United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                                                            December 17, 2003
               IN THE UNITED STATES COURT OF APPEALS
                                                         Charles R. Fulbruge III
                        FOR THE FIFTH CIRCUIT                    Clerk

                        _____________________

                            No. 02-11148
                        _____________________


     AMERICAN REALTY TRUST INC; BASIC CAPITAL MANAGEMENT INC

                      Plaintiffs - Counter Defendants - Appellants

          v.

     MATISSE CAPITAL PARTNERS LLC; ET AL

                      Defendants - Counter Claimants

     MATISSE CAPITAL PARTNERS LLC; PAUL BAGLEY

                    Defendants - Counter Claimants - Appellees
_________________________________________________________________

           Appeal from the United States District Court
                for the Northern District of Texas
                        No. 3:00-CV-1810-G
_________________________________________________________________

Before KING, Chief Judge, and DAVIS and EMILIO M. GARZA, Circuit
Judges.

KING, Chief Judge:*

     Two corporations brought breach of contract and breach of

fiduciary duty claims against their former financial consultants,

and the defendant consultants countersued for breach of contract.

The jury returned verdicts in the plaintiffs’ favor on all

     *
          Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
relevant counts.    On the defendants’ renewed motion for judgment

as a matter of law, the district court set aside the verdicts and

entered judgment in the defendants’ favor, granting the

defendants a substantial recovery on their counterclaim.    For the

following reasons, we AFFIRM in part, REVERSE in part, and

REMAND.

                            I. BACKGROUND

A.   Facts

     Viewing the evidence in the light most favorable to the

jury’s verdict, the facts in this case are as follows:

     American Realty Trust, Inc. (“ART”) is a publicly traded

Georgia corporation engaged in the real estate business.    It has

no employees of its own, and since 1989 it has been managed and

advised by Basic Capital Management, Inc. (“BCM”), a private

corporation that at all relevant times also has owned a majority

of ART’s stock.    BCM is indirectly owned by a trust created by

real estate magnate Gene Phillips for the benefit of his

children.

     Early in 2000, ART found itself with a need to raise

additional capital and refinance certain loans.    For help in

obtaining the desired new capital and financing, ART began

negotiations aimed at securing the consulting services of Matisse

Capital Partners, LLC (“Matisse”).    Matisse’s two principals,

Paul Bagley and Jack Takacs, had connections to Wall Street that


                                  2
would, in ART’s estimation, raise ART’s reputation with potential

investors and financiers.   Matisse was represented in the

negotiations by the law firm of Andrews & Kurth.   On April 13,

2000, ART, BCM, and another ART-affiliated entity entered into an

agreement styled a Financial Consulting, Management and Marketing

Agreement (“the Consulting Contract”) with Matisse.   The eleven-

page document required Matisse to assist ART in arranging certain

financing transactions, in exchange for which ART would pay

Matisse a monthly fee of $200,000 and, on at least some

transactions, a percentage commission.   Matisse’s duties under

the Consulting Contract fell into three categories: (1)

collaborating with ART to develop, within 30 days, a list of

financing projects to be pursued; (2) preparing business plans,

budgets, and analyses of the designated projects; and (3)

assisting ART in negotiating and closing the designated projects.

The Consulting Contract required Matisse to obtain ART’s approval

of, inter alia, “any contract or subcontract with a third party.”

Further, the Consulting Contract provided that “Matisse will

perform its duties under this Agreement with due diligence and in

a fiduciary manner.”

     In addition to obligating ART to pay Matisse a monthly fee

and certain commissions, the Consulting Contract required ART to

cause Bagley to be elected to ART’s board of directors and to be

installed as chairman of the board.   ART also contracted to give

Matisse a loan that would allow Matisse to purchase ART common

                                 3
stock.    The Consulting Contract further required ART and BCM to

use their best efforts to see to it that ART acquired an option

to buy out BCM’s advisory contracts with ART and other Phillips-

affiliated companies, so that ART could become self-

administering.

     By its terms, the Consulting Contract was to run for a

period of twelve months, with an automatic renewal for a

subsequent twelve months on the condition that Matisse arrange

for $100 million of new capital and refinance at least half of

ART’s outstanding land loans.     The agreement also provided,

however, that it would terminate “upon election of ART, forthwith

and upon notice, for any negligence, impropriety, or other

wrongful act of Matisse or any of its officers, employees, or

agents.”

