            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

                                 _________________________

                                          May 31, 2000


Before REAVLEY, SMITH, and                         Belle, Inc. (“BCBI”). Those assets were
  EMILIO M.GARZA, Circuit Judges.                  placed by BCI/BCBI into two escrow
                                                   accounts to be employed in building two
JERRY E. SMITH, Circuit Judge:                     casinos. The casinos ran over budget, and
                                                   BCI/BCBI filed for bankruptcy. First National
   First Trust National Association (“First        Bank of Commerce (“FNBC”), the agent for
Trust”) is indenture trustee for a trust the       these escrow funds, failed to obtain necessary
assets of which are proceeds of notes sold by      documentation, guaranteeing the cost of
Belle Casinos, Inc. (“BCI”), and Biloxi Casino     construction, from various sources, therefore
contributing to the cost overruns and the               were placed into two escrow accounts
bankruptcy. Before the bankruptcy, First                administered by FNBC, which agreed to
Trust became aware of cost overruns and of its          distribute the funds from those accounts only
failure to receive from FNBC copies of all              on the occurrence of certain conditions listed
necessary documentation.                                in the Disbursement Agreement.
                                                        Simultaneously, BCI loaned the net proceeds
   First Trust sued FNBC, claiming breach of            of the notes to BCBI, which executed a
various contractual and fiduciary obligations to        Disbursement and Escrow Account Security
the noteholders whom First Trust represents as          Agreement (“Disbursement Security
indenture trustee. FNBC challenged First                Agreement”) to BCI in the principal amount of
Trust’s suit on grounds of standing and the             $75 million. BCBI was to use the net
statute of limitations. The district court found        proceeds of the offering to finance the
for FNBC on summary judgment on both                    construction and expansion of the projects and
grounds. First Trust appeals. Agreeing with             thereafter operate the casinos.
the district court that limitations bars this ac-
tion, we affirm.                                           After a draw at closing to pay off the
                                                        interim loans and closing costs, BCBI
                       I.                               deposited almost $60 million into two escrow
   Mississippi Riverboat Amusements, Ltd.               accounts at FNBC. Finally, an Assignment
(“MRA”), which owned and operated the                   Agreement was executed between BCI as
Biloxi Belle Casino in Biloxi, Mississippi,             assignor and First Trust as assignee, whereby
decided in 1993 to expand its existing casino           BCI assigned all of BCI’s rights as Lender to
(the “Biloxi Project”) and to open a new                First Trust, including its rights under the
casino in Tunica County (the “Tunica                    Disbursement Agreement. Moreover, BCI
Project”). To facilitate this expansion, MRA            assigned its rights, title, and interest in the
established two subsidiary corporations: BCI,           escrow accounts to First Trust.
a Delaware corporation, and BCBI, a
Mississippi corporation. To finance the                     According to article III of the Disbursement
construction and expansion of the projects,             Agreement, FNBC and First Trust were to re-
certain notes were sold under an offering put           ceive certain documents (the “initial
together by Bear, Sterns & Co., Inc., in the            documents”) as a precondition to disbursing
name of BCI. The notes were sold to                     money from the escrow accounts. After the
investors (the “noteholders” or “Holders”)              note sale, FNBC received Contractor’s and
pursuant to an Indenture under which First              Architect’s Certificates (the “Disbursement
Trust served as indenture trustee, thereby              Certificates” or “certificates”) as contemplated
agreeing to perform certain acts on behalf of           by article VI of the Disbursement Agreement,
the Holders and in relation to the notes, which         and in particular section 6.08. FNBC,
were sold in October 1993.                              however, was to use the Disbursement
                                                        Certificates to make disbursements only if both
   Upon sale of the notes, FNBC was selected            First Trust and FNBC had first secured the
as Disbursing Agent for the proceeds, and its           initial documents.
obligations were defined by the Disbursement
and Escrow Agreement (“Disbursement                        Neither First Trust nor FNBC received
Agreement”). The proceeds from the notes                those documents. FNBC, though, disbursed

