided in 1993 to expand its existing casino           assignor and First Trust as assignee, whereby
(the “Biloxi Project”) and to open a new                BCI assigned all of BCI’s rights as Lender to
casino in Tunica County (the “Tunica                    First Trust, including its rights under the
Project”). To facilitate this expansion, MRA            Disbursement Agreement. Moreover, BCI
established two subsidiary corporations: BCI,           assigned its rights, title, and interest in the
a Delaware corporation, and BCBI, a                     escrow accounts to First Trust.
Mississippi corporation. To finance the
construction and expansion of the projects,                According to article III of the Disbursement
certain notes were sold under an offering put           Agreement, FNBC and First Trust were to re-
together by Bear, Sterns & Co., Inc., in the            ceive certain documents (the “initial
name of BCI. The notes were sold to                     documents”) as a precondition to disbursing
investors (the “noteholders” or “Holders”)              money from the escrow accounts. After the
pursuant to an Indenture under which First              note sale, FNBC received Contractor’s and
Trust served as indenture trustee, thereby              Architect’s Certificates (the “Disbursement
agreeing to perform certain acts on behalf of           Certificates” or “certificates”) as contemplated
the Holders and in relation to the notes, which         by article VI of the Disbursement Agreement,


                                                    2
and in particular section 6.08. FNBC,                    gets by more than $1.2 million without First
however, was to use the Disbursement                     Trust’s permission. There is no evidence that
Certificates to make disbursements only if both          First Trust ever consented to any increase in
First Trust and FNBC had first secured the               the budgets.
initial documents.
                                                            First Trust declared default on July 12,
   Neither First Trust nor FNBC received                 1994, and instructed FNBC to transfer the re-
those documents. FNBC, though, disbursed                 maining escrowed funds to First Trust; BCI
the requested funds on the strength of the Dis-          and BCBI filed for bankruptcy on August 31,
bursement Certificates alone.                            1994. First Trust claims that it first discovered
                                                         FNBC’s failure to obtain the initial documents
   FNBC first distributed money from the es-             in July 1996, when its attorneys examined
crow accounts on October 14, 1993, and                   FNBC’s files.
continued to disburse until May 13, 1994. On
or about April 14, 1994, the Holders were first                                  II.
notified by BCI that there were construction-                First Trust sued in its capacity as indenture
cost overruns. At a meeting between Bear,                trust ee on behalf of the Holders on June 10,
Stearns and the Holders on May 5, 1994, the              1997, claiming breach of the Disbursement
Holders received a financial report indicating           Agreement, alleging that FNBC disbursed
that the projects had greatly overrun their              funds from the escrow accounts without
budgets.                                                 having first received the initial documents. It
                                                         claimed breach of contract and of fiduciary
   The Holders hired attorneys to negotiate              duty and sought damages in an amount equal
further with BCI and to investigate defaults             to the funds wrongfully disbursed.
under      the Indenture and Disbursement
Agreements.       On May 19, 1994, the                      In response, FNBC filed a third-party
noteholders’ attorney informed Scott Strod-              complaint against various third-party
thoff, First Trust’s vice president, of the              defendants, claiming that they were at least
overruns and that a review of the                        partly responsible for FNBC’s alleged
Disbursement Agreement indicated that a po-              mishandling of the proceeds. FNBC also filed
tential default had occurred, and faxed Strod-           a motion for summary judgment, arguing that
thoff a copy of the Disbursement Agreement.              First Trust’s action was time-barred and that
                                                         First Trust lacked standing under the Indenture
   On or about May 19, 1994, Strodthoff ex-              to bring its claims. The district court found for
amined First Trust’s file and discovered that            FNBC on both counts, granting summary
only Disbursement Certificates numbered 3, 4,            judgment and attorney’s fees under the
and 5 were in the file. First Trust then hired its       Indenture.
own counsel on May 26, 1994, to “review
documents regarding construction                                                III.
disbursements.” The construction budget in                   All agree that the applicable statute of lim-
the Disbursement Agreement limited the Biloxi            itations is Mississippi’s catch-all statute, which
and Tunica Projects to about $30 million each.           requires that
Accordingly, BCBI could not exceed the bud-