     The Consulting Contract further provided that it was

“subject to the approval of the Board of Directors of each of

ART, BCM and [another ART-affiliated company].     If any such

company’s Board of Directors fails to approve this transaction,

this agreement shall terminate without liability of either

party.”    ART’s board did not approve the Consulting Contract

until May 19, 2000, a bit over a month after it was signed, and

BCM’s board never approved it.1    The parties nonetheless operated

     1
          At trial, it was disputed whether BCM’s representatives
told Bagley and Takacs that BCM’s board had approved the
Consulting Contract. BCM’s alleged misrepresentations about the
board’s approval formed the basis of Matisse’s fraud claim, which

                                   4
as if the Consulting Contract were in force.   Bagley was

appointed to ART’s board and made chairman of the board, as

required by the Consulting Contract, on April 28.   The board also

appointed Bagley to the position of chief executive officer on

that date, although the corporation’s bylaws did not provide for

any such post.   The Consulting Contract did not require ART to

appoint Bagley as its CEO, but ART believed that doing so would

increase his credibility on Wall Street in his dealings on ART’s

behalf.   Bagley and Takacs began to work with A. Cal Rossi, who

at that time was an executive vice president of both ART and BCM,

on putting together a list of financing projects.   BCM paid the

first monthly consulting fee to Matisse in early May, and ART

made the second payment in early June.2   Bagley and Takacs were

given office space at BCM’s offices, though they rarely worked

out of those offices.   ART’s day-to-day operations remained under

the control of the company’s president, Carl Blaha.

     On June 14, 2000, FBI agents searched BCM’s offices, and

word quickly spread that Phillips and Rossi had been indicted by

a New York grand jury on federal securities charges.   The

publicity surrounding the indictments precipitated a drop in the

market price of ART’s stock, as well as the stock of other


the jury rejected and which is not at issue in this appeal.
     2
          According to ART and BCM, ART could not make the first
payment because its board had not yet approved the Consulting
Contract. But (also according to ART and BCM) BCM, which was not
a public company, operated under looser financial rules.

                                 5
Phillips-affiliated companies.   This drop in share prices plunged

ART into a financial emergency, because ART owed margin loans

secured by stock held in its affiliated companies.   ART’s lenders

made margin calls on ART, demanding repayment or additional

collateral for the loans.   ART feared that the margin lenders

would sell the margin shares at the now-depressed market price, a

price that seriously undervalued the companies’ underlying real

estate holdings.

     ART’s board of directors held an emergency meeting on June

17 to discuss the company’s response to the margin calls.     The

board was told that efforts were being made to sell certain

properties to generate cash, but that these sales would not be

sufficient to meet the margin calls.   ART’s main response,

spearheaded by Brad Phillips, the son of Gene Phillips, was to

try to negotiate forbearance agreements with each of the margin

lenders in order to avoid a sale of the underpriced margin

shares.   The minutes of the meeting report that Bagley inquired

about the board’s current delegations of authority to the

corporation’s officers and asked the corporation’s counsel to

review those delegations.   At that time, Blaha was the only

officer to whom the board had delegated authority.

     Bagley knew about Brad Phillips’s efforts to secure

forbearance agreements, but Bagley seems to have pursued a

different response to the crisis.    In his view, the only way for

ART to survive was to persuade the New York Stock Exchange to

                                 6
suspend trading in the ART affiliates’ stock.       In order to

reassure the exchanges, Bagley believed that it was necessary to

enter talks with a credible financing source capable of

satisfying the margin debt.       To this end, he and Takacs began

negotiating with the Hampstead Group, a large institutional

investment fund.       In the negotiations with Hampstead, which

continued into the evenings and over the weekend, Bagley and

Takacs were assisted by the lawyers from Andrews & Kurth who had

previously represented Matisse in the negotiation of the

Consulting Contract.       Robert Waldman, ART’s general counsel, was

aware of the negotiations but was not told the details of the

proposed deal.

        The result of the talks with Hampstead was a Letter of

Intent dated June 22, 2000, in which Hampstead expressed its

interest in acquiring a majority of the margin shares held by

ART.3       While the Letter of Intent was not binding with respect to

that sale, it did contain a few binding obligations.       Most

significantly, it contained a “no-shop” provision that barred ART

from negotiating with any other party regarding a sale of the

margin shares until August 8, 2000.       If ART breached the no-shop

provision, the Letter of Intent provided that Hampstead would be

entitled to reimbursement of its out-of-pocket costs expended in

        3
          The Letter of Intent was actually executed between ART
and SH Funding Partners, L.P., an entity created by Hampstead for
purposes of the proposed transaction. Like the parties, we will
use the label “Hampstead” to refer to these associated entities.

