(caption unavailable)

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________
No. 92-2353
cons. w/ No. 92-2381
___________________
RICHARD DODSON, ET AL., Plaintiffs-Appellants,
versus
HILLCREST SECURITIES CORP., ET AL., Defendants,
ALEXANDER GRANT & CO., ETC.,
PANNELL, KERR & FORSTER, BRANCH
ORCUTT, KIRKPATRICK & CRISWELL, Defendants-Appellees.
**************************
WILLIAM M. and LUCILE C. LACY, ET AL., Plaintiffs-Appellants,
versus
HILLCREST SECURITIES CORPORATION,
INC., ET AL., Defendants,
ALEXANDER GRANT & CO., and
PANNELL, KERR & FORSTER,
Defendants-Appellees.
________________________________________________
Appeal from the United States District Court for the
Southern District of Texas
(CA H 1639 & CA H 90 1864)
________________________________________________
July 24, 1996

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* Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
1 BOKC was only named in the first of the two suits.
2 The investors allege that they invested in Hillcrest
investments in reliance on representations that the accountants
would audit and verify the transactions in government securities by
visiting primary and secondary dealers to verify the authenticity
of the trades. Ed Markowitz (Markowitz), not a party here or
below, a securities trader, allegedly ran a fraudulent scheme
involving the Hillcrest trading program in which very few
legitimate trades were actually made. Plaintiffs allege that
Hillcrest prepared paperwork showing the existence of transactions
that never occurred and that the accountants were aware of the
fraudulent scheme but continued to make fraudulent representations
to the investors regarding the Hillcrest investments from 1981 to
2
Before GARWOOD, SMITH and DENNIS, Circuit Judges.*
GARWOOD, Circuit Judge:
Facts and Proceedings Below
Two suits were brought in the name of investors in a
government securities tax shelter involving the trade of government
securities set up by securities broker/dealers and investment
advisors Hillcrest Securities Corp. and Hillcrest Equities Inc.
(collectively Hillcrest). The suits alleged federal (RICO and
securities fraud) and Texas state law (common law fraud,
negligence, breach of fiduciary duty, and Deceptive Trade
Practices Act) claims against Hillcrest, three accounting
firms——Alexander Grant & Company, now known as Grant Thorton LLP
(Grant), Pannell, Kerr & Foster (PKF), and Branch, Orcutt,
Kirkpatrick & Criswell (BOKC)1——, and others after the Internal
Revenue Service (IRS) determined that the reported trades in
government securities were never made.2

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1984.
3
One suit was filed against Hillcrest, Grant, PKF, and others
not party to this appeal, on May 11, 1988 (the Dodson suit). The
Dodson suit was filed by Sidney Ravkind as attorney for Richard
Dodson, David L. Standlee, the Hillcrest Investigation Trust (the
Trust)——later known as Hillcrest Investigative Participants
(HIP)——,and a class comprised of investors in the Hillcrest tax
shelter program. After the district court denied plaintiffs’
motion for class certification, more than a thousand additional
plaintiffs were added by means of a multitude of amended,
supplemental, and supplemental amended complaints. On February 13,
1990, an interlocutory judgment was entered against Hillcrest,
holding that it was liable to the Dodson plaintiffs for their
actual damages. Actual damages were to be determined by jury trial
at a later date.
Discovery commenced in the Dodson suit in February 1990. In
October 1990, the magistrate ordered 600 to 800 plaintiffs who had
failed to file any interrogatory responses dismissed with
prejudice. In January 1991, after repeated discovery abuses by
plaintiffs, the magistrate found that none of the interrogatory
answers of the remaining hundreds of plaintiffs were adequate and
recommended dismissing all Dodson plaintiffs except those who had
been deposed. BOKC was first named as a defendant in the Dodson
suit in Plaintiffs’ Fourth Amended Complaint, which the magistrate
granted leave to file on April 8, 1991. On April 1, 1992, the
district court adopted the magistrate’s recommendation and

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3 The court also dismissed the suit against Hillcrest for
failure to prosecute the Lacy suit under Rule 41(b).
4
dismissed all Dodson plaintiffs who had not been deposed for their
repeated failure to obey discovery orders. In the same order, the
district court dismissed the remaining Dodson plaintiffs by
granting summary judgment motions filed by Grant and PKF on statute
of limitations grounds. Two days later, the district court granted
BOKC’s motion for summary judgment on statute of limitations
grounds. A timely notice of appeal was filed in the Dodson suit.
On June 11, 1990, after the court-imposed cutoff date for
intervention in Dodson, Ravkind filed a second suit, this one on
behalf of twenty-four named plaintiffs, against Hillcrest, PKF, and
Grant (the Lacy suit). In an order dated April 23, 1992, the
district court dismissed the Lacy suit.3 A notice of appeal was
timely filed in the Lacy case.
Discussion
I. Notices of Appeal
As a threshold matter, we must determine whether we have
jurisdiction of the Dodson and Lacy appeals and, if we do, over
which parties. McLemore v. Landry, 898 F.2d 996, 999 (5th Cir.),
cert. denied, 111 S.Ct. 428 (1990). Failure to adequately comply
with Federal Rule of Appellate Procedure Rule 3(c) deprives this
court of jurisdiction over an attempted appeal. Torres v. Oakland
Scavenger Co., 108 S.Ct. 2405, 2409 (1988). Rule 3(c) requires
notices of appeal to “specify the party or parties taking the
appeal . . . .” Fed. R. App. P. 3(c). The notices of appeal in

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4 Rule 3(c) was amended while this appeal was pending.
Appellants argue that the amended Rule should be applied in their
cases. Under amended Rule 3(c), effective September 1, 1993, the
Dodson and Lacy notices of appeal would be sufficient. See Fed. R.
App. P. 3(c)(“An attorney representing more than one party may
fulfill [the naming of the parties] requirement by describing those
parties with such terms as ‘all plaintiffs,’ ‘the defendants,’ ‘the
plaintiffs A, B, et al.,’ or ‘all defendants except X.’”). The
Supreme Court order adopting the relevant amendment states that the
amendment shall govern “insofar as just and practicable, all
proceedings in appellate cases then pending.” Garcia v. Wash, 20
F.3d 608, 609 (5th Cir. 1994)(quoting the Supreme Court’s April
1993 order). Because we hold infra that the notice of appeal in
Lacy is sufficient under the pre-amendment rule, we need not
determine whether it would be just and practicable to apply the
amended rule to Lacy retroactively. We must, however, address this
argument as to Dodson.
The Dodson notice of appeal was filed in mid-August 1992 and
the appellees’ motion to dismiss the appeal for lack of
jurisdiction were filed in mid-October of 1992. In November 1992,
this Court ordered that the motion to dismiss be carried with the
appeal on the merits. On January 4, 1993, the appeal was
automatically stayed upon PKF’s filing for bankruptcy. The
amendment to Rule 3(c) did not become effective until almost
eleven months later, on December 1, 1993 (the Supreme Court did not
promulgate amended Rule 3(c) until April 22, 1993). The pre-
amendment Rule 3(c) unquestionably would have applied to the Dodson
appeal if either (1) this Court had ruled on the motion to dismiss
when it was made; or (2) PKF had not filed for bankruptcy. Because
it is merely fortuitous that the Dodson appeal has taken such a
long time to be considered by this Court, we hold that it would not
be “just and practicable” to apply amended Rule 3(c) retroactively
to it. We also note that the continual alteration of plaintiffs in
Dodson and the uncertainty even at oral argument about who was
appealing adds support to this conclusion. Because we hold that
5
Dodson and Lacy are captioned, respectively, “Richard Dodson, et
al.” and “William M. and Lucile C. Lacy, et al.” No other
plaintiffs are identified by name, but the text of the notices of
appeal state that “all Plaintiffs” appeal. We must determine
whether the designation of “all plaintiffs” in the Dodson and Lacy
notices of appeal satisfies the Rule 3(c) requirement to specify
the parties as the rule existed at the time these appeals were
brought.4