                                                     3
   (1) All actions for which no other period             cur. See Young v. Southern Farm Bureau Life
   of limitation is prescribed shall be                  Ins. Co., 592 So. 2d 103, 107 (Miss. 1991);
   commenced within three (3) years next                 Johnson v. Crisler, 125 So. 724, 724-25
   after the cause of such action accrued,               (Miss. 1930). The breach First Trust com-
   and not after.                                        plains of is FNBC’s disbursement of money
                                                         without having received and transmitted to
   (2) In actions for which no other period              First Trust the appropriate documents.
   of limitation is prescribed and which in-             Disbursements began on October 14, 1993,
   volve latent injury or disease, the cause             and continued until May 13, 1994. First
   of action does not accrue until the                   Trust’s cause of action therefore emerged at
   plaintiff has discovered, or by reasonable            the earliest on the first of those dates and,
   diligence should have discovered, the                 most generously, on the last.
   injury.
                                                            First Trust claims that its cause of action
MISS. CODE ANN. § 15-1-49 (1999).                        could not arise until BCI and BCBI filed for
                                                         bankruptcy, because “First Trust’s claims
    First Trust sued on June 10, 1997. Under             against FNBC were contingent on whether
subsection (1), therefore, its action is barred if       BCI paid the amounts due and owing under
it accrued before June 10, 1994. First Trust             the Notes. Only when it became clear that
claims, however, that the “discovery rule”               BCI was unable to satisfy its obligations under
should apply to toll the statute until July 1996,        the Notes was First Trust able to seek
when it first discovered that FNBC had never             recovery of principal and interest from other
sent it the initial documents, or, if the                sources.” First Trust argues that the district
discovery rule does not apply, that its claim            court’s earlier denial of summary judgment to
was still timely, because its cause of action did        the third-party defendants (regarding the
not accrue until BCI and BCBI declared bank-             claims brought by FNBC) on limitations
ruptcySSafter June 10, 1994.                             grounds should, under the law-of-the-case
                                                         doctrine, protect First Trust from FNBC’s
   The district court and FNBC reason, to the            summary judgment motion as well.
contrary, that First Trust’s claim accrued on
the day of the first disbursement of funds, that            First Trust errs in comparing its cause of
the discovery rule does not apply, and that              action to FNBC’s. As we will explain, First
even if it did, the tolling pursuant to that rule        Trust’s viable, independent action against
would have ended at the very latest on June              FNBC sounds in contract, while FNBC’s ac-
10, 1994, when First Trust’s attorneys                   tion sounds in tortSSrecovery as a result of
explained to First Trust that breach had                 fraud. The district court’s refusal to find the
probably occurred and that the relevant                  third-party defendants dismissed on limitations
documents should be reviewed. We agree.                  grounds is based on when tort actions, not
                                                         contract actions, accrue. As we have said,
                      A.                                 contract actions accrue when the breach, not
   In Mississippi, a breach of contract claim            the injury, accrues. While it might have been
accrues at the time of the breach regardless of          the case that First Trust’s injuries became final
when damages resulting from the breach oc-               when BCI/BCBI filed for bankruptcy, formal