                                     7
connection with the proposed transaction.   The Letter of Intent

was signed for ART by “Paul Bagley, Chairman and Chief

Executive.”

     None of ART’s other officers or directors had any input into

the Letter of Intent, and Bagley did not consult them before he

signed it.    When ART’s board and officers learned of the Letter

of Intent’s terms, they were stunned and angered.   The jury heard

testimony from ART’s witnesses that the Letter of Intent, and the

no-shop provision in particular, undercut Brad Phillips’s efforts

to obtain forbearance agreements and contradicted his statements

to the margin lenders.

     A special meeting of ART’s board was held on June 24 to

discuss progress in dealing with the margin debt situation.    Some

of the directors questioned the wisdom of the Letter of Intent,

criticized Bagley for not informing them about it, and expressed

their belief that Bagley lacked the authority to execute it.   At

some point in the meeting, Bagley refused to answer any more

questions until he consulted with his own counsel, and he later

left the meeting.   The board unanimously removed Bagley from his

positions as CEO and chairman of the board.   Two days later, on

June 26, ART sued Matisse, Bagley, and Takacs (collectively

“Defendants”) in Texas state court, asserting breach of the

Consulting Contract and breach of fiduciary duties, as well as

other claims.   Bagley resigned from his position as a director of

ART on July 10.

                                  8
B.   Proceedings Below

     Defendants removed the case to the district court on the

basis of diversity of citizenship.   They also countersued ART and

filed a third-party complaint against Gene Phillips and Rossi.

BCM was later joined as a plaintiff.

     The joint pretrial order, dated July 22, 2002, set forth the

parties’ various claims, defenses, and contentions.   Those claims

that remain relevant for purposes of this appeal are ART’s claims

for breach of contract and breach of fiduciary duty, BCM’s claim

for breach of contract, and Matisse’s counter-claim for breach of

contract.   ART’s breach of contract claim asserted that

Defendants both failed to undertake the duties required by the

Consulting Contract and affirmatively breached it by secretly

negotiating the Hampstead Letter of Intent.   Alternatively, ART

claimed that the Consulting Contract had terminated without

further liability to pay Matisse’s fees because BCM’s board had

never approved it.   ART’s fiduciary duty count alleged that

Defendants’ actions with respect to the Hampstead Letter of

Intent breached duties of care and loyalty owed to the

corporation; these fiduciary duties arose, according to ART, both

from Bagley’s status as an officer and director of ART and from

the Consulting Contract itself, in which Matisse promised to

undertake its efforts on ART’s behalf “in a fiduciary manner.”

As a remedy, ART sought disgorgement of Matisse’s fees, as well



                                 9
as “actual, consequential, and special damages” in an unspecified

amount.

     BCM’s breach of contract claim asserted two alternative

theories.    First, since BCM’s board never approved the contract,

Defendants breached the Consulting Contract by carrying on as if

it were in force, circumventing the provision requiring BCM’s

consent.    Second, if the Consulting Contract were valid, then

Defendants breached it in the same ways alleged by ART.    BCM

sought to recover at least the $200,000 it had paid Matisse as

the first monthly consulting fee.

     In its counterclaim against ART for breach of contract,

Matisse contended that the Consulting Contract was valid and

effective, and that ART had either waived or was estopped from

asserting any defect resulting from BCM’s failure to approve it.

ART breached the contract, according to Matisse, by terminating

it without cause, by failing to make the third monthly payment,

and by failing to make the loan that would enable Matisse to

purchase stock in ART.    Matisse sought the $2 million of monthly

consulting fees it was owed for the remainder of the first year

of the Consulting Contract, and it also sought to recover the

fees it would have earned in the renewal term, on the theory that

ART’s breach prevented Matisse from satisfying the conditions

necessary to trigger the renewal.




                                 10
     Both sides additionally requested an award of attorneys’

fees, as provided for under both Texas law and a provision of the

Consulting Contract.

     The district court denied the parties’ cross-motions for

summary judgment, and a jury trial followed.    The ten-day trial

featured over a dozen witnesses and over a hundred exhibits.      At

the close of the evidence, the parties filed Rule 50 motions for

judgment as a matter of law.    The court denied these without

prejudice to entertaining the motions again after the jury’s

verdict.