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Rule 3(c) should not be applied retroactively in this instance, we
do not reach appellees’ argument that retroactive application is
unconstitutional under Plaut v. Spendthrift Farm, 115 S.Ct. 1447
(1995).
6
“The purpose of the specificity requirement of Rule 3(c) is to
provide notice both to the opposition and to the court of the
identity of the appellant or appellants.” Torres, 108 S.Ct. at
2409. Permitting vague designations of parties “would leave the
appellee and the court unable to determine with certitude whether
a losing party not named in the notice of appeal should be bound by
an adverse judgment or held liable for costs or sanctions.” Id.
When a notice of appeal lists only the named plaintiff and “et al.”
in a class action, the notice is sufficient for the class members.
Morales v. Pan American Life Ins. Co., 914 F.2d 83, 85 (5th Cir.
1990)(citing Rendon v. AT&T Technologies, 883 F.2d 388, 398 n.8
(5th Cir. 1989)). Because we hold infra that the district court
did not abuse its discretion in denying class certification, we
must consider whether the plaintiffs individually joined in Dodson
and Lacy were sufficiently named in the notices of appeal. The
question facing this Court is whether designating “all plaintiffs”
as parties to the Dodson and Lacy appeals met the specificity
requirement of Rule 3(c) as it existed prior to the 1993 amendment.
Defendants argue that, under the version of Rule 3(c) in
effect at the time the notices of appeal were filed, “all
plaintiffs” is too ambiguous to meet the specificity requirement,
and thus, that we have jurisdiction over only the plaintiffs named
specifically in the notices of appeal: Richard Dodson, William M.

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7
Lacy, and Lucile C. Lacy. The Circuits are split regarding whether
“all plaintiffs” or similar language satisfies the specificity
requirement of pre-1993 Rule 3(c). See e.g., Adkins v. United Mine
Workers of America, 941 F.2d 392, 397 (6th Cir. 1991), cert.
denied, 112 S.Ct. 1180 (1992)(holding “all of the plaintiffs”
sufficient); Santos-Martinez v. Soto-Santiago, 863 F.2d 174, 175-76
(1st Cir. 1988)(holding “all plaintiffs” insufficient when five of
the eight plaintiffs did not actually wish to appeal).
Under pre-1993 Rule 3(c), individuals are not adequately
specified by either the phrase “et al.” in the caption or the
phrase “plaintiffs” in the text of the notice. See e.g., Torres,
108 S.Ct. at 2409; Colle v. Brazos County, Texas, 981 F.2d 237,
240-41 (5th Cir. 1993); Samaad v. City of Dallas, 922 F.2d 216, 219
(5th Cir. 1991). Similarly, this Court has rejected the
designation “the defendants in this action” as insufficient under
Rule 3(c) because it failed to provide certainty regarding which of
the six defendants joined in the appeal. Resolution Trust Corp. v.
Sonny’s Old Land Corp., 937 F.2d 128, 129 (5th Cir. 1991). In
McLemore, this Court held an even more specific designation to be
insufficient under Rule 3(c). McLemore, 898 F.2d at 999-1000
(holding that a notice of appeal designating “River Villa, A
Partnership, and the respective individual partners therein” was
insufficient to confer jurisdiction over an appeal by anyone other
than the named partnership). In so holding, however, we suggested
that the notice of appeal was insufficient because one of the
fifteen partners of the named partnership may not have been

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8
appealing jointly with the partnership. See id. at 1000 n.6
(noting that one partner was named as a third-party defendant by
the partnership and had interests inconsistent with the other
partners).
The decision in Britt v. Grocers Supply Co., 978 F.2d 1441
(5th Cir. 1992), cert. denied, 113 S.Ct. 2929 (1993), helps to
clarify our previous decisions involving generic phrases such as
“plaintiffs” and “defendants.” The plaintiffs in the Britt case
consisted of two originally named plaintiffs and another 126 opt-in
plaintiffs under 29 U.S.C. § 216(b). Id. at 1444. The caption of
the Britt notice of appeal used “et al.,” but the text of the
notice identified the remaining appellants as “all other 129
consenting Plaintiffs who have previously filed their written
consent pursuant to 29 U.S.C. Section 216(b).” Id. We held that
the notice complied with Rule 3(c)——even though there were actually
126 opt-in plaintiffs, not 129——“[b]ecause the notice in this case
states that all of a particular defined group are taking an appeal,
and the individual entities are readily ascertainable in the record
. . . .” Id. (emphasis added). We went on to specifically hold
that “it is not necessary to list the names of each appealing
party, as long as there can be no mistake about which parties are
intending to appeal.” Id. at 1444-45 (emphasis added); see also
Pope v. Mississippi Real Estate Comm’n, 872 F.2d 127, 129 (5th Cir.
1989)(holding designation of “plaintiffs” in text of notice
sufficient when there were only two plaintiffs, one of whom was
named in the caption, because “et al.” could logically apply only

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5 The original complaint named three specific plaintiffs and a
purported class. More than a year later, Plaintiffs’ Second
Amended Complaint and RICO Case Statement deleted one original
plaintiff and added two new plaintiffs. Throughout the Dodson
litigation, plaintiffs attempted to file at least six supplemental
complaints. Most of these attempts were successful, though it
appears that no court ever ruled on Plaintiffs’ motion for leave to
file their Fifth Amended Supplemental Complaint. While adding
named plaintiffs through supplemental complaints, plaintiffs also
filed a motion for leave to file Plaintiffs’ Third Amended
Complaint on December 18, 1990. Leave to file the Third Amended
Complaint was granted prior to March 5, 1990. More than nine
months later, plaintiffs filed a motion for leave to file
Plaintiffs’ Fourth Amended Complaint and Rico Case Statement. The
motion was granted on April 8, 1991, and they filed such pleading
on the same date. The April 8, 1991 pleading listed many fewer
plaintiffs than the previous pleading, though it still named more
9
to the one unnamed plaintiff). Accordingly, the phrase “all
plaintiffs” may suffice to meet the specificity requirement of Rule
3(c) if it leaves no room for doubt about which parties were
intending to appeal. On the other hand, if, for some reason
specific to the individual appeal, the phrase “all plaintiffs”
leaves room for the court and the parties to doubt who intends to
appeal, then the notice fails to comply Rule 3(c). See McLemore,
898 F.2d at 1000 n.6.
A. The Dodson Notice of Appeal
Though the Dodson notice of appeal states that “all
plaintiffs” are appealing, it is almost impossible to tell to whom
that phrase applies. The named plaintiffs were in continual flux
in the district court, and one must make a close examination of the
record to determine who were Dodson plaintiffs at any particular
time. More than a thousand plaintiffs were added to the Dodson
suit by numerous amended, supplemental, and supplemental amended
complaints.5 In addition to the adding and subtracting of