                                                    2
the requested funds on the strength of the Dis-          1994. First Trust claims that it first discovered
bursement Certificates alone.                            FNBC’s failure to obtain the initial documents
                                                         in July 1996, when its attorneys examined
   FNBC first distributed money from the es-             FNBC’s files.
crow accounts on October 14, 1993, and
continued to disburse until May 13, 1994. On                                     II.
or about April 14, 1994, the Holders were first              First Trust sued in its capacity as indenture
notified by BCI that there were construction-            trust ee on behalf of the Holders on June 10,
cost overruns. At a meeting between Bear,                1997, claiming breach of the Disbursement
Stearns and the Holders on May 5, 1994, the              Agreement, alleging that FNBC disbursed
Holders received a financial report indicating           funds from the escrow accounts without
that the projects had greatly overrun their              having first received the initial documents. It
budgets.                                                 claimed breach of contract and of fiduciary
                                                         duty and sought damages in an amount equal
   The Holders hired attorneys to negotiate              to the funds wrongfully disbursed.
further with BCI and to investigate defaults
under      the Indenture and Disbursement                   In response, FNBC filed a third-party
Agreements.       On May 19, 1994, the                   complaint against various third-party
noteholders’ attorney informed Scott Strod-              defendants, claiming that they were at least
thoff, First Trust’s vice president, of the              partly responsible for FNBC’s alleged
overruns and that a review of the                        mishandling of the proceeds. FNBC also filed
Disbursement Agreement indicated that a po-              a motion for summary judgment, arguing that
tential default had occurred, and faxed Strod-           First Trust’s action was time-barred and that
thoff a copy of the Disbursement Agreement.              First Trust lacked standing under the Indenture
                                                         to bring its claims. The district court found for
   On or about May 19, 1994, Strodthoff ex-              FNBC on both counts, granting summary
amined First Trust’s file and discovered that            judgment and attorney’s fees under the
only Disbursement Certificates numbered 3, 4,            Indenture.
and 5 were in the file. First Trust then hired its
own counsel on May 26, 1994, to “review                                          III.
documents regarding construction                             All agree that the applicable statute of lim-
disbursements.” The construction budget in               itations is Mississippi’s catch-all statute, which
the Disbursement Agreement limited the Biloxi            requires that
and Tunica Projects to about $30 million each.
Accordingly, BCBI could not exceed the bud-                 (1) All actions for which no other period
gets by more than $1.2 million without First                of limitation is prescribed shall be
Trust’s permission. There is no evidence that               commenced within three (3) years next
First Trust ever consented to any increase in               after the cause of such action accrued,
the budgets.                                                and not after.

   First Trust declared default on July 12,                 (2) In actions for which no other period
1994, and instructed FNBC to transfer the re-               of limitation is prescribed and which in-
maining escrowed funds to First Trust; BCI                  volve latent injury or disease, the cause
and BCBI filed for bankruptcy on August 31,                 of action does not accrue until the

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

                                                     4
any funds in the Escrow Account,” and take                First Trust’s fiduciary-duty claims against
various actions against the borrower. First            FNBC arise from the same source and the
Trust then, immediately upon disbursement of           same incidents as do its breach of contract
the first funds, could have recognized that it         claimsSSthe relationship between the parties
had not been sent copies of the initial docu-          created by FNBC’s contract and the failure to
ments, demanded them from FNBC, found                  get and deliver the initial documents to First
that FNBC lacked them as well, declared                Trust. No basis independent of the contract
breach, and seized the escrow accounts.                exists for finding a fiduciary duty. The district

   These actions would have ensured, as
concretely as did BCI’s and BCBI’s
                                                       (...continued)
bankruptcy, that expenditures from the
                                                       aff’d, 71 F.3d 875 (5th Cir. 1995); Smith v. Orkin
account would cease until the documentary
                                                       Exterminating Co., Inc., 791 F. Supp. 1137, 1143-
deficiencies were resolvedSSeither through             44 (S.D. Miss. 1990), aff’d, 943 F.2d 1314 (5th
proper provision of the documentation                  Cir. 1991) (noting that the “mere failure to perform
(thereby protecting the Holders) or through            a contract obligationSSor non-actionSSgives rise to
FNBC’s discovery of fraud by various third             no claim in tort”); see also Carter Equip. Co. v.
parties and recovery against them (thereby             John Deere Indus. Equip. Co., 681 F.2d 386, 390
reco mpensating the Holders). In short, First          (5th Cir. 1982) (opining that “[o]rdinarily, courts
Trust’s claim that its cause of action did not         do not impose fiduciary duties upon parties to
materialize until BCI and BCBI declared                contractual agreements”). In Palmer, the court
bankruptcy cannot stand; it accrued on                 explained that
disbursement of the funds.
                                                          [i]t is axiomatic that a single act or course
                       B.                                 of conduct may constitute not only a breach
   First Trust argues that the analysis above             of contract but an independent tort as well,
                                                          if in addition to violating a contract
ignores the fact that its claim against FNBC
                                                          obligation it also violates a duty owed to
for breach of fiduciary duty is an independent
                                                          plaintiff independent of the contract to
tort that could have emerged at a different,              avoid harming him. Such independent harm
later, time, because tort claims generally arise          may be found because of the relationship
only when damages therefrom occur.1 As the                between the parties, or because of
district court noted, however, an independent             defendant's calling or because of the nature
tort does not arise in circumstances in which             of the harm. However, not all breaches of
the tort claim is based solely on a breach of a           contract are also independent torts: where
contractual duty.2                                        defendant's negligence ends merely in
                                                          nonperformance of the contract and where
                                                          defendant is not under any recognized duty
                                                          to act apart from contract, the courts
   1
    See Williams v. Kilgore, 618 So. 2d 51, 54            generally still see no duty to act
(Miss. 1992) (citing Owens-Illinois, Inc. v.              affirmatively except the duty based onSSand
Edwards, 573 So. 2d 704, 706-07) (Miss. 1990)).           limited bySSdefendant's consent.
       2
      See Palmer v. Orkin Exterminating Co.,           Palmer, 871 F. Supp. at 914-15 (citations, quotation
871 F. Supp. 912, 914-15 (S.D. Miss. 1994),            marks and ellipses omitted; emphases added).
                         (continued...)