     The jury’s verdict resolved almost all of the issues against

Defendants.    Relevantly for purposes of this appeal, the jury

found in favor of ART on its breach of contract and fiduciary

duty counts and in favor of BCM on its contract claim; the jury

found that Matisse had not proven its breach of contract claim

against ART.    When asked to quantify the amount of damages the

victorious plaintiffs should be awarded on each of their claims,

however, the jury answered “none.”

     After the verdict, ART and BCM moved for entry of judgment

on the verdict and Defendants renewed their motion for judgment

as a matter of law.    In their motion, Defendants asked the

district court to set aside the verdicts in favor of ART and BCM

and to enter judgment for Matisse on its breach of contract

claim.   The district court granted Defendants’ renewed motion for

judgment as a matter of law, remarking as follows: “The court

                                 11
agrees with the arguments and authorities in the defendants’

motion.    These arguments and authorities are incorporated herein

by reference as the basis for this ruling.      Granting the

defendants’ motion necessarily means, of course that the

plaintiffs’ motion for entry of judgment on the verdict must be

denied.”   Although Defendants’ motion had asked for further

proceedings to fix damages, the court instead entered judgment

for Matisse for $4.4 million (i.e., $200,000 per month for the

remainder of the Consulting Contract, including the renewal

term), plus pre- and post-judgment interest.      The court’s

judgment also awarded Matisse attorneys’ fees in an amount to be

determined in a subsequent hearing.

     ART and BCM now appeal the district court’s judgment.4

                       II. STANDARD OF REVIEW

     We review the district court’s grant of judgment as a matter

of law under Rule 50 de novo, applying the same standard as the

district court.    See Coffel v. Stryker Corp., 

, 630

(5th Cir. 2002).   Judgment as a matter of law is appropriate with

respect to an issue if “there is no legally sufficient

evidentiary basis for a reasonable jury to find for [a] party on

that issue.”   FED. R. CIV. P. 50(a)(1).   This occurs when the

facts and inferences point so strongly and overwhelmingly in the


     4
          ART later filed a separate appeal, No. 03-10462,
relating to the amount of attorneys’ fees awarded to Matisse in
the subsequent hearing.

                                 12
movant’s favor that reasonable jurors could not reach a contrary

verdict.    

.   In considering a Rule 50

motion, the court must review all of the evidence in the record,

drawing all reasonable inferences in favor of the nonmoving

party; the court may not make credibility determinations or weigh

the evidence, as those are jury functions.     Reeves v. Sanderson

Plumbing Prods., Inc., 

, 150 (2000).     In reviewing

the record as a whole, the court “must disregard all evidence

favorable to the moving party that the jury is not required to

believe.    That is, the court should give credence to the evidence

favoring the nonmovant as well as that evidence supporting the

moving party that is uncontradicted and unimpeached, at least to

the extent that that evidence comes from disinterested

witnesses.”    

(citation and internal quotation marks

omitted).

                            III. ANALYSIS

     This appeal involves claims of breach of contract and breach

of fiduciary duty, claims for which state law provides the

substantive rules of decision.   The parties agree that Texas law

governs the contract issues.5 The parties also recognize,

however, that since ART is a Georgia corporation, ART’s internal

     5
          The Consulting Contract contains a choice-of-law clause
selecting Texas law to govern all disputes. The Texas courts
will enforce such clauses so long as the chosen state bears some
reasonable relationship to the parties and the transaction.
Lockheed Martin Corp. v. Gordon, 

, 133 (Tex.
App.—Houston [1st Dist.] 2000, pet. denied).

                                 13
affairs (including the rights and duties of its officers and

directors) are governed by Georgia law.       See Askanase v. Fatjo,

, 670 (5th Cir. 1997) (“Federal courts sitting in

Texas apply the law of the state of incorporation when a

corporation’s internal affairs are implicated.”).       We begin by

discussing the district court’s disposition of the breach of

contract claims, then turn to the breach of fiduciary duty

claims.

A.     Breach of Contract

       The jury returned verdicts in favor of both ART and BCM on

their respective breach of contract claims against all three

Defendants, but the jury awarded no damages.       The jury also found

that Matisse had not proven its breach of contract claim against

ART.       The district court disagreed and overturned the verdicts

for ART and BCM and entered a sizable judgment for Matisse.       The

question before us is whether the district court erred in ruling

that a rational jury could reach no other conclusion.