                                                     4
breach had occurred long before.                       only when damages therefrom occur.1 As the
                                                       district court noted, however, an independent
   Moreover, First Trust errs in its assertion         tort does not arise in circumstances in which
that it enjoyed no option of action before             the tort claim is based solely on a breach of a
bankruptcy ensued because it could prove no            contractual duty.2
damages. The Disbursement Agreement
provides that, “[u]pon the occurrence of any              1
Event of Default, Lender may, in its sole                  See Williams v. Kilgore, 618 So. 2d 51, 54
discretion and without notice to or demand on          (Miss. 1992) (citing Owens-Illinois, Inc. v.
                                                       Edwards, 573 So. 2d 704, 706-07) (Miss. 1990)).
Borrower, and in addition to all rights and
remedies available to Lender under the                    2
                                                             See Palmer v. Orkin Exterminating Co.,
Collateral Documents, demand the return of             871 F. Supp. 912, 914-15 (S.D. Miss. 1994),
any funds in the Escrow Account,” and take             aff’d, 71 F.3d 875 (5th Cir. 1995); Smith v. Orkin
various actions against the borrower. First            Exterminating Co., Inc., 791 F. Supp. 1137, 1143-
Trust then, immediately upon disbursement of           44 (S.D. Miss. 1990), aff’d, 943 F.2d 1314 (5th
the first funds, co uld have recognized that it        Cir. 1991) (noting that the “mere failure to perform
had not been sent copies of the initial docu-          a contract obligationSSor non-actionSSgives rise to
ments, demanded them from FNBC, found                  no claim in tort”); see also Carter Equip. Co. v.
that FNBC lacked them as well, declared                John Deere Indus. Equip. Co., 681 F.2d 386, 390
breach, and seized the escrow accounts.                (5th Cir. 1982) (opining that “[o]rdinarily, courts
                                                       do not impose fiduciary duties upon parties to
   These actions would have ensured, as                contractual agreements”). In Palmer, the court
                                                       explained that
concretely as did BCI’s and BCBI’s
bankruptcy, that expenditures from the                    [i]t is axiomatic that a single act or course
account would cease until the documentary                 of conduct may constitute not only a breach
deficiencies were resolvedSSeither through                of contract but an independent tort as well,
proper provision of the documentation                     if in addition to violating a contract
(thereby protecting the Holders) or through               obligation it also violates a duty owed to
FNBC’s discovery of fraud by various third                plaintiff independent of the contract to
parties and recovery against them (thereby                avoid harming him. Such independent harm
recompensating the Holders). In short, First              may be found because of the relationship
Trust’s claim that its cause of action did not            between the parties, or because of de-
materialize until BCI and BCBI declared                   fendant’s calling or because of the nature of
bankruptcy cannot stand; it accrued on                    the harm. However, not all breaches of con-
disbursement of the funds.                                tract are also independent torts: where
                                                          defendant's negligence ends merely in non-
                                                          performance of the contract and where de-
                       B.
                                                          fendant is not under any recognized duty to
   First Trust argues that the analysis above             act apart from contract, the courts
ignores the fact that its claim against FNBC              generally still see no duty to act
for breach of fiduciary duty is an independent            affirmatively except the duty based onSSand
tort that could have emerged at a different,              limited bySSdefendant’s consent.
later, time, because tort claims generally arise
                                                       Palmer, 871 F. Supp. at 914 (citations, quotation
                                                                                           (continued...)

