               United States Court of Appeals
                          For the Eighth Circuit
                      ___________________________

                              No. 13-2032
                      ___________________________

          Trip Mate, Inc., formerly known as Trip Mate Agency, Inc.

                     lllllllllllllllllllll Plaintiff - Appellee

                                          v.

Stonebridge Casualty Insurance Company; Legacy General Insurance Company;
Life Investors Insurance Company of America, also known as Transamerica Life
                             Insurance Company

                   lllllllllllllllllllll Defendants - Appellants

                           ------------------------------

   Unique Vacations, Inc., Brought over from case no. 4:11-cv-01097-ODS

                            lllllllllllllllllllll Plaintiff

                                          v.

Trip Mate, Inc., Brought over from case no. 4:11-cv-01097-ODS; Stonebridge
Casualty Insurance Company, Brought over from case no. 4:11-cv-01097-ODS;
  Life Investors Insurance Company of America; Legacy General Insurance
          Company, Brought over from case no. 4:11-cv-01097-ODS

                          lllllllllllllllllllll Defendants
                                  ____________

                   Appeal from United States District Court
              for the Western District of Missouri - Kansas City
                               ____________
                           Submitted: September 8, 2014
                              Filed: October 6, 2014
                                  ____________

Before BENTON, BEAM, and SHEPHERD, Circuit Judges.
                           ____________

BEAM, Circuit Judge.

       Stonebridge Casualty Insurance Co. (Stonebridge) appeals the district court's
judgment in favor of Trip Mate, Inc. (Trip Mate) following a bench trial. The district
court held that Stonebridge breached an implied amendment to the parties' Managing
General Agent Agreement that was incorporated into the Termination Agreement they
executed in 2009. We reverse.

I.    BACKGROUND

       Trip Mate began doing business in the travel insurance industry in 1989. Trip
Mate acts as the agent for insurance companies, and it markets, administers, and sells
to travel organizers1 the right to sell travel insurance policies. The contract between
Trip Mate and a travel organizer is known as a Travel Organization Agreement
(TOA). The TOA authorizes the travel organizer to offer travelers the option of
buying travel insurance issued by the insurers Trip Mate represents.

      From 1989 to 2009, Trip Mate served as the agent for various entities from a
"family" of insurance companies known as the AEGON group. Stonebridge was the




      1
      Travel organizers are businesses that combine various aspects of travel
packages (transportation, lodging, etc.) for sale to the general public.

                                         -2-
last such insurer, and for purposes of clarity we collectively refer to the members of
the AEGON Group as Stonebridge.

       In 1997, Stonebridge purchased Trip Mate. At that point, Bradley Finkle, Trip
Mate's prior owner, continued to manage the company. As part of the purchase
transaction, Finkle and his wife were given the option to re-purchase the company via
a stock buy-out option. They exercised this option in 2004 and entered into a Stock
Purchase Agreement (SPA) with Stonebridge. The parties simultaneously executed
a Managing General Agent Agreement (MGAA), which remained in effect until
Stonebridge and Trip Mate terminated their relationship in 2009. The MGAA
authorized Trip Mate to "market, underwrite, and service the travel insurance
policies" on Stonebridge's behalf. The MGAA also authorized Trip Mate to issue
insurance policies and required it to place policy premiums in a Premium Trust
Account that Trip Mate held in trust for Stonebridge.

       Article C of the MGAA described the parties' rights and obligations with
respect to funds in the Premium Trust Account. On a monthly basis, Trip Mate was
required to remit all funds in the Premium Trust Account to Stonebridge. However,
Trip Mate was authorized to use funds from this account to pay a number of
Stonebridge's obligations, including (1) making "refund[s] of premiums to persons
entitled to them," and (2) paying Trip Mate's compensation for services performed
under the terms of the MGAA. The MGAA did not define the term "premium" or
identify which persons or entities might be entitled to a refund of premiums.

       Article F of the MGAA contained part of the parties' compensation agreement.
However, rather than explaining the details of Trip Mate's compensation, Article F
merely stated that Stonebridge "agree[d] to pay [Trip Mate] an amount of
compensation to be agreed upon in writing" by the parties. Article F further provided
that any costs Trip Mate incurred related to marketing, selling, and administering



                                         -3-
insurance policies, along with any commissions due to its marketing representatives,
were to be paid out of Trip Mate's own compensation.