       To begin with one of the simpler aspects of this complicated

case, we believe that the district court was correct to reject

the jury’s verdict to the extent that the jury found that Bagley

and Takacs individually, as opposed to Matisse, had breached the

Consulting Contract.6      The Consulting Contract states that it was

       6
          It appears that the district judge harbored concerns
about this issue even before the charge was given to the jury.
Before the closing statements, Defendants’ counsel asked the
court to “correct” the verdict form by removing Bagley and Takacs

                                    14
“executed . . . by and between MATISSE PARTNERS, LLC, a Colorado

limited liability company” and the ART corporations.    It was

signed on Matisse’s behalf by Takacs in his capacity as Matisse’s

managing director.   It is of course true that a business entity

can act only through its officers, employees, and other agents.

If Matisse breached the contract, it would therefore necessarily

be by virtue of acts taken by Bagley or Takacs.   But that truism

does not mean that any breach of the Consulting Contract, which

breach could only happen through those two individuals’ actions,

creates individual liability on Bagley and Takacs.     Cf. Gonzales

County Water Supply Corp. v. Jarzombek, 

, 59-61

(Tex. App.—Corpus Christi 1996, no writ).   To so hold would

ignore the fact that Matisse’s principals were doing business as

an LLC.

     We recognize that the Consulting Contract specifically

refers to Bagley and Takacs by name and states that they will

undertake services for ART, but it is still Matisse who was the

promisor here.   The Consulting Contract provides that “Matisse

agrees that these individuals will be primarily responsible for

Matisse’s performance under this Agreement, and will spend

substantial amounts of time on the responsibilities of Matisse

hereunder” (emphasis added).   As we have said, Matisse could


from the question relating to the breach of contract claim. The
court responded, “I don’t think they were part of the contract,
but . . . that’s the plaintiff’s contention. I’m submitting it
as the plaintiff requested.”

                                15
perform under the contract only through its agents Bagley and

Takacs, but that does not make the agents parties to the

Consulting Contract.   Thus no action for breach of contract can

lie against them.   See Bernard Johnson, Inc. v. Cont’l

Constructors, Inc., 

, 369 (Tex. App.–Austin 1982,

writ ref’d n.r.e.) (“As a general rule, a suit for breach of

contract may not be maintained against a person who is not a

party to the contract, particularly a non-party who is assigned

duties by the terms of the contract.”).   Nor was there any basis

for the jury to conclude that Bagley and Takacs personally formed

any other contract, separate from the written Consulting

Contract, with ART and its affiliates.    Therefore, we hold that

the district court did not err to the extent that its judgment

set aside the jury’s verdict with respect to the plaintiffs’

breach of contract claims against Bagley and Takacs individually,

as opposed to Matisse.

     To clear away another relatively straightforward issue, we

also affirm the district court’s judgment to the extent that it

rejected the jury’s verdict in BCM’s favor on its breach of

contract claim.   Defendants’ renewed motion for judgment as a

matter of law attacked the jury’s verdict on BCM’s breach of

contract claim on the grounds that no duties under the Consulting

Contract ran in favor of BCM.   While BCM is a signatory to the

Consulting Contract, Defendants pointed out that BCM’s main role

in the agreement was its promise to assist ART in buying out

                                16
BCM’s advisory agreements.    In granting Defendants’ motion, the

district court implicitly accepted the argument that Matisse’s

duties under the Consulting Contract ran to ART, not to BCM.     The

appellate briefs filed by ART and BCM do not offer any argument

against this aspect of the district court’s judgment, and so they

have waived the issue.    See Gann v. Fruehauf Corp., 

,

1328 (5th Cir. 1995).    Accordingly, we do not decide whether

there was reversible error in the district court’s judgment to

the extent that it set aside the jury’s verdict in favor of BCM

on its breach of contract claim.

     We come then to heart of the breach of contract issue, the

question whether the district court erred in rejecting the jury’s

verdict against Matisse on ART’s breach of contract claim and

instead entering judgment——again notwithstanding the jury’s

verdict——in favor of Matisse.    In framing the issue, we note that

ART and Matisse agree that ART took actions inconsistent with the

Consulting Contract, such as removing Bagley from his position as

chairman of the board at the June 24 meeting.    The critical

dispute is whether Matisse had already breached the Consulting

Contract before ART took those actions.    ART contends that

Matisse had failed to perform as promised, in particular by

negotiating and signing the Hampstead Letter of Intent.    Not only

was the Letter of Intent unauthorized by either the Consulting

Contract or Bagley’s position as chairman and CEO, says ART, but

Bagley and Takacs in fact pursued the Hampstead deal because it

                                 17
would earn Matisse a commission under the Consulting Contract,

not because the deal was in ART’s best interests.    ART argues

that it therefore properly terminated the Consulting Contract.