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than 600 plaintiffs.
10
plaintiffs through pleadings, hundreds of plaintiffs were dismissed
for discovery sanctions. At least one plaintiff who was dismissed
with prejudice was again added as a plaintiff in a later pleading.
Throughout the litigation, plaintiffs also filed motions to
substitute new parties for named deceased plaintiffs. The court
granted the motions to allow substitution in part.
Because of the complexity of the Dodson litigation, many
motions often were outstanding at once. For example, on January
18, 1990, plaintiffs filed a status report listing over 1200
plaintiffs who had been named in at least one pleading and
recognizing that the court had yet to rule on several of those
pleadings. No attempt was made to separate those named who were
properly plaintiffs and those who were merely potential plaintiffs.
It is impossible to tell who “all plaintiffs” in Dodson actually
were at any particular time without extensive review of the record,
and even then there is confusion and ambiguity.
Even if the record were not so confusing regarding who were
Dodson plaintiffs at any particular time, the notice of appeal in
Dodson would still be insufficient because on briefing and argument
it has been made clear that “all plaintiffs”——if that is taken to
mean every plaintiff ever named in Dodson (and from the face of the
notice of appeal and the record below one could not confidently
conclude that such was not intended)——are not actually appealing.
When asked at oral argument who “all plaintiffs” are, counsel for
appellants responded “all plaintiffs listed in the briefs and all

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11
plaintiffs in the case below.” Yet, not every person who was ever
listed as a plaintiff below is listed in appellants’ briefs, and it
now appears that at least the six hundred to eight hundred
plaintiffs who were dismissed for failing to answer any
interrogatories are not appealing. In other words, “all” does not
really mean all in the Dodson notice of appeal. See McLemore, 898
F.2d at 1000 n.6; Santos-Martinez, 863 F.2d at 175-76. There is
certainly doubt about which Dodson plaintiffs——other than Dodson
himself——could be held liable for costs or sanctions. See Torres,
108 S.Ct. at 2409. For these reasons, we hold that the notice of
appeal in Dodson is insufficient to confer jurisdiction over an
appeal by any party other than Richard Dodson.
B. The Lacy Notice of Appeal
Although the wording of the notice of appeal in Lacy is
identical to the wording of the Dodson notice, the result is
different. The phrase “all plaintiffs” in the Lacy notice of
appeal leaves no room for doubt about who is appealing because,
while the plaintiffs in Lacy did add to their ranks through a
supplemental complaint and two amended complaints, no plaintiffs
were ever dismissed, dropped, or substituted. Not only does this
make rooting through the record to determine who are “all
plaintiffs” unnecessary, it distinguishes the Lacy appellants by
the fact that they appealed every order which dismissed any
plaintiff from the suit. “All” clearly means all in the Lacy
notice of appeal. As in Britt, we hold that there can be no
mistake about which parties are intending to appeal in Lacy’s

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12
notice of appeal. See Britt, 978 F.2d at 1444-45. Thus, we have
jurisdiction over all plaintiffs in Lacy.
II. Denial of Class Certification
Dodson appeals the district court’s denial of the motion for
class certification in Dodson. We will not overturn a decision to
deny class certification unless the district court has abused its
wide discretion. See McGrew v. Texas Bd. of Pardons & Paroles, 47
F.3d 158, 162 (5th Cir. 1995).
The Dodson plaintiffs filed a motion for class certification
on March 1, 1989, requesting that the court certify named
plaintiffs Richard Dodson and David L. Standlee as class
representatives. The class was to be composed of all investors in
the Hillcrest Securities trading program. In the closing paragraph
of the motion, plaintiffs requested that the court set the motion
for hearing. Prior to the filing of the motion, the district court
on January 26, 1989 had scheduled a hearing on class certification
for July 5, 1989. PKF and Grant in early May, 1989 filed memoranda
in opposition to plaintiffs’ motion for class certification. In
these memoranda, PKF and Grant argued that the motion should be
denied because, inter alia, Dodson and Standlee did not adequately
represent the class. Plaintiffs never filed a reply to these
memoranda.
On June 29, 1989, the hearing on class certification set for
July 1989, was canceled, and no hearing was ever held on the issue.
The district court denied plaintiffs’ motion for class
certification without opinion in an order dated October 19, 1989.

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6 Dodson argues that the plaintiffs did not waive these
arguments because they were prevented from filing a reply brief by
the court’s stay order of May 4, 1989. This argument is without
merit. The court’s order stayed all discovery in Dodson until the
related criminal suit came to a final resolution and suspended all
docket control dates until further notice by the court. It did not
prevent the parties from filing motions or responses. In fact,
plaintiffs and defendants continued to file motions and other
documents with the court. For example, plaintiffs filed (1)
several notices of intent to take depositions, (2) a second amended
complaint, (3) a motion for default judgment on July 21, 1989, and
(4) responses to defendants’ motions to strike, for extension of
time, and to quash or postpone depositions. Yet plaintiffs never
filed a response to the defendants’ memoranda on denying class
certification. More importantly, plaintiffs never filed a motion
for reconsideration of the denial of class certification: they
never gave the district court the chance to correct its own alleged
procedural errors. See Merrill v. Southern Methodist University,
806 F.2d 600, 609 (5th Cir. 1986)(“We take a very dim view of
parties who silently permit the trial court to slip into claimed
error only to complain for the first time on appeal.”).
13
Plaintiffs never filed a motion for reconsideration or, as far as
we can tell, ever complained to the district court about ruling on
the class certification issue without hearing or benefit of a
plaintiffs’ reply brief. Dodson argues on appeal that the district
court committed procedural error in denying class certification
without opinion or a hearing and without setting a new date for the
reply to the defendants’ memoranda. Plaintiffs have waived these
procedural complaints by failing to raise them below.6 See e.g.,
McGill v. Goff, 17 F.3d 729, 732 (5th Cir. 1994)(appellants’
failure to raise alleged procedural error——that hasty adoption of
magistrate’s report and recommendation before they had opportunity
to file objections——by motion to reconsider or otherwise before
district court resulted in waiver of the alleged procedural
irregularity); Atlantic Mut. Ins. Co. v. Truck Ins. Exchange, 797
F.2d 1288, 1293-94 (5th Cir. 1986)(holding that failure to raise

