B. Mahler Interests, LP v. DMAC Construction, Inc.

Opinion

ACCEPTED 14-15-00061-CV FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS 11/9/2015 2:31:43 PM CHRISTOPHER PRINE CLERK

IN THE COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS FILED IN AT HOUSTON 14th COURT OF APPEALS HOUSTON, TEXAS 11/9/2015 2:31:43 PM CHRISTOPHER A. PRINE NO. 14-15-00061-CV Clerk

B. MAHLER INTERESTS, L.P.,

Appellant,

V. DMAC CONSTRUCTION, INC.

Appellee.

On Appeal from the 152nd Judicial District Court Harris County, Texas The Honorable Robert Schaffer Presiding, Cause No. 2012-64035

APPELLANT'S AMENDED BRIEF

Jeffrey J. Tompkins SBT No. 20125500 1413 B11ttmoore Road, Suite 108 Houston, TX 77043-4005 Telephone: 713-787-5333 Facsimile: 713-787-5334 OF COUNSEL: Christopher D. Nunnallee SBT No. 24025568 1413 Brittmoore Road, Suite 113 Houston, TX 77043-4005 Telephone: 713-787-5333 Facsimile: 713-787-5334

ATTORNEYS FOR APPELLANT

ii IDENTITY OF PARTIES AND COUNSEL

Plaintiff-Appellee: DMAC Construction, Inc.

Defendant-Appellant: B. Mahler Interests, L.P.

Trial!Appellate Counsel for Defendant-Appellant: Jeffrey J. Tompkins SBT No. 20125500 1413 Brittmoore Road, Suite 106 Houston, Texas 77043-4005 Telephone: 713-787-5333 Facsimile: 713-787-5334 OF COUNSEL: Christopher D. Nunnallee SBT No. 24025568 1413 B11ttmoore Road, Suite 113 Houston, Texas 77043-4005 Telephone: 713-787-5333 Facsimile: 713-787-5334

Trial Counsel for Plaintiff/Appellee DMAC Construction, Inc.:

James A. Schuelke Reynolds Frizzell, LLP 1100 Louisiana Street, Suite 3500 Houston, Texas 77002 Telephone: 713-485-7200 Facsimile: 713-485-7250

iii TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL .......................................................... iii

TABLE OF CONTENTS ...................................................................................... iv-v

INDEX OF AUTHORITIES ................................................................................. xi-x

STATEMENT OF THE CASE ................................................................................ xi

ISSUES PRESENTED ............................................................................................ xii

STATEMENT OF FACTS ........................................................................................ 1

A. Factual Background ................................................................................... 1-12

B. Procedural History ................................................................................... 12-14

SUMMARY OF THE ARGUMENT ................................................................ 15-16

ARGUMENT .......................................................................................................... 17

ISSUE ONE ............................................................................................................. 17

I. The Trial Court Erred in Granting DMAC's No-Evidence Motion for Summary Judgment Because it Lacks Specificity ............................. 17-18

ISSUE TWO ............................................................................................................ 18

II. The Trial Court Erred Because DMAC Failed to Assert Fraudulent Concealment Relating to the Porches As Grounds In Its Motion ................................................................................................. 18-23

ISSUE THREE ........................................................................................................ 23

III. The Trial Court Erred In Granting DMAC's Traditional Motion for Summary Judgment on Mahler's Defense of the Discovery Rule .............................................................................................. 23

A. Standard of Review ............................................................................ 24

- IV- B. The DMAC failed to negate the Discovery Rule under Article l3.7 ofthe Contract Because Mahler was Unsophisticated and Not Represented by Counsel ................................................................ 25-30

C. Article 13.7.1.2 did not negate the DiscovelY Rule Pursuant to Texas public policy .................................................... 30-33

D. Under the Discovery Rule, Mahler's Causes of Action Accrued No Sooner than May 22, 2012 ............................................................. 33-34

1. Porch Roofs ............................................................................ 34-39

2. Floors ...................................................................................... 39-44

ISSUE FOUR .......................................................................................................... 45

IV. The Trial Court Erred In Granting DMAC's Motion for Summary Judgment on Mahler's Defense of Fraudulent Concealment.. ...................... 45

A. Standard of Review ............................................................................ 45

B. A Fact Question Exists on the Elements of Fraudulent Concealment Challenged by DMAC .................................................. 45

1. Mahler's reasonable diligence is a fact question .................... 45-53

2. DMAC's Purposeful Concealment Argument is Procedurally Defective and Raises A Fact Question .................................. 53-56