In response, Matisse contends that ART merely used the Hampstead

Letter of Intent as a pretext to terminate the Consulting

Contract.    The true reason for ART’s dissatisfaction with the

consulting arrangement, according to Matisse, is that Gene

Phillips had realized that his indictment would scare off

investors and impair ART’s ability to raise funds, meaning that

there would be little to be gained from the $200,000 monthly

payment to Matisse.7   ART’s suit, filed only days after the

revelation of the Letter of Intent, was in Matisse’s view an

attempt to preempt Matisse from filing its own suit for breach of

contract.8

     Matisse’s theory is not an unreasonable one.    ART and

Phillips may well have been looking for an excuse to slip out of

     7
          ART had in fact failed to make the third monthly
payment, which was expected on June 15, the day after the FBI
searched BCM’s offices. We do not take Defendants to assert,
however, that this failure to make timely payment itself amounts
to a material breach on ART’s part. On Defendants’ theory of the
case, Gene Phillips and ART had decided to breach the contract
soon after the crisis hit, but (again, on Defendants’ view) ART’s
actual breach of the Consulting Contract did not occur until
later, probably at the June 24 board meeting. While ART’s
failure to make the payment on June 15 might well have given
Matisse the right to suspend its own performance until it
received assurances, Defendants’ position is that they in fact
redoubled their efforts when ART ran into its financial crisis.
     8
          The district judge remarked on more than one occasion
that Matisse should have been the true plaintiff in this case.

                                 18
the Consulting Contract.    The jury, however, which had the

benefit of seeing and hearing the witnesses firsthand, rejected

Matisse’s pretext theory.    Based on our review of the record, we

believe that there was sufficient evidence for them rationally to

reach that conclusion.   If the jury credited the testimony of

ART’s witnesses, the jury could have found that ART believed that

Matisse had breached the Consulting Contract, as the jury itself

found.   To the extent that Defendants advance a different reading

of the facts, their argument must fail.     See 

(stating that the court “may not make credibility

determinations or weigh the evidence” in ruling on a Rule 50

motion).

     Defendants’ argument does not, however, rest solely on an

effort to re-weigh the disputed evidence.    The legal centerpiece

of the argument in Defendants’ renewed Rule 50 motion to the

district court, as well as in their brief on appeal, is the

contention that Bagley’s actions with respect to the Hampstead

Letter of Intent simply cannot constitute a breach of contract on

Matisse’s part, for the Letter of Intent reveals on its face that

Bagley signed it for ART in his capacity as CEO and chairman of

the board, not in his capacity as an agent of Matisse.

Defendants repeatedly press upon us the importance of realizing

that Bagley had two distinct roles vis-à-vis ART: one as a

financial consultant to ART under the Consulting Contract and one

as ART’s chairman/CEO.   Defendants ask us to conclude that

                                 19
Bagley’s deeds in the latter role as a corporate representative

of ART are therefore irrelevant, as a matter of law, with respect

to Matisse’s performance under the Consulting Contract.

     It is of course true, as Defendants argue, that the same

individual can act in distinct legal capacities.   We do not

believe, however, that this well-settled principle is

determinative of the rather unusual case before us today.

Although Bagley had two different legal personalities——Matisse

consultant on the one hand and ART officer/director on the

other——we believe that his actions in his capacity as an ART

officer and director could still amount to a breach of the

Consulting Contract.   The Consulting Contract called for Bagley

to be installed as chairman of the board and required that

Matisse’s duties, to be discharged by Bagley and Takacs, be

performed “with due diligence and in a fiduciary manner.”

Therefore, given the peculiar nature of the Consulting Contract,

any malfeasance undertaken in Bagley’s role with ART could breach

both Matisse’s contractual duties to ART as well as Bagley’s

distinct, corporate-law duties to ART.   That is, although we

agree with Defendants that the two sets of duties are

conceptually distinct, it is also the case that the same conduct

can in practice violate both sets of duties.   Otherwise, the

contract would saddle ART with a duty to continue paying

faithless and negligent consultants, as long as the consultants’

trespasses were accomplished under ART’s name.