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14
issue before district court results in waiver); Long v. McCotter,
792 F.2d 1338, 1345 (5th Cir. 1986)(“we ordinarily do not consider
issues that have not been presented to the court of first
instance”)(citations omitted). Even if plaintiffs had not waived
these procedural complaints, we would still affirm the district
court’s denial of the class certification because appellant cannot
show any prejudice from the alleged procedural errors. See
Merrill, 806 F.2d at 608-09 (affirming denial of class
certification because any error was harmless).
“An action may be maintained as a class action if it
meets the criteria of ‘numerosity, commonality,
typicality, and adequacy of representation,’ the
questions of law or fact involved ‘predominate’ over any
issues affecting individual members of the class, and a
class action is the ‘superior’ method of handling the
action.” McGrew, 47 F.3d at 162 (citations omitted).
Because absent class members will be bound by the judgment in a
class action law suit, strict review of the adequacy of
representation is required. See Susman v. Lincoln American Corp.,
561 F.2d 86, 90 (7th Cir. 1977)(citations omitted). This Court
looks to two criteria to determine adequate representation: “(1)
the [proposed] representative must have common interests with the
unnamed members of the class; and (2) it must appear that the
[proposed] representative will vigorously prosecute the interests
of the class through qualified counsel.” Gonzales v. Cassidy, 474
F.2d 67, 72 (5th Cir. 1973). We affirm the district court’s denial
of class certification because it would have been an abuse of
discretion to hold that it appeared that either Standlee or
Dodson——the only two proposed class representatives——would

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15
vigorously prosecute the suit through qualified class counsel.
Dodson makes no argument on appeal that Standlee was an
adequate representative. Clearly Standlee could not have
vigorously prosecuted the suit because, when the court denied class
certification, he had been dismissed from the suit with prejudice
for willful refusal to appear at his deposition. Thus, he was
inadequate as a class representative.
The argument for Dodson’s adequacy is not much stronger.
Though he remained as a named plaintiff, he admitted that he “did
not want to be heavily involved” in the case. Dodson did not
authorize the suit before it was filed, though he did later ratify
it. Dodson admitted that he had no understanding of what it means
to be a class representative. He also admitted that he did not
know who Grant is or what role either Grant or PKF played in the
Hillcrest securities program. Finally, proposed class counsel
Ravkind had serious conflicts of interest with the proposed class:
he was simultaneously representing Mack Hickman, a criminal
defendant charged with defrauding the very investors belonging to
the proposed class. It certainly does not appear that Dodson would
vigorously prosecute the interests of the class either on his own
or through “qualified counsel.” See Gonzales, 474 F.2d at 72
(quoting with approval Eisen v. Carlisle and Jacquelin, 391 F.2d.
555, 562 (2d Cir. 1968)(“[A]n essential concomitant of adequate
representation is that the party’s attorney be qualified,
experienced and generally able to conduct the proposed
litigation.”)(brackets in original)). For these reasons, we affirm

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7 Furthermore——though the causes of action against Grant, PKF,
and BOKC are based on allegations that they solicited and/or
attracted the plaintiff-investors to invest in Hillcrest securities
offerings and represented to the investors that they would be
responsible for all of the trades to be made——Dodson relied solely
upon information he received from his personal accountant and a
broker-friend when he invested in Hillcrest securities. Dodson
attended no group meetings describing the Hillcrest securities
trading program, and he made it abundantly clear that he did not
read any materials at all regarding the Hillcrest investments.
Thus, Dodson’s claims, if they withstand failure-to-state-a-claim
scrutiny, are not typical of those who actually did rely on
representations by the defendants. See Fed. R. Civ. P. 23(a).
8 While plaintiffs in both Dodson and Lacy also alleged
violations of the Texas Securities Act, the appellants waived any
argument that the district court improperly dismissed these claims
on statute of limitations grounds by failing to address the issue
in their briefs. See Carmon v. Lubrizon Corp., 17 F.3d 791, 794
(5th Cir. 1994)
9 While the Supreme Court has held § 78aa-1(b)
unconstitutional, the reasoning does not extend to render § 78aa-
1(a) unconstitutional. See Plaut, 115 S.Ct. at 1447.
16
the district court’s denial of class certification.7
II. Statute of Limitations8
A four-year limitations period, coupled with a discovery rule,
applies to plaintiffs’ RICO, federal securities law, and Texas
common law fraud actions. See e.g., Agency Holding Corp. v.
Malley-Duff & Assoc., Inc., 107 S.Ct. 2759 (1987)(RICO); Sioux,
Ltd., Sec. Litig. v. Coopers & Lybrand, 914 F.2d 61, 63 (5th Cir.
1990)(federal securities fraud and Texas common law fraud); 15
U.S.C. § 78aa-1(a)(pending claims of federal securities fraud
governed by law as it existed on June 19, 1991).9 Claims under
Texas law for breach of fiduciary duty, negligence, and Deceptive
Trade Practices Act (DTPA) violations are subject to a two-year
statute of limitations. See Russell v. Campbell, 725 S.W.2d 739,

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10 One Texas appellate court has held that the discovery rule
applies to accounting malpractice and negligence claims only when
the plaintiff was a client of the accountant. See Brown v. KPMG
Peat Marwick, 856 S.W.2d 742, 747-49 (Tex.App.--El Paso 1993, writ
denied). While the court specifically held that the auditor/non-
client relationship in Brown did not permit the application of the
discovery rule, the reasoning in Brown suggests that the discovery
rule is appropriate in claims based on fiduciary duty. See id.
Accordingly, we hold that the discovery rule is applicable to the
breach of fiduciary duty claims.
17
744, 748 (Tex. App.--Houston [14th Dist.] 1987, writ ref’d
n.r.e.)(breach of fiduciary duty, professional negligence, and
DTPA); Sioux Ltd., Sec. Litig., 914 F.2d at 64 (negligent
misrepresentation). The state law DTPA and breach of fiduciary
duty claims are subject to a discovery rule; the negligent
misrepresentation claim is not. See Tex. Bus. & Com. Code §
17.565 (DTPA); Kansa Reinsurance Co., Ltd. v. Congressional
Mortgage Corp. of Texas, 20 F.3d 1362, 1373 (5th Cir.
1994)(negligent misrepresentation); Woodbine Elec. Serv., Inc. v.
McReynolds, 837 S.W.2d 258, 262 (Tex. App.--Eastland 1992, no
writ)(accounting malpractice).10
A. The Dodson Suit
On this appeal from summary judgment granted on statute of
limitations grounds, this Court views the facts in the light most
favorable to Dodson. See Corwin v. Marney, Orton Investments, 843
F.2d 194, 195 (5th Cir. 1985), cert. denied, 109 S.Ct. 305 (1988).
1. Accrual
Federal law determines when the limitations period begins to
run on the federal claims, and state law dictates the result for
state law claims. See F.D.I.C. v. Shrader & York, 991 F.2d 216,