C. Fraudulent concealment and "equitable estoppel" preserve Mahler's claims pertaining to the doors and floors ...................................... 56-60

PRAYER ................................................................................................................. 61

-v- INDEX OF AUTHORITIES

CASES

American Tobacco Co. v. Grinnell, 951 S.W.2d 420,425 (Tex. 1997) ................................................................ 24

Bayou Bend Towers Coullcil of Co-Owners v. Manhattan Const. Co., 866 S.W2d 740,742 (Tex. App.---Houston [14th Dist.] 1993, writ denied) ................................................................................... 33-34

Bandera Elec. Coop. v. Gilchrist, 945 S.W.2d 336,337 (Tex. 1997) ................................................................ 20

Booker v. Real Homes, Inc., 103 S.W.3d 487,494 (Tex. App.---San Antonio 2011, pet. denied) .................................................................................. 55,57

BP America Productioll Co. v. Marshall, 342 S.W.3d 59, 67, (Tex. 2011) ................................................. .47-48,53,60

Brisbane Lodging, L.P. v. Webcor Builders, Inc., 216 Cal. App. 4th 1249, 1260 (Cal. Ct. App. 20l3) ............................... 25-27

Borderloll v. Peck, 661 S.W.2d 907,909 (Tex. 1983) ..................................................... .46-47,53

Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563,564 (Tex. 1983) ................................................................ 20

City of the Colony v. North Tex. MUll. Water Dist., 272 S.W.3d 699, 730 (Tex. App.---Fort Worth 2008, pet. dism'd) .............. 35

College ofNotre Dame ofMmyland, Inc. v. Morabito Consultants, Inc., l32 Md.App. 158 (Md.App.2000) .......................................................... 29,31

Cheny v. Victoria Equip. & Supply, Inc., 645 S.W.2d 781,782 (Tex. 1983) ................................................................. 47

- VI- DiGrazia v. Old, 900 S.W.2d 499, 503 (Tex. App.---Texarkana 1995, no writ) ..................... 54

Earle v. Ratliff 998 S.W.2d 882, 888-89 (Tex. 1999) ........................................................... 54

Exxon CO/po v. Emerald Oil & Gas Co., 348 S.W.3d 194,202 (Tex. 2011) ........................................................... 46, 48

Estate a/Stonecipher v. Estate a/Butts, 591 S.W.2d 806,809 (Tex. 1979) ................................................................. 60

Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620,623 (Tex. 2011) (per curiam) ............................................ 47

FM Props. Operating Co. v. City 0/Austin, 22 S.W.3d 868, 872 (Tex. 2000) .................................................................. 24

G&H Towing Co. v. Magee, 347 S.W.3d 293,297 (Tex. 2011) ................................................................ 20

Goswami v. Metropolitan S&L Ass'n" 751 S.W.2d 487,490 (Tex. 1988) ................................................................ 21

Hogget v. Brown, 971 S.W.2d 472, 487 (Tex. App.---Houston [14th Dist.] 1997, pet. denied) ............................................................................................... 46, 55

Horizon/CMS Healthcare CO/po v. Auld, 34 S.W.3d 887, 897 (Tex. 2000) ................................................................... 22

Hurlbut v. GulfAt!. Life Ins. Co., 749 S.W.2d 762,766 (Tex. 1987) ................................................................. 47

Johnson v. RaUen, 818 S.W.2d 180, 183 (Tex. App.---Houston [1st Dist.] 1991, no writ) ...... 20

Kerlin v. Sauceda, 263 S.W.3d 920, 926 (Tex. 2008) .................................................................. 48 - Vll - Maj;'ige v. Ross., 866 S.W.2d 590,591 (Tex. 1993) ................................................................ 21

McConnell v. Southside Ind. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993) ..................................................... 15, 19-20

Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430,442 (Tex. App.---Fort Worth 1997, pet denied) ................................................................................ 46, 51-52

Mooney v. Harlin, 622 S.W.2d 83, 85 (Tex. 1981) ..................................................................... 50

Moreno v. Sanchez, 106 Cal. App. 4th 1415, 1424, 131 Cal. Rptr. 2d 684 (2003) .................. 28-29

Moreno v. Sterling Drug, Inc., 787 S.W.2d 348,351 (Tex. 1990) ................................................................. 33

Oriskany Central School District v. Edmund J. Booth Architects, A.IA, 615 N.Y.S2d 160,206 A.D.2d896 (1994) .................................................... 31

