Summary
stating that statute of limitations for fraudulent inducement claim is four years
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No. 01-07-00654-CV
Opinion issued April 10, 2008.
On Appeal from the 61st District Court, Harris County, Texas, Trial Court Cause No. 2001-30088.
Panel consists of Chief Justice RADACK and Justices JENNINGS and BLAND.
MEMORANDUM OPINION
Appellant, Dodson International ("Dodson"), challenges the trial court's summary judgment rendered in favor of appellee, Atlantic Aviation Corporation ("Atlantic"), on Dodson's cross-claims against Atlantic for contribution, negligent misrepresentation, unjust enrichment, and fraudulent inducement. In four issues, Dodson contends that the trial court erred in granting summary judgment on the grounds asserted by Atlantic because Atlantic failed to establish its affirmative defense of limitations as a matter of law, Atlantic is estopped from relying on the statute of limitations as a result of its own fraudulent actions, Atlantic failed to conclusively establish that the terms of the sale in question negated the element of reliance, and Atlantic "failed to establish that its representatives did not `recklessly' make false representations."
We affirm.
Factual and Procedural Background
In 1991, Arrendadora Internacional, S.A. de C.V. ("Arrendadora") leased an aircraft to Aerovanguardia, S.A. de C.V. ("Aerovanguardia"). In 1993, Aerovanguardia took the aircraft to Atlantic for repairs, but, after Atlantic completed the repairs, Aerovanguardia failed to pay Atlantic. Atlantic then filed suit against Aerovanguardia, obtained a default judgment, and, on May 12, 1998, seized the aircraft and sold it at a judicial sale to Dodson.
In May 1999, Dodson informed Arrendadora that it had bought the aircraft and was trying to get its name on the aircraft's title. On July 9, 1999, Arrendadora sent a letter to Dodson informing Dodson that Arrendadora was the owner of the aircraft and that it was aware that Dodson had taken possession of the aircraft after a judicial sale conducted by Atlantic. In the letter, Arrendadora further explained that it had "leased the [aircraft] to Aerovanguardia . . . and at no point did Aerovanguardia have any present or future ownership interest in the [aircraft]." Rather, Arrendadora noted that "Aerovanguardia was simply a lessee." Finally, Arrendadora further explained that it "need[ed] to take steps to protect its interests," its "focus" was on Atlantic because it believed Atlantic had "wrongfully levied upon and sold" the aircraft, and Arrendadora anticipated that Atlantic would soon involve Dodson in the matter. Robert Dodson, the corporate representative for Dodson, admitted in his deposition that Dodson received this letter.
Arrendadora filed suit on June 15, 2001, against Atlantic and Dodson, asserting causes of actions for conversion and violations of the Texas Property Code. Dodson filed a general denial on August 13, 2001, the date its answer was due. On October 2, 2001, Dodson filed its first amended original answer and cross-claim, asserting that it was bringing "a cross-claim against Atlantic as a potentially responsible party" and that, "in the unlikely event of a finding that Dodson is liable," Dodson was entitled to contribution. Approximately three years and four months later, on January 20, 2005, Dodson added contingent cross-claims for unjust enrichment and fraudulent inducement against Atlantic and, over one year later, on February 16, 2006, Dodson added a cross-claim for negligent misrepresentation against Atlantic.
See Tex. Prop. Code Ann. § 70.301 (Vernon 2007).
On March 24, 2006, Dodson filed its fifth amended answer, cross-claims and counterclaims, which was Dodson's live pleading at the time the trial court granted Atlantic summary judgment. Dodson specifically pleaded that " [i]n the unlikely event of a finding that Dodson is liable to [Arrendadora]," Dodson was bringing cross-claims against Atlantic for unjust enrichment and fraudulent inducement and, as damages, was "seeking all monies paid to Atlantic for the purchase of the aircraft in question." (Emphasis added). Dodson did not include this contingent language on its negligent misrepresentation cross-claim, but, as with its other claims, requested as damages only the "monies paid to Atlantic for the purchase of the aircraft." In its prayer for relief, Dodson again requested "monies paid to Atlantic for the purchase of the aircraft" and further just relief.