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18
220 (5th Cir. 1993), cert. denied, 114 S.Ct. 2704 (1994). Under
federal law, Dodson’s causes of action accrued when the illegal
acts allegedly occurred. See e.g., La Porte Construction Co. v.
Bayshore Nat’l Bank of La Porte, Texas, 805 F.2d 1254, 1256 (5th
Cir. 1986). His federal claims all accrued prior to May 11, 1984,
because all of defendants’ alleged misdeeds were alleged to have
been performed prior to that date.
State law is less clear. Under Texas law, tort-based causes
of action generally accrue when the tort is committed. Randolph v.
Resolution Trust Corp., 995 F.2d 611, 617 (5th Cir. 1993)(citing
Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex. 1967)), cert. denied,
114 S.Ct. 1294 (1994). This is true even if the damages are not
ascertainable until a later date. Id. But a cause of action does
not accrue until a legal injury has been sustained. Id. Dodson
relies on Atkins and our holding in Bauman v. Centex Corp., 611
F.2d 1115 (5th Cir. 1980) for the proposition that he suffered no
legal injuries until the IRS sent notice of tax deficiencies.
In Atkins, the Texas Supreme Court held that the defendant
accountant’s use of the cash method, as opposed to the accrual
method, “was not in itself the type of unlawful act which, upon its
commission, would set the statute in motion.” Atkins, 417 S.W.2d
at 153. Following Atkins, we noted that under Texas law a
fraudulent misrepresentation tort “is not complete until the
[plaintiff] acts [on the misrepresentation] to his detriment.”
Bauman, 611 F.2d at 1119. We have recently noted that Bauman holds
that “misrepresentation by itself is not enough to establish harm

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19
because it is still possible for the plaintiff to earn a profit
after the misrepresentation.” Oliver Resources PLC v.
International Fin. Corp., 62 F.3d 128, 131 n.3 (5th Cir.
1995)(emphasis added). Thus, we have held that legal injury did
not occur to one of the plaintiffs until he “went further into debt
and purchased stock in an attempt to rectify a problem allegedly
caused by” the defendant’s misconduct. Randolph, 995 F.2d at 618.
Unlike the potential harm in Bauman and Oliver Resources
PLC——which was not inevitable because of the inherent
unpredictability of the marketplace——incurred tax liability is
analogous to the debt incurred in Randolph. It is itself enough to
constitute a legal injury. See Randolph, 995 F.2d at 618; see also
Bankruptcy Estate of Rochester v. Campbell, 910 S.W.2d 647, 650
(Tex.App.--Austin, 1995, writ granted Apr. 12, 1996)(interpreting
Atkins and holding that “the ‘legal injury rule’ provides that a
party has been damaged [by accounting malpractice], for purposes of
limitations, when the party discovers a concrete and specific risk
to an economic interest”); Ponder v. Brice & Mankoff, 889 S.W.2d
637, 642 (Tex.App.--Houston [14th Dist.] 1994, writ denied)(holding
that claims arising from bad tax advice accrue “on a fact specific
basis when [the taxpayer] discovers a risk of harm to his economic
interest, whether that be at the time of assessment or
otherwise.”)(quoting Hoover v. Gregory, 835 S.W.2d 668,
673)(Tex.App.--Dallas 1992, writ denied)(emphasis added).
Consequently, Dodson suffered legal injury when Markowitz failed to
make the trades in government securities and the accountants failed

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11 Dodson also argues that his causes of action were tolled
while he was defending the paper trades to the IRS. He cites no
federal authority for this proposition, and the Texas courts have
strictly limited the Hughes v. Mahaney & Higgins, 821 S.W.2d 154
(Tex. 1991) litigation exception to toll only legal malpractice
claims while the litigation in which the alleged legal malpractice
occurred is pending. See Hoover, 835 S.W.2d at 675-76.
20
to perform the proper audits because it was at this point that the
plaintiffs became legally liable for the taxes for which they later
unwittingly claimed wrongful deductions. It is undisputed that the
allegedly wrongful actions took place prior to May 11, 1984.
Accordingly, Dodson’s state law claims (like his federal claims)
had accrued prior to May 11, 1984. Because negligent
misrepresentation is not subject to the discovery rule, Kansa
Reinsurance Co. Ltd.,11 Dodson’s claim on this ground had expired
prior to when he filed suit. In any event, as demonstrated infra,
Hillcrest’s May 11, 1984 letter put plaintiffs on notice well
before May 1, 1986 and hence claims with two years limitations,
such as negligent misrepresentation, were clearly barred when the
Dodson suit was filed May 11, 1988. We affirm the district court’s
grant of summary judgment on Dodson’s state law negligent
misrepresentation claim.
2. The Discovery Rule
Both federal and state law allow, under certain circumstances,
for tolling of the statute of limitations after the causes of
action have accrued. Under federal law, the limitations period is
extended by the discovery rule until a party has notice of “‘storm
warnings’ which would alert a reasonable investor to the
possibility of fraudulent statements or omissions . . . .” Jensen

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21
v. Snellings, 841 F.2d 600, 607 (5th Cir. 1988). A person with
notice of such storm warnings must proceed with a reasonable and
diligent investigation, and is charged with the knowledge of all
facts such an investigation would have disclosed. Id. We refer to
the chargeable knowledge as inquiry notice. The Texas discovery
rule is similar. Texas limitations periods run from the date the
plaintiff (1) discovers or, in the exercise of reasonable care and
diligence, should have discovered the injury, or (2) was on notice
of such facts as would cause a reasonably prudent person to make an
inquiry that would lead to the discovery of the cause of action.
Hoover, 835 S.W.2d at 671. Generally, the reasonableness of
plaintiffs’ actions, including the reasonableness of inquiring or
failing to inquire, is a fact question for the jury. Corwin, 843
F.2d at 198.
The district court held that Dodson was filed one day late
because the statutes of limitations began running on May 10, 1984,
the day that a particular Wall Street Journal article was
published. The May 10, 1984 Wall Street Journal contained an
article reporting that Markowitz agreed to plead guilty to fraud
and was suspected of providing customers with millions of dollars
of paper losses in trades on government securities while actually
making very few legitimate trades. The article noted that
Hillcrest had traded with Markowitz in securities valued at more
than $1 billion. The district court purported to rest its grant
of summary judgment on four grounds: (1) the Wall Street Journal
article gave plaintiffs actual or constructive notice of the