                                                   5
   First Trust’s fiduciary-duty claims against            will analyze First Trust’s contention that the
FNBC arise from the same source and the                   discovery rule should apply in this case under
same incidents as do its breach of contract               the assumption that FNBC was, pursuant to its
claimsSSthe relationship between the parties              contractual relationship, a fiduciary of First
created by FNBC’s contract and the failure to             Trust’s.
get and deliver the initial documents to First
Trust. No basis independent of the contract                  First Trust argues that the discovery rule
exists for finding a fiduciary duty. The district         should apply in this context because FNBC’s
court therefore decided that the fiduciary duty           errors were latent and undiscoverable,
claim was parasitic of the breach on contract             especially because FNBC stood in the position
claim, and thus accrued as the contract claim             of fiduciary to First Trust, responsible to
accrued.                                                  report all of its errors to First Trust at every
                                                          opportunity. FNBC responds by noting that
    First Trust does nothing to defeat the dis-           the discovery rule has never been applied in
trict court’s reasoning; it merely reasserts that         Mississippi to a contract claim, and urges us to
FNBC owed it a contract-based fiduciary duty.             construe the discovery rule as inapplicable to
Even were it able to convince us that the                 the contract setting. These facts, however, do
court erred in finding that First Trust’s tort            not require us to make that determination of
claim is entirely derivative of its contract              Mississippi law.
claim, however, First Trust would gain no
ground on the limitations front, because, for                Even the assumption, arguendo, that the
reasons we will explain, First Trust was or               discovery rule should apply in a contract set-
should have been aware, more than three years             ting such as this does First Trust no material
before it brought the instant action, that it had         good. When applying the discovery rule,
been actionably damage.                                   “[t]he focus is upon the time that [First Trust]
                                                          discovers, or should have discovered by the
                       C.                                 exercise of reasonable diligence, that [it]
    We agree with the district court that First           probably has an actionable injury.”4 The
Trust’s fiduciary duty claim is derivative of its
contract claim. Because First Trust insists that
                                                             3
a fiduciary relationship existed between it and                (...continued)
FNBC, however, and because the bare                       thus cannot create an independent tort action. We
existence of a fiduciary relationship is, in              have not held thereby that FNBC did in fact owe
Mississippi, a question of fact for the jury,3 we         First Trust a fiduciary duty for any purposes, be-
                                                          cause such a conclusion is reserved to the jury. We
                                                          conduct the following analysis to demonstrate the
                                                          irrelevance of such a finding, whatever the answer,
   2
   (...continued)                                         to this case.
marks and ellipses omitted; emphases added).
                                                             4
                                                               Smith v. Sanders, 485 So. 2d 1051, 1052
   3
      See Carter Equip., 681 F.2d at 390. As              (Miss. 1986) (emphases added); see also In re
discussed, we have recognized that any fiduciary          Catfish Antitrust Litig., 826 F. Supp. 1019, 1031
duty owed First Trust by FNBC would have arisen           (N.D. Miss. 1993). The court explained that
as a result of the agreements discussed herein, and
                                     (continued...)                                            (continued...)

                                                      6
would-be plaintiff need not have become abso-             supporting an Event of Default.” First Trust
lutely certain that he had a cause of action; he          makes a gross overstatement to suggest that
need merely be on noticeSSor should beSSthat              FNBC “actively concealed” breach. First
he should carefully investigate the materials             Trust provides no evidence of active
that suggest that a cause probably or                     concealment by FNBC. In fact, the only
potentially exists.5 Neither need the plaintiff           evidence First Trust supplies in purported
know with precision each detail of breach,                support of its position is a letter dated July 13,
causation, and damages, but merely enough to              1994, in which FNBC explained to First Trust,
make a plain statement of the case backed by              in relevant part, that
evidence sufficient to survive a summary
judgment motion.6                                            [a]fter reviewing the documentation, we
                                                             have reached the conclusion that we
    First Trust argues that FNBC’s breaches                  cannot comply with your request that
were inherently undiscoverable, because                      we deliver funds directly to you under
FNBC “actively concealed its breaches” by                    the Escrow Agreement or the Security
“represent[ing] to First Trust, as its fiduciary             Agreement.
. . . that it was not aware of any evidence
                                                             Under the terms of the Escrow
                                                             Agreement, an event of default must
   4
    (...continued)                                           exist before we, as escrow agent, can
   The plaintiffs need not have actual                       deliver the funds to the trustee.
   knowledge of the facts before the duty of                 Although we do not have concrete
   due diligence arises; rather, knowledge of                evidence of the existence of an event of
   certain facts which are “calculated to excite             default, we would be willing to rely
   inquiry” give rise to the duty to inquire. The
                                                             upon your representation to that effect,
   statute of limitations begins to run once
                                                             provided that you indemnified us for any
   plaintiffs are on inquiry that a potential
   claim exists.                                             loss we sustained and costs and
                                                             expenses incurred in connection with the
Id. (citations omitted; emphasis added).                     transfer of such funds to you. . . .