Pursuant to a settlement with Atlantic, Arrendadora non-suited its claims against Atlantic on April 1, 2006, and, as represented by the parties in their briefing, Arrendadora assigned its claims against Dodson to Atlantic. Despite Arrendadora's non-suiting of its claims, Dodson continued with its cross-claims against Atlantic.
Because these assigned claims were subsequently non-suited, we do not consider the validity of the assignment of Arrendadora's claims to Atlantic.
On July 26, 2006, Atlantic filed a summary judgment motion on Dodson's cross-claims, asserting that, as pleaded, "Dodson's only cross-claim that is not derivative of Arrendadora's claims against Dodson is [Dodson's] negligent misrepresentation claim." (Emphasis added). Atlantic again contended that Dodson had pleaded its cross-claims for unjust enrichment and fraudulent inducement as contingent upon a finding of liability against Dodson in favor of Arrendadora. Atlantic noted that it had settled the dispute over the aircraft with Arrendadora, Arrendadora had non-suited its claims against Atlantic based on the settlement, and Arrendadora was also willing to non-suit its claims against Dodson based on this settlement. Atlantic asserted that it had received an assignment of Arrendadora's claims against Dodson only because Dodson refused to non-suit its cross-claims and Atlantic was willing to non-suit these assigned claims if the trial court granted it summary judgment.
In its briefing, Atlantic represents that it non-suited its assigned claims against Dodson, rendering the summary judgment order final. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 205 (Tex. 2001) (stating that when there has not been conventional trial on merits, an order or judgment is not final for appellate purposes unless it disposes of every pending claim and party or clearly and unequivocally states that it finally disposes of all claims and parties). Neither party contends that there are any remaining claims before the trial court.
In support of its defense that Dodson's cross-claims were time barred, Atlantic asserted that, by Dodson's own admissions, Dodson's cross-claims accrued in May 1999, when Dodson learned that there was a problem with its title to the aircraft, or at the latest, when Dodson received Arrendadora's July 9, 1999 letter again notifying it that there was a problem with its title. Atlantic quoted Dodson's admissions in its pleadings that "the undisputed summary judgment evidence establishe[d] that [Arrendadora] ha[d] notice . . . that Dodson was claiming an ownership interest in the aircraft inconsistent with [Arrendadora's] true ownership of the aircraft — by May 1999" and that, by May of 1999, "Dodson had informed [Arrendadora] that it was claiming it had bought the aircraft at a judicial sale and was trying to get Dodson's name on the title as the owner of the aircraft."
These statements, included in Dodson's reply to Dodson's second amended summary judgment motion, were made in support of Dodson's argument that Arrendadora's claims against Dodson were time barred.
After Atlantic filed its summary judgment motion, and, after the trial court's deadline to amend pleadings had passed, on February 28, 2007, Dodson filed its sixth amended answer, cross-claims, and counterclaims, in which Dodson sought to change the nature of its pleadings by deleting the contingent language, "In the unlikely event of a finding that Dodson is liable to Plaintiff [Arrendadora]," from its cross-claims for unjust enrichment and fraudulent inducement. Dodson also sought to add a claim against Atlantic for violations of the Texas Deceptive Trade Practices Act and to expand its damages claim from only those "monies paid to Atlantic for the purchase of the aircraft in question" to now include out-of-pocket expenses, unspecified "other damages," and attorney's fees.
See Tex. Bus. Com. Code Ann. § 17.41-.63 (Vernon 2002 Supp. 2007).