Ortiz v. Collins, 203 S.W3d 414 (Tex. App.---Houston [14th Dist.] 2006, pet. denied) ........ 17

Page v. Geller, 941 S.W.2d 101, 102 (Tex. 1997) ................................................................. 20

Quick v. City ofAustin, 7 S.W.3d 109, 116 (Tex. 1998) .................................................................... 24

Roark v. Allen, 633 S.W.2d 804,809 (Tex. 1982) ................................................................ 22

Rhone-Polllenc, Inc. v. Steel, 997 S.W.2d 217,224 (Tex. 1999) ................................................................ 24

- Vlll - Ruebeck v. Hunt, 176 S.W.2d 738,739 (Tex. 1943) ............................................................ 46-47

Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910,911 (Tex. 1997) ................................................................ 24

Shah v. Moss, 67 S.W.3d 836,841 (Tex. 2001) .............................................................. 46-47

Shell Oil Co. v. Ross, 356 S.W.3d 924,930 (Tex. 2011) .................................................................. 48

Sherman v. Sipper, 152 S.W.2d 319, 321 (Tex. 1941) .................................................................. 48

Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002) .................................................................. 24

Specialty Retailers, Inc. v. Fuqua, 29 S.W.3d 140,2000 WL 675127, at *5 (Tex. App.---Houston [14 th Dist.] 2000, no pet. h.) ................................................................ 15,19-20

s.v. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996) ................................................................... 46,53

Tenowich v. Sterling Plumbing Co., Inc., 712 S.W.2d 188, 189-90 (Tex.App.---Houston [14th Dist.] 1986, no writ) .......................................................................................... 34, 44

Timpte Indus. v. Gish, 286 S.W.3d 306,310 (Tex. 2009) .......................................................... 15, 17

Velsicol Chem. CO/po v. Winograd, 956 S.W.2d 529,530 (Tex. 1997) ................................................................ 33

Villages o/Greenbriar v. Torres, 874 S.W.2d 259, 264(Tex. App.---Houston [1st Dist.] 1994, writ denied) ......................................................................................... 59

- IX- William L. Lyon & Associates, Inc. v. Superior Court, 204 Ca1.App.4th 1294 (2012) .................................................................... 31-32

Weaver v. Highlands Ins. Co., 4 S.W.3d 826,829 n.2 (Tex. App.---Houston [1st Dist.] 1999, no pet.) .............................................................................................. 17-18

RULES

TEX. R. CN. P. 45(b) (Vernon's Supp. 2015) .................................................................................. 23

TEX. R. CN. P.166a(c) (Vernon's Supp. 2015) ............................................................................ 19,24

TEX. R. CN. P. 166a(i) (Vernon's Supp. 2015) .................................................................................. 17

TEX. CN. PRAC. & REM. CODE §16.009(a), (e)(3) (Vernon's Supp. 2015) ....................................................................... 1,31,33

TEX. GOV'T CODE ANN. §IOOI.056 (Vernon's Supp. 2015) .................................................................................. 49

Justice Michol O'Connor, O'Connor's Texas Rules: Civil Trials 2012 §6.6 (2012) ........................................................................................... 19

-x- STATEMENT OF THE CASE

Nature of the Case: This case is about a bad contractor who intentionally provided substandard doors, floors, and framing in connection with the construction of an event center and recreation hall (wedding venue) in Katy, Texas. (CR 1:6-12; SCR 2:6-7, 'il4.).

Course ofProceedings: DMAC filed Motions for Summary Judgment asserting the statute of limitations barred both Mahler's claims. (CR 1:66-77; 135-149). Mahler asserted the counter- affinnative defenses of the discovery rule, fraudulent concealment, and estoppel. (CR 1:10-11).

Trial Court's Disposition of Case: The trial court granted DMAC's motions for final summary judgment by signed order on October 17, 2014. (SCR 1:4-5). Notably, it did so notwithstanding DMAC's fraudulent concealment of the nature of the doors and floors installed, as well as latent defects built into the structure of the porch framing (SCR 2:6-7, 'il4).

- XI- ISSUES PRESENTED

1. Whether the trial court erred in granting DMAC's No Evidence Motion for Summary Judgment because the motion fails to specifically challenge one or more elements of any cause of action asserted by Mahler in Plaintiffs Original Petition.

2. Whether the trial court erred in granting DMAC's Traditional Motion for Summary Judgment because the court granted more relief than requested in DMAC's motion.

3. Whether the Trial Court Erred In Granting DMAC's Traditional Motion for Summary Judgment because DMAC failed to conclusively negate the discovery rule.