       Sometime before 1997, Trip Mate began including profit sharing provisions in
its TOAs with some of its larger clients. Under these agreements, if claims by the
travel organizer's customers fell below a certain percentage of the net premium for the
"Premium Year," the travel organizer received a share of that difference. Trip Mate
continued its profit sharing practice during the time when Stonebridge owned the
company. In addition, although the MGAA did not explicitly authorize profit
sharing, Trip Mate continued the practice after the Finkles re-purchased the company
and until the parties terminated their relationship in 2009. Trip Mate used funds from
the Premium Trust Account to pay profit sharing and disclosed these deductions to
Stonebridge in various reports and audits.

       In November 2009, Stonebridge and Trip Mate terminated their relationship
via a written Termination Agreement. The Termination Agreement was intended to
resolve all outstanding issues and matters between the parties, including
Stonebridge's release of a potential $16 million claim it had against Trip Mate.
However, section 6 of the Termination Agreement provided that several provisions
of the MGAA, including Article C, would remain in effect for a period of time
sufficient to resolve any liabilities from run-off claims. Section 6 further stated that
the MGAA and the amendments to it were attached as exhibits. Finally, section 14.1
of the Termination Agreement contained an integration clause that superseded any
prior oral or written arrangements or understandings between the parties.

       In July 2010, Trip Mate calculated profit sharing due under its TOAs with two
travel organizers–Avanti Destinations (Avanti) and Unique Vacations (Unique). Trip
Mate concluded Avanti was owed approximately $146,000 and Unique was owed
$324,827.30. There were insufficient funds in the Premium Trust Account to pay
these obligations, so Trip Mate paid Avanti $100,000 out of its own funds. Trip Mate

                                          -4-
then notified Stonebridge that it was liable for the profit sharing owed to Unique and
requested reimbursement for Trip Mate's $100,000 payment to Avanti. Stonebridge
refused to pay these amounts and instead claimed that Trip Mate was liable for the
profit sharing obligations.

      Trip Mate chose not to pay Unique, and Unique subsequently sued both Trip
Mate and Stonebridge for breach of contract. Trip Mate and Stonebridge filed cross-
claims alleging the other was liable for the amounts owed to Unique. Trip Mate filed
a separate suit against Stonebridge seeking reimbursement for its $100,000 payment
to Avanti. The district court consolidated the two lawsuits.

         Stonebridge and Trip Mate filed numerous pleadings that asserted several
legal theories for why the other was liable for the profit sharing. Trip Mate claimed
it was acting as Stonebridge's duly authorized agent when it signed the TOAs with
Unique and Avanti and was thus not personally liable under the contracts. Trip Mate
further alleged that profit sharing was a "premium refund" for purposes of Article C
that could be paid with funds from the Premium Trust Account. Finally, Trip Mate
argued that Stonebridge was unjustly enriched by Trip Mate's profit sharing payment
to Avanti since Stonebridge was liable for the amount paid.

      Stonebridge countered that Trip Mate was not authorized to engage in profit
sharing and thus was not acting as Stonebridge's agent when it agreed to the profit
sharing provisions in Avanti's and Unique's TOAs. Stonebridge further claimed that
Trip Mate's profit sharing obligations were commissions, and that the MGAA thus
required Trip Mate to pay these obligations out of its own compensation.

        The district court conducted a two-day trial. Trip Mate presented its case the
first day, and all of its evidence was directed to the issues contained in its pleadings.
At the end of the first day's proceedings, the district court made the following
statement to the parties:

                                          -5-
      Obviously, one of the issues here is, irrespective of what the [MGAA]
      says, was there a course of dealing which effectively modified the terms
      of the [MGAA]. I don't know whether you want to deal with that in
      your presentations tomorrow or whether you want to deal with it post-
      trial by way of additional briefing, but I'll tell you that that is an issue
      that I see, and I would like some help in trying to make my way through
      it. Okay. And then the followup to that seems to me is that if the
      [MGAA] was modified through a course of conduct, then what effect
      does the termination agreement have? Does it terminate the agreement
      as modified, does it terminate the original agreement? Those are legal
      issues that I think need to be addressed at some stage.

        Stonebridge presented its defense on the second day of trial, and neither party
expressly offered any evidence on the issues raised by the district court the previous
day regarding the "course of dealings" amendment theory. At the close of
proceedings, one of the attorneys noted that he "got the impression that the court
might be asking [the parties] for some additional briefing." The district court replied
that it just wanted a brief from each of the parties addressing the issues they thought
were important.