On April 25, 2007, Atlantic filed an objection and motion to strike Dodson's sixth amended original answer, cross-claims, and counter claims. Atlantic noted that the case had been on file since June 15, 2001, the case was set for trial on May 28, 2007, the trial court's docket control order established February 17, 2006 as the pleadings amendment deadline, Dodson did not file its sixth amended pleading until over one year after the pleadings deadline, and Dodson had "wholly changed the nature of its previously asserted cross-claims against Atlantic." Atlantic further noted that "[o]ver the years, Dodson [had] asserted cross-claims against Atlantic for contribution, unjust enrichment, and fraudulent inducement" with the express qualification that these claims were brought only "in the unlikely event of a finding that Dodson [was] liable to [Arrendadora]." Atlantic contended that it had proceeded in the case in reliance upon the fact that Dodson brought its cross-claims only contingent upon a finding of liability against Dodson in favor of Arrendadora. Atlantic further stated that "[i]ndeed, once the pleadings deadline had passed and Atlantic had settled [Arrendadora's] claims against it, Atlantic filed no evidence and traditional motions for summary judgment, seeking dismissal of each of those cross-claims, as asserted in Dodson's live pleading." (Emphasis added). Atlantic complained that Dodson was now, after the pleadings deadline, amending the previously asserted contingent claims as "independent cross claims," and Dodson's attempt to amend these cross-claims operated to surprise and prejudice Atlantic. Atlantic further complained that, "[u]ntil now, Dodson would not have been entitled to any recovery under the [c]ontingent [c]laims absent a finding of liability against Dodson and in favor of [Arrendadora]," that "in the absence of a submission of [Arrendadora's] claims against Dodson, Dodson's contingent claims against Atlantic would have automatically failed," and that Dodson's "late amended pleading [would] force Atlantic to trial as a direct defendant to Dodson and require Atlantic to defend those reshaped claims on different substantive grounds than those reasonably anticipated by Atlantic for more than a year now." Atlantic requested that if the trial court did allow Dodson to amend its pleadings at this late stage, then it be granted a continuance to prepare for trial on cross-claims as now amended by Dodson's late pleading.
Atlantic also complained that Dodson had added a new cause of action for violations of the Texas Deceptive Trade Practice Act against Atlantic in its pleading.
On June 15, 2007, the trial court sustained Atlantic's objection to Dodson's sixth amended original answer, cross-claims, and counter claims and granted Atlantic's motion to strike "in its entirety." Subsequently, on July 9, 2007, the trial court, without specifying the basis of its order, granted Atlantic summary judgment on Dodson's cross-claims and ordered that Dodson take nothing against Atlantic.
In its appeal, Dodson does not raise any complaints about, nor does it address, the arguments made in Atlantic's motion to strike or the effect of the trial court's order granting the motion to strike. Thus, Dodson has waived any argument that the trial court erred in granting the motion to strike. See Tex. R. App. P. 38.1.
Standard of Review
To prevail on a summary judgment motion, a movant has the burden of proving that it is entitled to judgment as a matter of law and that there is no genuine issue of material fact. Tex. R. Civ. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). When a defendant moves for summary judgment, it must either (1) disprove at least one element of the plaintiff's cause of action or (2) plead and conclusively establish each essential element of its affirmative defense, thereby defeating the plaintiff's cause of action. Cathey, 900 S.W.2d at 341. When deciding whether there is a disputed, material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Every reasonable inference must be indulged in favor of the non-movant and any doubts must be resolved in its favor. Id. at 549.
When, as in this case, a summary judgment does not specify the grounds on which the trial court granted it, the reviewing court will affirm the judgment if any theory included in the motion is meritorious. Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173 (Tex. 1995); Summers v. Fort Crockett Hotel, Ltd., 902 S.W.2d 20, 25 (Tex.App.-Houston [1st Dist.] 1995, writ denied). Moreover, if summary judgment may have been rendered, properly or improperly, on a ground not challenged on appeal, the judgment must be affirmed. Ellis v. Precision Engine Rebuilders, Inc., 68 S.W.3d 894, 898 (Tex.App.-Houston [1st Dist.] 2002, no pet.).