                                                   5
court therefore decided that the fiduciary duty           First Trust does nothing to defeat the dis-
claim was parasitic of the breach on contract         trict court’s reasoning; it merely reasserts that
claim, and thus accrued as the contract claim         FNBC owed it a contract-based fiduciary duty.
accrued.                                              Even were it able to convince us that the
                                                      court erred in finding that First Trust’s tort
                                                      claim is entirely derivative of its contract
                                                      claim, however, First Trust would gain no
                                                      ground on the limitations front, because, for
                                                      reasons we will explain, First Trust was or
                                                      should have been aware, more than three years
                                                      before it brought the instant action, that it had
                                                      been actionably damage.

                                                                             C.
                                                          We agree with the district court that First
                                                      Trust’s fiduciary duty claim is derivative of its
                                                      contract claim. Because First Trust insists that
                                                      a fiduciary relationship existed between it and
                                                      FNBC, however, and because the bare
                                                      existence of a fiduciary relationship is, in
                                                      Mississippi, a question of fact for the jury,3 we
                                                      will analyze First Trust’s contention that the
                                                      discovery rule should apply in this case under
                                                      the assumption that FNBC was, pursuant to its
                                                      contractual relationship, a fiduciary of First
                                                      Trust’s.

                                                         First Trust argues that the discovery rule
                                                      should apply in this context because FNBC’s
                                                      errors were latent and undiscoverable,
                                                      especially because FNBC stood in the position
                                                      of fiduciary to First Trust, responsible to

                                                          3
                                                             See Carter Equip., 681 F.2d at 390. As
                                                      discussed, we have recognized that any fiduciary
                                                      duty owed First Trust by FNBC would have arisen
                                                      as a result of the agreements discussed herein, and
                                                      thus cannot create an independent tort action. We
                                                      have not held thereby that FNBC did in fact owe
                                                      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,
                                                      to this case.

                                                  6
report all of its errors to First Trust at every        know with precision each detail of breach,
opportunity. FNBC responds by noting that               causation, and damages, but merely enough to
the discovery rule has never been applied in            make a plain statement of the case backed by
Mississippi to a contract claim, and urges us to        evidence sufficient to survive a summary
construe the discovery rule as inapplicable to          judgment motion.6
the contract setting. These facts, however, do
not require us to make that determination of                First Trust argues that FNBC’s breaches
Mississippi law.                                        were inherently undiscoverable, because
                                                        FNBC “actively concealed its breaches” by
   Even the assumption, arguendo, that the              “represent[ing] to First Trust, as its fiduciary
discovery rule should apply in a contract set-          . . . that it was not aware of any evidence
ting such as this does First Trust no material          supporting an Event of Default.” First Trust
good. When applying the discovery rule,                 makes a gross overstatement to suggest that
“[t]he focus is upon the time that [First Trust]        FNBC “actively concealed” breach. First
discovers, or should have discovered by the             Trust provides no evidence of active
exercise of reasonable diligence, that [it]             concealment by FNBC. In fact, the only
probably has an actionable injury.”4 The                evidence First Trust supplies in purported
would-be plaintiff need not have become abso-           support of its position is a letter dated July 13,
lutely certain that he had a cause of action; he        1994, in which FNBC explained to First Trust,
need merely be on noticeSSor should beSSthat            in relevant part, that
he should carefully investigate the materials
that suggest that a cause probably or                      [a]fter reviewing the documentation, we
potentially exists.5 Neither need the plaintiff            have reached the conclusion that we
                                                           cannot comply with your request that
                                                           we deliver funds directly to you under
    4                                                      the Escrow Agreement or the Security
      Smith v. Sanders, 485 So. 2d 1051, 1052
(Miss. 1986) (emphases added); see also In re              Agreement.
Catfish Antitrust Litig., 826 F. Supp. 1019, 1031
(N.D. Miss. 1993). The court explained that                Under the terms of the Escrow