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12 As a preliminary matter, we note that the last of the
district court’s above-mentioned rationales for dismissing the
Dodson suit, though perhaps relevant to class members, is
irrelevant as to any notice Dodson himself received.
13 The only evidence that might be considered to show that
Dodson read the article on the day of its publication is an
inference which could arguably be drawn from the following
interrogatory and Dodson’s answer:
“Q: On what date and how did you first learn of any
facts concerning the allegations in your complaint
and the identity of the Persons or Documents that
were the source of any such knowledge?
A: In general, the first indication of possible
wrongdoing is in a Wall Street Journal article
published on May 10, 1984 involving Markowitz.”
Because all reasonable inferences must be drawn in favor of
the nonmovant on a motion for summary judgment, this interrogatory
answer is, of itself, insufficient to find as a matter of law that
Dodson had actual notice on May 10, 1984. Furthermore, defendants
complained to the district court that this answer was vague and did
not tell them when Dodson actually read the article. It does not
appear that defendants ever argued below that Dodson had actual
notice of the article on the day of its publication. In fact, in
a hearing before the district court on March 15, 1991, defendants’
counsel suggested that if the district court granted their statute
of limitations motion, Dodson would remain as the only plaintiff.
22
violations; (2) Hillcrest mailed plaintiffs copies of the article
on May 11, 1984, (3) plaintiffs, through Hickman, made a binding
admission that the limitations period ran on May 10, 1988, and (4)
some of the plaintiffs admitted to reading the article on the day
it was published. The appellees rely on the district court’s
rationales for dismissing Dodson on limitations grounds, and we
address the first three grounds,12 along with a proposed alternative
ground applicable only to BOKC, below.
a. The Wall Street Journal Article
Appellees point to no evidence that Dodson received actual
notice of the contents of the Wall Street Journal article on the
day of its publication.13 Instead, they argue that the Wall Street

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23
Journal article constituted constructive inquiry notice to all of
the investors, including Dodson, on the day of its publication. A
plaintiff can be charged with constructive inquiry notice only if
a reasonably diligent person in his situation would have become
aware of the facts comprising inquiry notice. See Corwin, 843 F.2d
at 198. Accordingly, plaintiffs have been charged with
constructive notice of events that receive “widespread publicity”
or that are “widely publicized.” See e.g., State of Texas v. Allan
Constr. Co., 851 F.2d 1526, 1527, 1534 (5th Cir. 1988)(state deemed
to be aware of “widely publicized” federal grand jury proceedings);
United Klans of America v. McGovern, 621 F.2d 152, 154 (5th Cir.
1980)(corporate plaintiff put on notice by “widespread publicity”
resulting from attorney general’s press conference attended by
virtually all national media; in addition, Senate report and letter
received by president of corporate plaintiff gave notice); In re
Beef Indus. Antitrust Litig., 600 F.2d 1148, 1170 (5th Cir.
1979)(plaintiffs on constructive notice because reasonably diligent
plaintiffs would have been aware of “widely publicized” reports of
charges of collusion in industry and of lawsuit similar to
plaintiffs’ suit), cert. denied, 101 S.Ct. 280 (1980). Appellees
point to no case, however, in which a single newspaper article was
considered significantly widespread to constitute constructive
notice, and we find none. We will not hold as a matter of law that
a reasonably diligent investor would have certainly read a single
newspaper article on the day of its publication, even if published
in a national newspaper such as the Wall Street Journal. The Wall

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24
Street Journal article, without more, does not establish May 10,
1984 as the date on which Dodson received constructive inquiry
notice as a matter of law.
b. Hillcrest’s Letter to Investors
Hillcrest prepared a letter, dated May 11, 1984, advising all
of its investors of the Wall Street Journal article and that
Hillcrest had made a number of trades through Markowitz-controlled
entities in 1982, 1983, and 1984. This letter——stating that
Hillcrest (1) was unable to advise them whether the IRS was
investigating any Hillcrest transactions, and (2) did not have
documentation for at least some of the trades purportedly made by
Markowitz——gave “storm warnings” that would lead reasonable
investors who received the letter to suspect the possibility of
wrongdoing and to conduct further inquiry. Jensen, 841 F.2d at 607;
see also Bell v. Showa Denko K.K., 899 S.W.2d 749, 754 (Tex. App.--
Amarillo 1995, writ denied)(limitations start running when
plaintiff acquires knowledge of facts which would cause reasonable
person to diligently make inquiry to determine his or her legal
rights).
There is undisputed record evidence in Dodson that the letter
was sent to all investors on May 11, 1984. We hold that this
undisputed record fact is some evidence that Dodson received the
letter at some reasonable amount of time after May 11, 1984.
Because the letter could not have provided Dodson with notice prior
to May 11, 1984——and because Dodson filed suit on May 11, 1988——,
the letter is not grounds for affirming the district court’s order

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14 We reject Dodson’s argument that fraudulent concealment
tolled the statute of limitations beyond the discovery rule. Once
one is under a duty to inquire, “fraudulent concealment does not
trump the discovery rule . . . .” Colonial Penn Ins. Co. v. Market
Planners Ins. Agency, Inc., 1 F.3d 374, 377 (5th Cir.
1993)(describing Texas law).
25
dismissing Dodson’s federal claims or his Texas common law fraud
claims on statute of limitations grounds. It is grounds, however,
for dismissing those claims which have two-year statutes of
limitations. Consequently, we affirm the district court’s grant of
summary judgment on all of Dodson’s state law claims other than his
claim of Texas common law fraud.14
c. Hickman’s Letter to Investors
At some time prior to May 10, 1988, Mack Hickman circulated
a letter to other Hillcrest investors, attempting to garner
interest in suing Hillcrest and others. This letter informed the
investors that the Trust had been formed and would obtain Mandell
& Wright as legal counsel to file a class action law suit. The
letter also stated that the Trust had been advised that if the
investors did not file suit by May 10, 1988, their claims would
expire. Appellees argue that this letter supports the district
court’s summary judgment dismissal of the suit on statute of
limitations grounds for two reasons. First, they argue that the
appellants waived any argument that they were not bound by this
statement. Second, appellees argue that the letter was an
admission of fact which binds all of the appellants. Each of these
arguments is without merit as to Dodson.
Appellees argued in the district court that the plaintiffs who

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26
claimed to be members of the Trust or HIP were bound by
“admissions” it had made through Hickman. They did not argue that
Dodson, who never claimed to be a member of the Trust, was bound by
any such “admissions.” Accordingly, Dodson could not have waived
any argument to the contrary. Even if Hickman’s letter were
binding on Dodson, which is unlikely, the letter is not a judicial
admission. Compare to Davis v. A.G. Edwards and Sons, Inc., 823
F.2d 105, 107-08 (5th Cir. 1987). Neither does the letter admit
facts which would be conclusive on the issue of statute of
limitations; it merely states what Hickman was advised regarding
the statute of limitations. Compare id. The advice Hickman
mentions could very well have been in error. The Hickman letter
does not establish that Dodson’s claims were barred by the statute
of limitations.
3. Allegedly Improper Relation Back for BOKC
BOKC argues that the statute of limitations bars Dodson’s
remaining claims against it, even if it does not bar these claims
against the other defendants, because it was not sued until April
8, 1991, almost three years after the original complaint was filed.
As noted above, the statute of limitations had began running on
Dodson’s claims long prior to January 1987. Thus, absent some
other tolling provision, Dodson’s federal law claims had expired
long before April 8, 1991. Federal Rule of Civil Procedure 15(c)
operates to toll statutes of limitations for claims which relate
back to a timely claim under its provisions. Kansa Reinsurance
Co., Ltd., 20 F.3d at 1366-67 & n.4. This relation back doctrine