Limitations
In its first issue, Dodson argues that the trial court erred in granting summary judgment in favor of Atlantic on Atlantic's affirmative defense of limitations because Atlantic failed to provide "concrete proof" that Dodson's claims accrued in May 1999 or on July 9, 1999. Dodson does not suggest that its claims accrued on any certain date, provide any specific argument as to when its claims accrued, or address the effect of its own admissions establishing that its dispute with the other parties over the aircraft's ownership arose in May 1999. Rather, Dodson only asserts that, assuming its claims were otherwise time barred, "the relation back doctrine contained in section 16.068 of the Texas Civil Practice and Remedies Code" applies to save its claims. See Tex. Civ. Prac. Rem. Code Ann. § 16.068 (Vernon 1997).
Dodson's negligent misrepresentation and unjust enrichment claims are governed by a two-year statute of limitations. See id. § 16.003(a) (Vernon Supp. 2007); Elledge v. Friberg-Cooper Water Supply Corp., 240 S.W.3d 869, 869-70 (Tex. 2007) (unjust enrichment); HECI Exploration Co. v. Neel, 982 S.W.2d 881, 885 (Tex. 1998) (unjust enrichment and negligent misrepresentation). Dodson's fraudulent inducement claim is governed by a four-year statute of limitations. See Tex. Civ. Prac. Rem. Code Ann. § 16.004(a)(4) (Vernon 2002).
A limitations period begins to run when a cause of action accrues, and the date of accrual is a question of law. J.M.K. 6, Inc. v. Gregg Gregg, P.C., 192 S.W.3d 189, 196 (Tex.App.-Houston [14th Dist.] 2006, no pet.) (citing Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990)); Waxler v. Household Credit Services, Inc., 106 S.W.3d 277, 279 (Tex.App.-Dallas 2003, no pet.). When applicable, the discovery rule defers accrual of a cause of action until a plaintiff discovers or, through the exercise of reasonable care and diligence, should discover the nature of his injury. Wagner Brown, Ltd. v. Horwood, 58 S.W.3d 732, 735 (Tex. 2001); Childs v. Haussecker, 974 S.W.2d 31, 40 (Tex. 1998). Discovering the nature of the injury "requires knowledge of the wrongful act and the resulting injury." Wagner Brown, Ltd., 58 S.W.3d at 735. "Thus, when the discovery rule applies, accrual is tolled until a claimant discovers or in the exercise of reasonable diligence should have discovered the injury and that it was likely caused by the wrongful acts of another." Id.
Here, Atlantic presented summary judgment evidence conclusively establishing that Dodson became aware of the dispute among the parties and the competing claims to the aircraft in May 1999. Therefore, we conclude that Dodson's claims accrued in May 1999. Thus, the two-year limitations period in which Dodson could have brought its negligent misrepresentation and unjust enrichment claims expired in May 2001 and the four-year limitations period in which Dodson could have brought its fraudulent inducement claims expired in May 2003. See Tex. Civ. Prac. Rem. Code Ann. §§ 16.003(a), 16.004(a)(4).
Arrendadora filed suit on June 15, 2001, after the expiration of the limitations period on Dodson's claims for negligent misrepresentation and unjust enrichment. In these circumstances, we apply section 16.069 of the Civil Practice and Remedies Code to determine if Dodson timely asserted its negligent misrepresentation and unjust enrichment claims. See id. § 16.069 (Vernon 1997). Section 16.069 provides,
Dodson does not discuss section 16.069 in its briefing on appeal.
(a) If a counterclaim or cross claim arises out of the same transaction or occurrence that is the basis of an action, a party to the action may file the counterclaim or cross claim even though as a separate action it would be barred by limitation on the date the party's answer is required.
(b) The counterclaim or cross claim must be filed not later than the 30th day after the date on which the party's answer is required.
Id.
The parties agree that Dodson's original answer was due, and was timely filed, on August 13, 2001. In its original answer, Dodson made a general denial, but did not make any affirmative claims for relief. Dodson filed his claims for unjust enrichment and negligent misrepresentation later than the 30th day after the date on which its answer was required. Because Dodson did not file its cross-claims for unjust enrichment and negligent misrepresentation within 30 days from the date its answer was required, these claims were barred under section 16.069. Id. Accordingly, we hold that the trial court did not err in granting Atlantic summary judgment based on limitations as to Dodson's claims for negligent misrepresentation and unjust enrichment.