                                20
     Defendants’ own arguments recognize the soundness of our

conclusion.   One of the ways in which ART breached the Consulting

Contract, on Defendants’ view of the case, was in removing Bagley

from his position as chairman in contravention of the one-year

appointment specified in the Consulting Contract.   ART’s removal

of Bagley altered the corporate-law relationship between ART and

Bagley, but, on Defendants’ own view, it also simultaneously

breached the Consulting Contract, which installed him as chairman

in the first place.   Just as Defendants would have us recognize

that ART’s actions against Bagley in his corporate role with ART

could constitute a breach of the Consulting Contract between ART

and Matisse, so too do we recognize that Bagley’s actions in his

corporate role with ART can violate that same agreement.9   We

note as well that the Hampstead negotiations, along with other

events that might have constituted a breach of the Consulting

Contract, were not solely attributable to Bagley; Takacs took

part in these activities as well, as did Matisse’s counsel,

Andrews & Kurth, making it very much a Matisse operation (or so a

jury was entitled to find).   As such, Matisse’s failure to obtain



     9
          Corporate executives’ relationships with the
corporation are often governed by contractual duties as well as
by status-based duties imposed by corporate law. Texas law and
Georgia law both provide that although a corporate board can
remove an executive at any time, the individual can still sue the
corporation for thereby breaching his or her employment contract.
See O.C.G.A. § 14-2-844; TEX. BUS. CORP. ACT ANN. art. 2.43 (Vernon
2003).

                                21
ART’s approval of the Letter of Intent could also have been found

by the jury on this record to breach the Consulting Contract.

     Since there was a legally sufficient basis for the jury’s

conclusion that ART proved at trial that Matisse breached the

Consulting Contract, the district court erred in overturning that

portion of the verdict.   For the same reason, the district court

also necessarily erred in entering judgment as a matter of law in

Matisse’s favor, and awarding a substantial recovery, on

Matisse’s breach of contract claim.

B.   Breach of Fiduciary Duty

     ART’s complaint alleged that Defendants breached the

fiduciary duties they owed to ART.    According to ART, these

duties arose from two sources: (1) Bagley’s status as an officer

and director of ART and (2) the contractual arrangement between

Matisse and ART.   The district court instructed the jury that

Matisse was ART’s agent, and that an agent owes fiduciary duties

to its principal; it likewise charged the jury that officers and

directors owe fiduciary duties to the corporation they serve.

The court further instructed that these duties required Bagley

and Matisse to

     deal fairly and honestly with ART, to make reasonable use
     of ART’s confidences, to act in the utmost good faith and
     with the most scrupulous honesty toward ART, to fully and
     fairly disclose all important information to ART, to
     place ART’s interests before their own, and not to use
     their position as agent, officer, or director to the
     detriment of ART.



                                22
The jury’s verdict was that both Bagley and Matisse breached

fiduciary duties owed to ART.     As with the contract claim,

however, the jury awarded ART no damages.10

     Although ART’s complaint included separate counts for

breaches of the duties of care and of loyalty, and the pretrial

order also mentioned both theories, the charge to the jury spoke

generically of “fiduciary duties” without distinguishing between

the distinct types of duties.11    The parties do not challenge the

content of the jury instruction, however.     For purposes of our

assessment of the legal sufficiency of the jury’s verdict,

therefore, we need only ask whether there was sufficient evidence


     10
          The verdict form included a question asking whether
Takacs was vicariously liable for Bagley’s or Matisse’s breach of
fiduciary duty on a theory of civil conspiracy. The verdict form
instructed the jury to skip this question, however, since the
jury awarded ART no damages. The verdict with respect to Takacs
is not an issue in this appeal.
     In their motion for entry of judgment on the verdict, ART
and BCM requested disgorgement of the $400,000 paid to Matisse
under the Consulting Contract; they argued that disgorgement was
required as a matter of law when there has been a breach of
fiduciary duty, despite the jury’s verdict that they were
entitled to no damages. This issue has not been pursued on
appeal, and it is therefore waived.
     11
          The distinction between the duties of loyalty and of
care was relevant at trial because ART’s articles of
incorporation arguably waive the corporation’s right to recover
against officers and directors for breaches of the duty of care.
When ART moved for entry of judgment on the verdict, Defendants
argued that the verdict was ambiguous in that the jury
instructions, while apparently focusing on the law of the duty of
loyalty, also referred to incidents that arguably implicated the
duty of care. Since the district court rejected the verdict, the
court did not have any occasion to decide which duty was
breached.

                                  23
for the jury to find a breach of fiduciary duty according to the

law that they were given.