      The parties' post-trial briefs focused exclusively on the claims, counterclaims,
and defenses contained in their pleadings. Trip Mate reiterated its argument that the
MGAA authorized it to bind Stonebridge to profit sharing contracts and to use
Premium Trust Account funds to pay these profit sharing "premium refunds." Trip
Mate further argued that the parties had engaged in a twenty year course of conduct
whereby Trip Mate administered profit sharing payments on behalf of Stonebridge.

       Stonebridge contended that Trip Mate was not authorized to bind Stonebridge
to profit sharing contracts and that Trip Mate's profit sharing obligations were
commissions it had to pay out of its compensation. Stonebridge also noted that the
parties' course of dealings supported its interpretation of the term "compensation" for



                                          -6-
purposes of the MGAA. Stonebridge did not, however, address whether the parties
amended the MGAA by their course of dealings.

       The district court rejected all of Trip Mate's theories of relief. It first concluded
that neither the MGAA nor Stonebridge's conduct provided Trip Mate with actual or
apparent authority to bind Stonebridge to profit sharing contracts. The district court
thus held that Trip Mate, and not Stonebridge, was directly liable for the profit
sharing contained in its TOAs with Avanti and Unique. It further determined that
travelers, not travel organizers, paid premiums and that profit sharing therefore did
not fit within the customary and ordinary concept of "refund of premiums." The
district court thus concluded the express terms of the MGAA did not authorize Trip
Mate to pay profit sharing with funds from the Premium Trust Account.

       With little explanation, the district court also rejected Stonebridge's argument
that profit sharing was a commission that Trip Mate was required to pay out of its
compensation. The district court instead held in favor of Trip Mate based on a theory
the parties neither pled nor argued–that their course of dealings amended Article C
of the MGAA "by creating an additional circumstance under which payments from
the Premium Trust Account were permitted." Specifically, the district court
concluded that Stonebridge's "knowing acquiescence" in Trip Mate's use of Premium
Trust Account funds to pay profit sharing indicated that "Stonebridge effectively
agreed profit sharing was a debt it would pay out of its share of the premiums." The
district court further determined this "amendment" to Article C survived the parties'
2009 Termination Agreement. The district court thus held that Stonebridge was
obligated to reimburse Trip Mate for the $100,000 it paid to Avanti and the
$324,827.30 it owed to Unique. The district court did not, however, formally amend
the pleadings to include the implied amendment theory or discuss whether the parties
consented to trying this new theory.




                                            -7-
      Stonebridge appeals, claiming the district court erred by (1) finding in favor of
Trip Mate on the grounds of an implied amendment to the MGAA because this legal
theory was outside the scope of the pleadings; (2) holding profit sharing payments
were not commissions that Trip Mate was required to pay out of its own
compensation; (3) holding the alleged implied amendment survived the parties' 2009
Termination Agreement; and (4) finding Trip Mate sufficiently proved any profit
sharing was owed.

II.   DISCUSSION

       Stonebridge first argues that the district court erred by finding in favor of Trip
Mate because the court's implied amendment theory was outside the scope of the
pleadings. As noted above, the district court rejected the theories of recovery Trip
Mate pled and argued, and its judgment in favor of Trip Mate was instead based
solely on the implied amendment theory. Trip Mate does not appeal any aspect of the
district court's judgment. Stonebridge thus contends that, since the parties neither
pled nor consented to trying this theory, we should reverse the district court and
remand with instructions to enter judgment in favor of Stonebridge. We agree.

       Rule 15(b)(2) of the Federal Rules of Civil Procedure provides that "[w]hen an
issue not raised by the pleadings is tried by the parties' express or implied consent,
it must be treated in all respects as if raised in the pleadings." Fed. R. Civ. P.
15(b)(2). Such amendments are "to be liberally granted where necessary to bring
about the furtherance of justice and where the adverse party will not be prejudiced."
Am. Fed'n of State, Cnty. & Mun. Emps. v. City of Benton, 513 F.3d 874, 883 (8th
Cir. 2008) (internal quotation omitted). Trip Mate concedes that the parties did not
expressly consent to trying the implied amendment issue. Thus, the question before
us is whether the parties tried the issue by implied consent.




                                          -8-
       The district court's decision to grant or deny an amendment under Rule
15(b)(2) is reviewed for abuse of discretion. Am. Family Mut. Ins. Co. v. Hollander,
705 F.3d 339, 347 (8th Cir. 2013). Stonebridge, however, argues that the district
court's failure to mention or analyze whether the parties impliedly consented to trying
this new issue requires us to undertake de novo review. Stonebridge is incorrect.