In regard to Dodson's fraudulent inducement claim, Dodson first asserted the claim on January 20, 2005. As the applicable limitations period expired in May 2003, Dodson's fraudulent inducement claim, absent any other exception, would have been barred by the statute of limitations. See id. § 16.004(a)(4). However, Dodson argues that its fraudulent inducement claims survived because it related back to its "contribution/and or indemnity claims" filed on October 2, 2001. Section 16.068 of the Texas Civil Practice and Remedies Code provides,
Dodson actually argues that all of its claims survived because they all related back to its "contribution/and or indemnity claims" under section 16.068. However, having held that section 16.069 barred Dodson's claims for unjust enrichment and negligent misrepresentation, we address only Dodson's fraudulent inducement claim in this section of the opinion.
Despite Dodson's characterization of its claims, Dodson never filed an indemnity claim in the trial court. Dodson's pleadings solely refer to a claim for contribution.
If a filed pleading relates to a cause of action, cross action, counterclaim, or defense that is not subject to a plea of limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.
Id. § 16.068.
Even assuming that Dodson's fraudulent inducement claim related back to Dodson's first amended original answer and cross-claim and, thus, would not have been time barred, Dodson failed to challenge the trial court's summary judgment on Dodson's fraudulent inducement claim on other grounds raised by Atlantic's summary judgment motion and further articulated in Atlantic's motion to strike. After Arrendadora non-suited its claims against Atlantic, Atlantic moved for summary judgment on Dodson's cross-claims, specifically asserting that Dodson's fraudulent inducement claim, as well as Dodson's unjust enrichment claim, were pleaded as being derivative of or contingent upon a finding of liability against Dodson and in favor of Arrendadora. Atlantic also asserted in its summary judgment motion that it had settled the dispute over the aircraft with Arrendadora, Arrendadora had non-suited its claims against Atlantic and was willing to non-suit its claims against Dodson based upon this settlement, and Atlantic received Arrendadora's claims against Dodson by assignment only because Dodson refused to non-suit its cross-claims and end the litigation. Atlantic represented to the trial court that it would non-suit its assigned claims. Subsequent to Atlantic's filing of the summary judgment motion, and after the pleadings deadline, in an apparent effort to cure its derivative pleadings and to respond to Atlantic's summary judgment motion, Dodson filed an amended pleading seeking to delete the language establishing that its fraudulent inducement claim was contingent upon a finding of liability against it in favor of Arrendadora. Atlantic then filed a motion to strike Dodson's late-filed pleading, objecting to Dodson's attempt to "wholly change" the nature of some of its cross-claims and noting that it had proceeded in the litigation, entered into a settlement, and filed a summary judgment motion all in reliance upon the fact that Dodson had pleaded certain of its cross-claims as existing only upon a finding of liability being entered against Dodson and in favor of Arrendadora. Consistent with its summary judgment motion, Atlantic explained that it was not going to pursue the assigned claims because Dodson's cross-claims, as pleaded throughout the litigation, would automatically fail without a submission as to Dodson's liability to Arrendadora.
Atlantic argues that Dodson's fraudulent inducement claim could not have related back to its contribution claim because a contribution claim does not even accrue, for limitations purposes, until a plaintiff recovers damages or settles its suit against a defendant, a contribution claim is derivative of the plaintiff's right to recover damages from the defendant against whom contribution is sought, and "[n]o defendant has a right of contribution against any settling person." See J.M.K. 6, Inc. v. Gregg Gregg, P.C., 192 S.W.3d 189, 200, 202 (Tex.App.-Houston [14th Dist.] 2006, no pet.); see also Tex. Civ. Prac. Rem. Code Ann. § 33.015(a), (d) (Vernon 1997). Atlantic also argues that Dodson's fraudulent inducement claim could not have related back to Dodson's contribution claim because the fraudulent inducement claim constitutes a new, distinct, or different transaction or occurrence from the transaction or occurrence underlying the contribution claim. See Ware v. Everest Group, L.L.C., 238 S.W.3d 855, 866 (Tex.App.-Dallas 2007, pet. filed) (setting forth two-part test that must be satisfied in order for amended pleading to relate back to an original pleading under section 16.068). Because Dodson's fraudulent inducement claim fails for other reasons, we do not address these arguments.