4. Whether the Trial Court Erred In Granting DMAC's Traditional Motion for Summary Judgment because Mahler raised a genuine issue of material fact on each element of fraudulent concealment.

- xu - II.

STATEMENT OF FACTS

This case involves the intentional building and installation of latent

construction defects, which through DMAC's later misrepresentation and

concealment, resulted in Mahler filing this lawsuit beyond the prescribed four-year

statute of limitations.

However, even if Mahler had not discovered the nature of its injuries within

ten years after substantial completion (which it did), the ten-year Statute of Repose

would not have barred Mahler's claims because of DMAC's fraudulent

concealment ofthe defects existing in the doors, the floors, and the porch framing. 1

A. Factual Background

Mahler hired DMAC as the general contractor for the construction of an

event center and reception hall called Briscoe Manor (the "Project") now located

and doing business in Katy, Texas (CR 1: 14-18). The parties signed the contract

on November 29, 2005, and DMAC agreed to a contract sum of $1,368,516.00

(CR 1: 14-15, 'll4.1). DMAC started construction of the Project in January 2006

(CR 66-67, 'll2).

lIt is Texas law that regardless whether a plaintiff actually discovers an injury within ten years, a claim brought due to damage "arising out of a defective or unsafe condition of the real property or a deficiency in the construction or repair of the improvement," must be brought no later than 10 years after the construction is substantially complete, unless the action is "based on willful misconduct or fraudulent concealment in connection with the performance of the construction or repair." TEX. CN. PRAC. & REM. CODE §16.009(a), (e)(3) (Vernon's Supp. 2015). - 1- On October 25, 2006, the parties signed the Certificate of Substantial

Completion (CR 1:S9). According to that document, DMAC agreed to a list of

items to be completed or corrected but the list is not attached (CR 1:S9; 161).

DMAC performed punch-list item work during the end of 2006 and for much of

the 2007-year and into the early portion ofthe 200S-year (CR 1: 151, ~4; SCR 2:29-

32).

The following provisions of the AlA Document A20l-l997 and entitled,

General Conditions of the Contract for Construction, are pertinent to this dispute,

to-wit:

3.3 SUPERVISON AND CONSTRUCTION PROCEDURES 3.3.1 The Contractor shall supervise and direct the Work, using the Contractor's best skill and attention. The Contractor shall be solely responsible for and have control over construction means, methods, techniques, sequences and procedures and for coordinating all portions ofthe Work under the Contract.

3.5 WARRANTY 3.5.1 The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless otherwise required or permitted by the Contract Documents, that the Work will be free from defects not inherent in the quality required or permitted, and the Work will conform to the requirements of the Contract Documents.

3.7 PERMITS, FEES AND NOTICES 3.7.4 If the Contractor performs Work knowing it to be contrary to laws, statutes, ordinances, building codes, and rules and regulations without such notice to the Architect and Owner, the Contractor shall assume appropriate responsibility for such Work and shall bear the costs attributable to correction.

-2- 12.2 CORRECTION OF WORK 12.2.1 BEFORE OR AFTER SUBSTANTIAL COMPLETION 12.2.1.1 The Contractor shall promptly correct Work rejected by the Architect or failing to conform to the requirements of the Contract Documents, whether discovered before or after Substantial Completion and whether or not fabricated, installed or completed. Costs of correcting such rejected Work, including additional testing and inspection and compensation for the Architect's services and expenses made necessary thereby shall be at the Contractor's expense.

On August 17, 2007, Mahler hired a licensed professional inspector, Edward

Robinson (SCR 2:29, ~4).2 Robinson conducted an inspection and prepared a

property condition report (CR 1:91-118). The Robinson report did not disclose

that the doors were rated as interior grade doors not suited for use at exterior

locations (CR 1:113-118; SCR 2:15).3 It also didn't disclose that the floors were

manufactured and rated for residential use only and not commercial grade designed

for higher traffic (ballroom dancing), higher loads (crowds), and higher abrasion

occurrences (tables, carts, chairs, etc.) than residential floors (CR 1:113-118; SCR

2: 15). Rather, it merely disclosed existing and visible property defects at the time

of the inspection. Id.

DMAC argued below that the following comment in the Robinson report

about the porches disclosed structural defects with the roof and soffit below that

2Robinson is licensed as a mechanical engineer only (SCR 2:10, ~1).