       Rule 15(b)(2) provides that, although a party may move at any time to amend
the pleadings to conform to the evidence or to raise an unpleaded issue, failure to
amend does not affect the result of the trial on that issue. In addition, "a district court
may amend the pleadings merely by entering findings on the unpleaded issues."
Galindo v. Stoody Co., 793 F.2d 1502, 1513 n.8 (9th Cir. 1986). Here the district
court amended the pleadings by entering findings regarding the implied amendment.
Our task is to determine whether the district court, in so doing, abused its discretion.
Hollander, 705 F.3d at 347.

      "Implied consent exists where a party has actual notice of an unpleaded issue
and has been given an adequate opportunity to cure any surprise resulting from the
change in the pleadings." Id. at 348 (internal quotation omitted). A party generally
has actual notice if the opposing party communicates its intention to amend the
pleadings, or the court announces at or before trial that it will treat the pleadings as
amended. Id. In addition, "consent may be implied when evidence relevant to an
unpleaded issue has been introduced at trial without objection" if it is clear
Stonebridge, as the non-moving party, had actual notice of the implied amendment
claim and an adequate opportunity to cure any surprise. Id. at 348-49. However,
evidence that is relevant to a pleaded issue generally will not by itself provide notice
to a non-moving party that an unpleaded issue is being tried. Pariser v. Christian
Health Care Sys., Inc., 816 F.2d 1248, 1253 (8th Cir. 1987).




                                           -9-
        Trip Mate argues that the district court's rather vague comments at the end of
the first day of trial about the parties' course of dealings put them on notice that the
district court was amending the pleadings. The parties' response to these comments
tells a much different story.

       During the second day of trial, neither party provided any witness testimony
or submitted any exhibits directly related to their course of dealings. In addition, both
parties' post-trial briefs indicate Trip Mate and Stonebridge understood any course
of dealings evidence was in support of their respective interpretation of terms
explicitly included in the MGAA. Neither party mentioned or argued that their
course of dealings actually amended the MGAA.

       We are deeply skeptical that lead counsel for Stonebridge and Trip Mate, both
of whom are experienced, well-respected members of their state's bar, would have
blatantly ignored the implied amendment issue if they had "actual notice" that it was
part of the case. Hollander, 705 F.3d at 348. Indeed, at oral argument both counsel
conceded the district court's holding was a "curveball" which took them by surprise.
We thus conclude that the district court's comments to the parties regarding their
course of dealings were too vague and ambiguous to provide the parties with actual
notice that the court amended the pleadings to include the implied amendment theory.

      Trip Mate's additional argument that the parties' consent should be implied
because they did not object to the introduction of evidence that supported the implied
amendment theory is also without merit. Trip Mate correctly notes that amendment
under Rule 15(b)(2) is not foreclosed merely because "evidence bearing on [pleaded
and unpleaded] claims may well overlap in a given case." Id. at 349 (quotation
omitted). We refuse to ignore, however, that "the dispositive inquiry is whether
[Stonebridge] had actual notice of the unpleaded claim and an adequate opportunity




                                          -10-
to cure any surprise resulting from the change of the pleadings." Id. (internal
quotation omitted).

       Through the lens of hindsight we can see that the district court probably
attempted to amend the pleadings during the first day of trial. The parties, however,
reasonably and quite clearly misunderstood the district court's vague comments about
their course of dealings, and the court took no steps to clarify this obvious
misunderstanding during the trial or in its instructions to the parties regarding their
post-trial briefs. The parties thus did not have actual notice of the implied
amendment issue or an adequate opportunity to cure the surprise of this issue being
added to the case. Id. at 348-49. The parties therefore did not consent to trying the
implied amendment issue, and the district court abused its discretion by adding it to
the pleadings. Id.

       The district court rejected all of the legal theories Trip Mate pled and argued,
and Trip Mate does not appeal any aspect of the district court's holding.2 Because the
district court improperly added the implied amendment theory to the pleadings, there
is no remaining basis for the district court's judgment against Stonebridge in favor of
Trip Mate.




      2
       The district court did not explicitly address Trip Mate's unjust enrichment
claim. This claim, however, was predicated on Trip Mate's assertion that Stonebridge
was directly liable for the profit sharing owed to Avanti. Because the district court
held Stonebridge was not directly liable for profit sharing under the theories Trip
Mate pled and argued, we conclude the district court also impliedly rejected Trip
Mate's unjust enrichment claim.


                                         -11-
III.   CONCLUSION

       For the reasons stated above, we reverse the district court's judgment in favor
of Trip Mate and remand with instructions to dismiss the case.
                        ______________________________




                                        -12-