One of the grounds upon which Atlantic sought summary judgment was that certain of Dodson's cross-claims, including its fraudulent inducement claim, automatically failed based on the fact that, after the settlement with Arrendadora, there could be no finding of liability against Dodson and in favor of Arrendadora. The trial court, without specifying its reasons in its order, sustained Atlantic's objection to Dodson's amended pleading and granted Atlantic's motion to strike "in its entirety," thereby precluding Dodson from amending its contingent cross-claims and deleting the contingent language upon which Dodson has been specifically pursuing those cross-claims. The trial court then, again without specifying its reasons, granted Atlantic summary judgment on Dodson's cross-claims. On appeal, Dodson neither addresses the trial court's order striking its amended pleading, nor does it challenge Atlantic's arguments that it would have been prejudiced by allowing these amended pleadings. Moreover, on appeal, Dodson does not challenge Atlantic's arguments in its summary judgment motion that Dodson's cross-claim for fraudulent inducement would have automatically failed based on the manner in which the claim was pleaded and based upon the fact that, after Atlantic's settlement with Arrendadora, there could be no finding of liability against Dodson in favor of Arrendadora. Because the trial court did not specify the ground upon which it granted summary judgment and because summary judgment on Dodson's fraudulent inducement claim could have been rendered on this ground, which is not challenged by Dodson on appeal, the summary judgment as to the fraudulent inducement claim must be affirmed. See Ellis, 68 S.W.3d at 898.
We overrule Dodson's first issue.
Fraudulent Concealment
In its second issue, Dodson argues that the trial court erred in granting summary judgment in favor of Atlantic because Atlantic is estopped from relying on the statute of limitations as a result of its own fraudulent actions. Dodson asserts that Atlantic fraudulently concealed the true nature of the judicial sale, the status of the aircraft's rightful owner, and its failure to comply with the mechanic's lien statute regarding notification.
The doctrine of fraudulent concealment defers the accrual of a cause of action until the plaintiff discovers or should have discovered the deceitful conduct or facts giving rise to the cause of action. Earle v. Ratliff, 998 S.W.2d 882, 888 (Tex. 1999). The estoppel effect of fraudulent concealment ends when a party learns of facts, conditions, or circumstances which would cause a reasonably prudent person to make inquiry, which, if pursued, would lead to discovery of the concealed cause of action. Borderlon v. Peck, 661 S.W.2d 907, 909 (Tex. 1983).
Here, the summary judgment evidence conclusively established that Dodson had knowledge of the facts giving rise to its claims by May 1999. Other than Dodson's complaint that Atlantic committed wrongful conduct in the course of the judicial sale, Dodson did not adduce any evidence that, after this date, Atlantic committed any additional conduct during and beyond the limitations to fraudulently conceal facts that prevented Dodson from asserting its claims after the sale. Accordingly, we hold that Atlantic was not estopped from relying on the statute of limitations as an affirmative defense and that the trial court did not err in granting Atlantic summary judgment on the basis of limitations as to Dodson's negligent misrepresentation and unjust enrichment cross-claims.
We overrule Dodson's second issue.
Conclusion
Having held that the trial court did not err in granting Atlantic summary judgment on its affirmative defense of limitations against Dodson's negligent misrepresentation and unjust enrichment claims, and, having held that we must affirm the summary judgment granted in favor of Atlantic on Dodson's fraudulent inducement claim, we need not address Dodson's third and fourth issues.
We affirm the judgment of the trial court.