   5
     Mississippi courts have upheld summary                  In the alternative, under the Security
judgments on limitations grounds even where the              Agreement, you could seize the account.
summary judgment record shows that the discovery             The seizure of the account should be a
rule would otherwise have applied under the                  relatively simple matter. . . . Finally, . . .
circumstances, because the plaintiff either knew or          [w]e can invoke a concursus [interplead-
should have known that an action had accrued, and            er] proceeding and deposit funds into
it was not therefore latent. See Robinson v.                 the registry of the court.
Singing Riv. Hosp. Sys., 732 So. 2d 204, 208
(Miss. 1999); Womble v. Singing Riv. Hosp., 618
                                                          This letter hardly indicates active concealment
So. 2d 1252, 1266 (Miss. 1993); cf. Chamberlin v.
City of Hernando, 716 So. 2d 596, 601 (Miss.              on FNBC’s part. Rather, it demonstrates a
1998).                                                    bank wishing to serve the interests of all
                                                          relevant parties to the best of its
   6
     See Robinson, 732 So. 2d at 208; FED. R.             capacitySSeven providing legal advice about
CIV. P. 8, 56.

                                                      7
how best a threatening party might achieve its               exist to protect the courts from indolent
desired ends.                                                claimants as well as defendants from stale
                                                             claims.
    First Trust also argues that the fiduciary re-
lationship between it and FNBC rendered it                      In defense of its position, First Trust points
“entitled to rely” on its conclusion that FNBC               to Merchants & Marine Bank v. Douglas-
had collected and provided to First Trust all of             Guardian Warehouse Corp., 801 F.2d 742
the necessary and appropriate forms, and on                  (5th Cir. 1986). There, a bank hired Douglas-
FNBC’s representation that it lacked concrete                Guardian to keep track of the inventory of a
proof of an Event of Default. First Trust                    debtor. Because of the debtor’s misfeasance,
apparently thought this entitlement survived                 Douglas-Guardian submitted incorrect reports
even in the face of mounting evidence of seri-               to Merchants & Marine Bank, badly
ous cost overruns, of Holders who had                        overstating the value of the debtor’s inventory.
demanded an accounting, of evidence from its                 Douglas-Guardian did, however, provide all
own files that FNBC had actually defaulted by                reports to the bank as scheduled, and left the
failing to file with First Trust most of the nec-            bank with no way of discerning the
essary documentation related to the                          incorrectness of the reports. See id. at 744-45.
disbursements, and of lawyers who told it that               The court held that, under those
a default had probably occurred and that it                  circumstances, the bank’s action against
should begin a review of its records to                      Douglas-Guardian for contract breach did not
document and act on that default.                            accrue until the bank discovered the error in
                                                             the reports.8
   While fiduciary relationships do often ob-
scure misfeasance on the fiduciary’s part and                   Merchants & Marine’s facts are inapposite
thus trigger the discovery rule, the principal of            here.     As the Disbursement Agreement
a fiduciary is not thereby permitted                         signifies, “[a]gent’s obligation to disburse any
permanently and willfully to ignore patent                   portion of the funds in the Escrow Account to
evidence of the fiduciary’s breach so as to                  Borrower . . . is subject to Agent and Trus-
delay indefinitely the accrual of an action                  tee having received the . . . Collateral
against the fiduciary.7 Statutes of limitations              Documents.” (Emphasis added). First Trust,
                                                             by its own admission, never received these
                                                             documents. This failure to receive docu-
   7
     For its proposition, First Trust relies on Smith        mentsSSeven without notice of cost over-
v. Sneed, 638 So. 2d 1252, 1258 (Miss. 1994),
holding that the discovery rule would work against
a lawyer in a malpractice suit in part because of
“the inability of the layman to detect [legal]                  7
                                                                 (...continued)
misapplication; the client may not recognize the             being able to protect those rights and duties.
negligence of the professional when he sees it.” Id.
                                                                8
(citations omitted). Here, of course, First Trust                  See also Smith, 638 So. 2d at 1257 (holding
does not merit “lay” status; it is, after all, a trust       that the statute will not run against a fiduciary
company, and therefore must be charged with the              “until the client discovers, or should discover, the
duty of knowing how to read a trust indenture,               material facts in issue” because such tolling “vin-
being aware of the rights and duties therein, and            dicates the fiduciary duty of full disclosure”)
                                       (continued...)        (citation omitted)).