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15 Rule 15(c) was amended, effective December 1, 1991. This
amendment made it easier to name additional parties under Rule
15(c). See Fed. R. Civ. P. 15 advisory committee note. The
parties make no argument that the pre-1991 amendment version of
Rule 15(c) should be applied in the instant case. We assume that
the post-1991 amendment version of the rule applies. If the claim
against BOKC does not relate back under the later, more permissive
version of the rule, then it also would not relate back under the
older version of the rule.
27
is considered purely procedural and governs all claims brought in
federal court. Id. at n. 4. Dodson argues that the amended
complaint adding BOKC related back to the original suit under Rule
15(c).
“Federal Rule of Civil Procedure 15(c) is a
procedural provision to allow a party to amend an
operative pleading despite an applicable statute of
limitations in situations where the parties to litigation
have been sufficiently put on notice of facts and claims
which may give rise to future, related claims. The
rationale of the rule is that, once litigation involving
a particular transaction has been instituted, the parties
should not be protected by a statute of limitations from
later asserted claims that arose out of the same conduct
set forth in the original pleadings.” Id. at 1366-67
(footnote and citations omitted).
An amended pleading under Rule 15(c)15 relates back to the date of
the original pleading when the amendment changes the party or the
naming of the party against whom a claim is asserted, if, but only
if,(1) the claim asserted in the amended pleading arose out of the
transaction set forth in the original pleading, (2) the party to be
brought in by amendment received sufficient actual notice of the
action within 120 days (with some presently irrelevant exceptions)
of its institution and will not be prejudiced in maintaining a
defense on the merits because of the relation back, and (3) the
party to be brought in by amendment knew or should have known that

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28
but for a mistake concerning the identity of the proper party, the
action would have been brought against the party. See Fed. R. Civ.
P. 15. While BOKC had the burden on summary judgment of presenting
evidence sufficient to prove its statute of limitations defense,
Dodson had the burden of proof to rebut the statute of limitations
grounds by relation back under Rule 15(c). See Crescent Towing &
Salvage Co., Inc. v. M/V Anax, 40 F.3d 741, 744 (5th Cir.
1994)(party who has burden of proof on affirmative defense at trial
has burden of proof on summary judgment); cf. McGregor v. Louisiana
State University Bd. of Supervisors, 3 F.3d 850, 865 (5th Cir.
1993)(plaintiff had burden of proof on summary judgment to present
facts supporting equitable estoppel of defendants’ statute of
limitations defense), cert. denied, 114 S.Ct. 1103 (1994).
There is no dispute that the first Rule 15(c) requirement set
forth above has been met. BOKC argues that plaintiffs failed to
present any evidence that BOKC received notice of the suit within
120 days of the original complaint, or knew or should have known
that it would have been named as a party but for a mistake. BOKC
also argues that it will be prejudiced by its late addition to the
suit because of the vast amount of discovery that has already been
taken without any participation by it. Dodson responds that BOKC
merged with PKF and that notice to PKF provided notice to BOKC.
Dodson relies on two unauthenticated deposition excerpts as
evidence of the merger. Id. These are not proper summary judgment
evidence. Cf. Fed. R. Civ. P. 56; Duplantis v. Shell Offshore,
Inc., 948 F.2d 187, 191 (5th Cir. 1991)(unsworn letter giving no

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29
indication that affiant is qualified to render an opinion is not
summary judgment evidence).
Because Dodson fails to point to any proper evidence that BOKC
merged with PKF, he has not met his burden of presenting some
evidence that BOKC received notice within the necessary period or
that BOKC knew or should have known that it would have been named
as a party but for a mistake. Consequently, the statute of
limitations continued running on Dodson’s claims against BOKC after
the initial Dodson suit was filed, and his claims against BOKC had
expired long before April 8, 1991. For these reasons, we affirm
the district court’s grant of summary judgment against Dodson on
all of his claims against BOKC.
B. The Lacy Suit
The district court issued an order purporting to grant
defendants’ motions to dismiss the Lacy complaint under Rule
12(b)(6) on statute of limitations grounds. The appellants and the
appellees assume that the district court granted summary judgment,
not motions to dismiss. Rule 12(c) permits the district court to
treat motions to dismiss as motions for summary judgment if matters
outside the pleadings are presented to and not excluded by the
court. Fed. R. Civ. P. 12(c); Darlak v. Bobear, 814 F.2d 1055,
1064 (5th Cir. 1987). “Only if it appears that the district court
did rely on matters outside the pleadings should an appellate court
treat the dismissal as a summary judgment.” Fernandez-Montes v.
Allied Pilots Ass’n, 987 F.2d 278, 283 (5th Cir. 1993)(emphasis in
original). In Lacy, the district court explicitly relied on its

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16 Grant did raise the statute of limitations as to all of
plaintiffs’ claims in its response in opposition to plaintiffs’
motions for leave to file three complaints. Because the magistrate
granted plaintiffs’ leave to file the complaints, however,
plaintiffs had no reason to respond to these arguments. Grant next
raised these arguments in its response in opposition to plaintiffs’
motion for reconsideration of the district court’s dismissal order.
30
order dismissing Dodson, which is a matter outside the pleadings.
And the reasoning in the Dodson order was based on matters also
outside of the pleadings in Lacy: the Wall Street Journal article,
the Hickman letter, the Hillcrest letter, and the fact that some
Dodson plaintiffs admitted to reading the Wall Street Journal
article on the day it was published. Thus, we will review the
order dismissing Lacy as a summary judgment order. See also
Charles A. Wright & Arthur R. Miller, 5 Federal Practice &
Procedure § 1277 (1990)(“[I]n practice, courts that allow the
adjudication of affirmative defenses on a motion to dismiss or for
judgment on the pleadings are converting these motions into summary
judgment motions and normally will give all parties the opportunity
provided by Rule 56 to present pertinent evidentiary material to
the court.”)
While the district court in Lacy does appear to have relied
on matters outside of the pleadings to grant summary judgment, the
court actually raised the statute of limitations defense sua
sponte. PKF never raised the defense, and Grant raised it by its
motions to dismiss16 only as to plaintiffs’ Texas securities law
claims. Thus, the district court raised the statute of limitations