     We begin with the jury’s finding that Bagley breached his

fiduciary duties to ART.    Upon examination of the record, we

conclude that a rational jury could have found that Bagley failed

to satisfy the standard expressed in the jury instruction.    Not

only did Bagley fail to consult with ART’s board and other

officers about executing the Letter of Intent, but, according to

ART’s witnesses, Bagley in fact actively kept ART’s people in the

dark about the details of the Letter of Intent.    ART’s board

learned of the terms only after the Letter of Intent had been

signed.   Bagley was advised in the Hampstead negotiations by the

law firm of Andrews & Kurth, the same firm that had earlier

represented Matisse, adverse to ART, in negotiating the

Consulting Contract.   Waldman, ART’s own general counsel, was

unaware of the nature of the agreement that was being

contemplated.   These actions violate, at a minimum, Bagley’s duty

“to fully and fairly disclose all important information to ART.”

We conclude that the jury’s verdict against Bagley on ART’s

fiduciary duty count was therefore sound.12

     12
          ART contended at trial that Matisse stood to earn a fee
on the Hampstead deal (unlike the forbearance agreements that
Brad Phillips was busy arranging) and that Defendants’ own
financial interests therefore led them to pursue an agreement
that was disadvantageous for ART. Defendants responded that they
had no personal stake in the Hampstead deal because the
Consulting Contract did not entitle them to any fee on a
transaction such as that contemplated in the Letter of Intent.

                                 24
       The jury also found that Matisse, in addition to Bagley

individually, had breached fiduciary duties owed to ART.    Unlike

Bagley, Matisse was of course not an officer or a director of

ART.    According to the jury instructions, the fiduciary

relationship between Matisse and ART arose from Matisse’s

position as ART’s agent under the Consulting Contract.13    In

their renewed motion for judgment as a matter of law, Defendants

argued that Matisse could not have violated any fiduciary duty

because: (1) an entity cannot breach contractually created

fiduciary duties when it has not breached the underlying

contract, and (2) Bagley had not violated fiduciary duties he

owed to ART, so no breach on his part could be attributed to

Matisse.    Since the predicates for those arguments are no longer

available in light of our dispositions of the other claims in

this case, the jury’s verdict should be reinstated to the extent

that it found against Matisse on ART’s breach of fiduciary duty

claim.



The parties’ dispute stems from a disagreement over the scope of
a “catch-all” clause that obligated ART to pay Matisse a
commission on additional transactions not specifically mentioned
in the Consulting Contract. ART produced some rather thin
evidence that possibly tended to show that the Matisse
consultants expected to earn a commission on the Hampstead deal.
We need not decide if there was sufficient evidence to support a
finding of self-dealing, however, for the jury instruction does
not require proof of self-dealing.
       13
          Regardless of whether or not such a characterization of
the parties’ relationship is accurate, Defendants have not
objected to it.

                                 25
C.   Proceedings on Remand

     The district court’s judgment notwithstanding the verdict

also gave Matisse, as the newly prevailing party, an award of

costs and attorneys’ fees in an amount to be determined in a

subsequent hearing.   Since we have now partially reversed the

district court’s judgment and reinstated portions of the jury’s

verdict, we remand the case to the district court to vacate the

award of attorneys’ fees to Matisse,14 see 

, and to determine ART’s entitlement to attorneys’ fees (if,

indeed, ART is so entitled, as to which we intimate no opinion).

                            IV. CONCLUSION

     We conclude that the district court properly granted some

portions of Defendants’ renewed motion for judgment of law, but

we also hold that the district court erred in granting other

portions.   We AFFIRM the district court to the extent that it

entered judgment in favor of all three Defendants on BCM’s breach

of contract claim and in favor of Bagley and Takacs on ART’s

breach of contract claim.    We REVERSE the district court’s entry

of judgment in Matisse’s favor on its breach of contract claim,

and REMAND for entry of judgment in favor of ART on ART’s breach

of contract claim against Matisse and on ART’s breach of



     14
          We recognize that ART’s appeal of the district court’s
order fixing the amount of attorneys’ fees was dismissed.
However, Matisse’s entitlement to such fees was the subject of
this appeal, and is disposed of contrary to Matisse herein.

                                  26
fiduciary duty claim against Matisse and Bagley, with no damages

to be awarded to ART on any of such claims.   We REVERSE the

district court’s finding that Matisse was entitled to attorneys’

fees, and we REMAND for a determination of ART’s entitlement to

attorneys’ fees and for further proceedings consistent herewith.

Costs shall be borne by Matisse.




                               27