                                                         8
runsSSconstituted the relevant “event of                    The record indicates that First Trust was
default.”                                                   first informed of the cost overruns on
                                                            April 29, 1994. After taking over the
   It was always within First Trust’s power,                account [a First Trust executive] was
upon knowledge that disbursements were                      notified of the cost overruns on May 16,
being made, simply to review its records, note              1994, when he received a call from a
the lack of documentation, demand the                       Holder. As previously stated, [another
documents, and order that FNBC cease                        party] also called [him] on May 19,
disbursements and return the remaining escrow               1994 and discussed the Holders’
money to First Trust upon failure to comply                 concerns about potential defaults under
with the demand. Unlike Merchants & Marine                  the Disbursement Agreement and the
Bank, First Trust did not regularly, and in                 Indenture.        [He] reviewed the
conformance with its contract, receive                      Disbursement Agreement on or about
documents that were false. Instead, it failed to            May 19, 1994, and discovered that
receive documents that it knew, or should                   Disbursement Certificates numbers 3, 4,
have known, it should have been receiving.                  and 5 were the only documentation in
First Trust, therefore, did not suffer a latent or          First Trust’s file. . . . First Trust hired
hidden breach; the breach was always, or                    its own counsel on May 26, 1994, to
should always have been, patently obvious to                review all documents pertaining to the
a reasonably diligent party.9                               construction of the projects. First Trust
                                                            also sent letters to FNBC on May 26
   The district court chronicled the events that            and June 3, 1994, acknowledging that
occurred before June 10, 1994:                              disbursements had been made by FNBC
                                                            and requesting Disbursement Cer-
                                                            tificates that it had not received as
   9
     First Trust again points the panel to Smith,           required by section 6.08 of the
638 So. 2d at 1257, wherein the court instructed            Disbursement Agreement.
that
                                                         None of these facts comports with the picture
   the general policies underlying th[e] statute         of an entity’s remaining blissfully unaware that
   of limitations will not be thwarted by                a cause of action had “probably” or “potential-
   adoption of the discovery rule in that                ly” arisen. Rather, they are events indicating
   limited class of . . . cases in which, because        that First Trust not only should have
   of the secretive or inherently                        recognized but actually recognized that its
   undiscoverable nature of the [act] the                rights had been jeopardized, and that it needed
   plaintiff did not know, or with reasonable            to take forceful and perhaps litigious action to
   diligence could not have discovered, that
                                                         defend them.
   he had been [injured]. In such rare
   instances, we do not believe that a plaintiff
   can be accused of sleeping on his rights.                What follows these actions, though, is a
                                                         long pauseSSuntil June 1996 according to First
Id. (citations omitted; emphasis added). Again,          TrustSSin which First Trust took no action
this is inapposite, because even minimal diligence
by First Trust would have brought discovery of the
agent’s breaches.

                                                     9
against FNBC.10 The district court was fully
justified in concluding that First Trust knew or
should have known that breach probably had
occurred before June 10, 1994. Applying the
discovery rule, then, cannot save First Trust’s
cause of action.

                      IV.
    The question of attorney’s fees is parasitic
here. Section 10.14 o f the Disbursement
Agreement reads, “[i]f any action or
proceeding is brought by any party against any
other party under this Agreement, the
prevailing party shall be entitled to recover
such co sts and attorneys’ fees as the court in
such action or proceeding may adjudge
reasonable.” Because we affirm the judgment
rendering FNBC the prevailing party, we
affirm too on the issue of attorney’s fees.
Neither side challenges the amount of fees
awarded.

   AFFIRMED.




   10
      First Trust claims in July 1996 to have
learned for the first time that FNBC had not re-
ceived any initial documents (even though it knew
or should have known that it had also never
received such documents, as required), and realized
that FNBC was a relevant target of litigation.
Even then, First Trust still waited another 11
months, until June 1997, to sue FNBC.

                                                      10