   The plaintiffs need not have actual
   knowledge of the facts before the duty of            (...continued)
   due diligence arises; rather, knowledge of           summary judgment record shows that the discovery
   certain facts which are “calculated to excite        rule would otherwise have applied under the
   inquiry” give rise to the duty to inquire. The       circumstances, because the plaintiff either knew or
   statute of limitations begins to run once            should have known that an action had accrued, and
   plaintiffs are on inquiry that a potential           it was not therefore latent. See Robinson v.
   claim exists.                                        Singing Riv. Hosp. Sys., 732 So. 2d 204, 208
                                                        (Miss. 1999); Womble v. Singing Riv. Hosp., 618
                                                        So. 2d 1252, 1266 (Miss. 1993); cf. Chamberlin v.
Id. (citations omitted; emphasis added).                City of Hernando, 716 So. 2d 596, 601 (Miss.
                                                        1998).
        5
      Mississippi courts have upheld summary
                                                            6
judgments on limitations grounds even where the               See Robinson, 732 So. 2d at 208; FED. R.
                           (continued...)               CIV. P. 8, 56.

                                                    7
   Agreement, an event of default must                   should begin a review of its records to
   exist before we, as escrow agent, can                 document and act on that default.       While
   deliver the funds to the trustee.                     fiduciary relationships do often obscure
   Although we do not have concrete                      misfeasance on the fiduciary’s part and thus
   evidence of the existence of an event of              trigger the discovery rule, the principal of a fi-
   default, we would be willing to rely                  duciary is not thereby permitted permanently
   upon your representation to that effect,              and willfully to ignore patent evidence of the
   provided that you indemnified us for any              fiduciary’s breach so as to delay indefinitely
   loss we sustained and costs and                       the accrual of an action against the fiduciary.7
   expenses incurred in connection with the              Statutes of limitations exist to protect the
   transfer of such funds to you. . . .                  courts from indolent claimants as well as
                                                         defendants from stale claims.
   In the alternative, under the Security
   Agreement, you could seize the account.                  In defense of its position, First Trust points
   The seizure of the account should be a                to Merchants & Marine Bank v. Douglas-
   relatively simple matter. . . . Finally, . . .        Guardian Warehouse Corp., 801 F.2d 742
   [w]e can invoke a concursus [interplead-              (5th Cir. 1986). There, a bank hired Douglas-
   er] proceeding and deposit funds into                 Guardian to keep track of the inventory of a
   the registry of the court.                            debtor. Because of the debtor’s misfeasance,
                                                         Douglas-Guardian submitted incorrect reports
This letter hardly indicates active concealment          to Merchants & Marine Bank, badly
on FNBC’s part. Rather, it demonstrates a                overstating the value of the debtor’s inventory.
bank wishing to serve the interests of all               Douglas-Guardian did, however, provide all
relevant parties to the best of its                      reports to the bank as scheduled, and left the
capacitySSeven providing legal advice about              bank with no way of discerning the
how best a threatening party might achieve its           incorrectness of the reports. See id. at 744-45.
desired ends.                                            The court held that, under those
                                                         circumstances, the bank’s action against
    First Trust also argues that the fiduciary re-       Douglas-Guardian for contract breach did not
lationship between it and FNBC rendered it               accrue until the bank discovered the error in
“entitled to rely” on its conclusion that FNBC
had collected and provided to First Trust all of
                                                            7
the necessary and appropriate forms, and on                   For its proposition, First Trust relies on Smith
FNBC’s representation that it lacked concrete            v. Sneed, 638 So. 2d 1252, 1258 (Miss. 1994),
proof of an Event of Default. First Trust                holding that the discovery rule would work against
apparently thought this entitlement survived             a lawyer in a malpractice suit in part because of
                                                         “the inability of the layman to detect [legal]
even in the face of mounting evidence of seri-
                                                         misapplication; the client may not recognize the
ous cost overruns, of Holders who had
                                                         negligence of the professional when he sees it.” Id.
demanded an accounting, of evidence from its             (citations omitted). Here, of course, First Trust
own files that FNBC had actually defaulted by            does not merit “lay” status; it is, after all, a trust
failing to file with First Trust most of the nec-        company, and therefore must be charged with the
essary documentation related to the                      duty of knowing how to read a trust indenture,
disbursements, and of lawyers who told it that           being aware of the rights and duties therein, and
a default had probably occurred and that it              being able to protect those rights and duties.