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17 Appellants do not contest the dismissal of their Texas
securities law claims.
31
defense as to all of the claims on appeal17 sua sponte. “While this
Court generally will not consider an affirmative defense not raised
below, we are not prevented from considering the defense where it
is raised sua sponte by the district court.” Burrell v. Newsome,
883 F.2d 416, 418 (5th Cir. 1989). When a summary judgment is
raised sua sponte by the district court, as when a motion to
dismiss is converted into a summary judgment motion, the notice and
hearing requirements of Rule 56(c) must be met. Nowlin v.
Resolution Trust Corp., 33 F.3d 498, 504 (5th Cir. 1994); Estate
of Smith v. Tarrant County Hosp. Dist., 691 F.2d 207, 208 (5th Cir.
1982). In the instant case, the district court failed to give ten
days notice of its sua sponte motion to grant summary judgment on
statute of limitations grounds as required by Rule 56(c). Nowlin,
33 F.3d at 504; see Fed. R. Civ. P. 56(c).
While this Court strictly enforces the notice requirement, we
have held that the harmless error doctrine applies to a failure to
provide notice under Rule 56(c). Nowlin, 33 F.3d at 504 (citation
omitted). Thus, if it is established that the additional evidence
which the appellants would have provided given proper notice
presents no genuine issue of material fact, then the failure to
give notice was harmless error. See id. The Lacy plaintiffs’
pleaded in their complaint that they first had knowledge of the
facts complained of in the Summer of 1986 and that they exercised
due diligence to determine the facts. The Lacy suit was filed on

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32
June 11, 1990. Summer ends in late September. We cannot say that
the Lacy record before us adequately establishes the Nowlin
harmless error exception regarding those claims which have four-
year statutes of limitations coupled with the discovery rule. We
reverse the district court’s order dismissing the Lacy plaintiffs’
RICO, federal securities law, and Texas common law fraud claims.
The Lacy appellants’ remaining state law claims, all of which
have two-year statutes of limitations, present a more complicated
issue. The appellants argue on appeal that the statute of
limitations was tolled by the filing of the motion for class
certification in Dodson. Under Texas law, the filing of a motion
for class certification tolls the statute of limitations. National
Ass’n of Government Employees v. City Public Serv. Bd. of San
Antonio, Texas, 40 F.3d 698, 715 n.25 (5th Cir. 1994)(Texas law
same as federal); see Grant v. Austin Bridge Constr. Co., 725
S.W.2d 366, 370 (Tex. App.--Houston [14th] 1987, no writ). Once a
class is decertified or the motion for certification is denied, the
statute begins running again. See Grant, 725 S.W.2d at 370;
Calderon v. Presidio Valley Farmers Ass’n, 863 F.2d 384, 390 (5th
Cir.)(federal law), cert. denied, 110 S.Ct. 79 (1989).
Accordingly, the longest possible time that the statute of
limitations was tolled on the Lacy plaintiffs’ claims was from May
11, 1988 (the time the Dodson suit was filed on behalf of a
putative class) until October 19, 1989 (the time the motion for
class certification was denied).
As noted above, the Lacy plaintiffs claim to have discovered

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18 We further note that, the class certification argument is
inapplicable to the appellants’ negligence cause of action. The
last date on which the Lacy complaint alleges any wrongful act was
committed is in 1984. Thus, the negligence cause of action accrued
prior to January 1, 1985, and, because the discovery rule does not
apply to the negligence-based claim, it expired prior to January 1,
1987. See Kansa Reinsurance Co., Ltd., 20 F.3d at 1363.
33
facts sufficient to trigger the statute of limitations running in
the Summer of 1986, and Summer ends in late September. For
purposes of this analysis, we use October 1, 1986 as the date on
which the statutes of limitations commenced to run on the Lacy
appellants’ state claims other than common law fraud. The statutes
ran one year, seven months, and ten days, until they were tolled by
the Dodson suit on May 11, 1988. The statutes began running again
on October 19, 1989. The claims expired, at the latest, four
months and twenty-one days later on March 12, 1990——almost three
months before the Lacy suit was filed. For this reason, we hold
that the district court’s error in failing to notify the Lacy
plaintiffs of its intent to raise the statute of limitations as to
their state law claims of breach of fiduciary duty, DTPA, and
negligence,18 to all of which the two year statute applies, was
harmless error. We affirm the dismissal of the Lacy plaintiffs’
state law claims, other than that for Texas common law fraud.
IV. PKF’s Proffered Alternative Grounds for Dismissal
PKF argues that this Court should affirm the district court’s
orders of dismissal on several alternative grounds: that
plaintiffs in Lacy and Dodson failed to allege fraud with
particularity and that the complaints failed to state a claim on
which relief could be granted under various theories not addressed

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34
by the district court. In a similar case in which we reversed a
dismissal on limitations grounds, we twice declined to affirm on
the alternative basis that the defendants were entitled to summary
judgment on the merits. See Corwin, 843 F.2d at 199 n.1; Corwin v.
Marney, Orton Investments, 788 F.2d 1063, 1069 n.5 (5th Cir. 1986).
The contention that the plaintiffs’ securities claims failed as a
matter of law had been raised below, but this Court held that the
issue should be considered by the district court in the first
instance. Corwin, 843 F.2d at 199 n.1; Corwin, 788 F.2d at 1069
n.5. Remand to the district court to consider issues it did not
consider previously is especially appropriate when, even if the
court finds plaintiffs’ claims to be faulty, it is within the
district court’s discretion to allow the plaintiffs to amend their
pleadings. See Fed. R. Civ. P. 15(a); Griggs v. Hinds Junior
College, 563 F.2d 179, 180 (5th Cir. 1977)(“Granting leave to amend
is especially appropriate, in cases such as this, when the trial
court has dismissed the complaint for failure to state a claim.”);
cf. Bueno v. City of Donna, 714 F.2d 484, 493-94 (5th Cir.
1983)(“It is well-established that there can be no appellate review
of allegedly excessive or inadequate damages if the trial court was
not given the opportunity to exercise its discretion on a motion
for new trial.). Accordingly, we decline PKF’s invitation to
affirm on alternative grounds of failure to state a claim.
Conclusion
We summarize our disposition as follows:
In Dodson: we dismiss the appeal of all appellants except

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35
Dodson himself; we affirm the district court’s denial of class
certification; we affirm the limitations dismissal of all of
Dodson’s claims against BOKC and of Dodson’s state law claims for
breach of fiduciary duty, DPTA and negligence against Grant and
PKF; and, we reverse the dismissal of Dodson’s RICO, federal
securities fraud and Texas common law fraud claims against Grant
and PKF and remand such claims for further proceedings not
inconsistent herewith.
In Lacy: we affirm the district court’s dismissal of the Lacy
plaintiffs’ state law claims for breach of fiduciary duty, DPTA and
negligence; and we reverse the dismissal of the Lacy plaintiffs’
RICO, federal securities fraud and Texas common law fraud claims
and remand such claims for further proceedings not inconsistent
herewith.
DODSON: DISMISSED in part; AFFIRMED in part; REVERSED and
REMANDED in part.
LACY: AFFIRMED in part; REVERSED and REMANDED in part.

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