                                                     8
the reports.8                                                 The district court chronicled the events that
                                                           occurred before June 10, 1994:
   Merchants & Marine’s facts are inapposite
here.     As the Disbursement Agreement                       The record indicates that First Trust was
signifies, “[a]gent’s obligation to disburse any              first informed of the cost overruns on
portion of the funds in the Escrow Account to                 April 29, 1994. After taking over the
Borrower . . . is subject to Agent and Trus-                  account [a First Trust executive] was
tee having received the . . . Collateral                      notified of the cost overruns on May 16,
Documents.” (Emphasis added). First Trust,                    1994, when he received a call from a
by its own admission, never received these                    Holder. As previously stated, [another
documents. This failure to receive docu-                      party] also called [him] on May 19,
mentsSSeven without notice of cost over-                      1994 and discussed the Holders’
runsSSconstituted the relevant “event of                      concerns about potential defaults under
default.”                                                     the Disbursement Agreement and the
                                                              Indenture.        [He] reviewed the
   It was always within First Trust’s power,                  Disbursement Agreement on or about
upon knowledge that disbursements were                        May 19, 1994, and discovered that
being made, simply to review its records, note                Disbursement Certificates numbers 3, 4,
the lack of documentation, demand the                         and 5 were the only documentation in
documents, and order that FNBC cease                          First Trust’s file. . . . First Trust hired
disbursements and return the remaining escrow                 its own counsel on May 26, 1994, to
money to First Trust upon failure to comply                   review all documents pertaining to the
with the demand. Unlike Merchants & Marine                    construction of the projects. First Trust
Bank, First Trust did not regularly, and in                   also sent letters to FNBC on May 26
conformance with its contract, receive                        and June 3, 1994, acknowledging that
documents that were false. Instead, it failed to              disbursements had been made by FNBC
receive documents that it knew, or should
have known, it should have been receiving.
First Trust, therefore, did not suffer a latent or         (...continued)
hidden breach; the breach was always, or                      the general policies underlying th[e] statute
should always have been, patently obvious to                  of limitations will not be thwarted by
a reasonably diligent party.9                                 adoption of the discovery rule in that
                                                              limited class of . . . cases in which, because
                                                              of the secretive or inherently
   8
      See also Smith, 638 So. 2d at 1257 (holding             undiscoverable nature of the [act] the
that the statute will not run against a fiduciary             plaintiff did not know, or with reasonable
“until the client discovers, or should discover, the          diligence could not have discovered, that
material facts in issue” because such tolling “vin-           he had been [injured]. In such rare
dicates the fiduciary duty of full disclosure”)               instances, we do not believe that a plaintiff
(citation omitted)).                                          can be accused of sleeping on his rights.

    9
     First Trust again points the panel to Smith,          Id. (citations omitted; emphasis added). Again,
638 So. 2d at 1257, wherein the court instructed           this is inapposite, because even minimal diligence
that                                                       by First Trust would have brought discovery of the
                           (continued...)                  agent’s breaches.

                                                       9
   and requesting Disbursement Cer-                        reasonable.” Because we affirm the judgment
   tificates that it had not received as                   rendering FNBC the prevailing party, we
   required by section 6.08 of the                         affirm too on the issue of attorney’s fees.
   Disbursement Agreement.                                 Neither side challenges the amount of fees
                                                           awarded.
None of these facts comports with the picture
of an entity’s remaining blissfully unaware that             AFFIRMED.
a cause of action had “probably” or “potential-
ly” arisen. Rather, they are events indicating
that First Trust not only should have
recognized but actually recognized that its
rights had been jeopardized, and that it needed
to take forceful and perhaps litigious action to
defend them.

   What follows these actions, though, is a
long pauseSSuntil June 1996 according to First
TrustSSin which First Trust took no action
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 of 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 cost s and attorneys’ fees as the court in
such action or proceeding may adjudge


     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