3The Robinson report did note "[i[t was indicated that there was concern that the wood exit doors from the buildings were not intended for exterior use" (CR 1: 114, ~18) (emphasis added). However, DMAC's representative later assured Mahler that the doors were appropriate for a commercial setting (SCR 2:82, ~3).

-3- area for the entire porch roofs running approximately 114' long protecting an

outdoor patio along the east face of the ballroom, a similar porch roof along the

west side of the ballroom, and continuing along the north side of the offices and

over the chapel, to-wit:

The surface of the roof at the east porch off the reception building was uneven, which corresponded to sags and unevenness at the ceiling below this area. There was significant sag observed over the barbeque area outside the bar which was abnormal and may be due to structure of insufficient stiffiless to prevent the sag. It is recommended that these irregularities be further investigated by the builder to determine the extent of reinforcement necessary for the ceiling structure to prevent further unevenness or deflections.

(CR 1:103; SCR2:14, ~2) (emphasis added).

Consistent with the report noting that the sags and unevenness "may be due

to structure of insufficient stiffoess," Robinson recommends that DMAC perform

its own inspection to determine "the extent of reinforcement necesswy" to prevent

further unevenness or deflections" and highlights that "inspection for ... latent

defects in the roof .,. is beyond the scope of this inspection" (CR 1:101, ~C; lO3,

~5;). Robinson neither performed nor was he qualified to perform the tests

necessary to detect structural defects.

This inspector has not been trained to detect such materials, and no tests were pelformed to discover any latent defects in the inspected items including the foundation, structure, roof, or maintenance of the building that may become evident in the future with normal use of the building.

(CR 1:101, ~C) (emphasis added).

- 4- On October 24, 2007, Mahler contacted Roger Tornga of DMAC by email

inquiring about Bob Cooper's failure to respond to Mahler's requests to make a

schedule for repairs of the items identified in the Robinson report (SCR 2: 77).

Mahler made a nonexclusive list of specific "outstanding items" and said the

following about the porches: "The ceiling under the porches was put up using

staples and is starting to have a wave look and has come apart in some areas.

Needs to be screwed in." (SCR 2: 29-30, ~4) (emphasis added).4

On or about December 1, 2007, DMAC sent a daily worker to the Project

who installed screws into the soffits and then caulked and painted over them (SCR

2: 30, ~6). On December 8, 2007, in an email to Roger Togna, Mahler stated the

soffits have a "wave-look" to them and "were to be corrected." Id. On December

17,2007, DMAC's on site superintendant, Bob Cooper, sent an email responding,

in part, to Mahler's concerns, to-wit:

Hi Jorden,

I have a contractor that would like to look at the soffit at Briscoe in order to know exactly what his crew will need when they start after the first. Are you all open this week where he could look at it? Please let me know.

Thanks,

Bob

4Mahler's observation that the porch ceilings were secured to the rafters by using staples and needed to be screwed in evidence that he was unaware of the structural nature of the defects in the porch framing (SCR 2: 77) (emphasis added). -5- (SCR 2:30, 'jI7).

On December 28, 2007, Cooper later sent a second email to "clear the air

about a couple of items that you sent to Roger" (SCR 2: 82, 'jIl). Cooper then

explained the repairs done to the soffits of the porch roofs and recommended one

oftwo options to complete the repairs:

• The hardiplank ceiling covering ... has been tightened up using counter-sunk screws and caulked. Due to the nature of this material, we have two options. First, we can finish filling the screw heads flush with caulk and then paint, or secondly, we can 'feather float' with ceiling texture and paint which will help hide the joints. Your comment to one of the subcontractors about wanting it to look like 'glass' makes me feel that you will be much happier with the secondary option. I need to know which option you wish to go ahead with before I schedule the painter.

(SCR 2: 82-83, 'jI5). DMAC never recommended an investigation deeper into the

structure of the porches to identify latent defects or structure of insufficient

stiffness as the cause to the sags and unevenness at the soffits below the porch

roofs ("entire record").

Mahler elected the second option, the application of a joint compound to the

exterior of the soffits as the means to repair the sags and unevenness in the porch

roofs (SCR 2: 30, 'jI8). Not knowing any better, Mahler thought the results "looked

great" for the next several years (SCR 2: 30, 'jI9). In fact, Cooper told Mahler "that

there were no structural concerns in the Robinson report or as a result of DMAC's

subsequent inspections of the porch roofs and ceilings." Id. DMAC's

-6- representatives told Mahler that the porch roofs and ceilings had been fixed. Id. As

recently as July 14, 2014, during the course of his oral deposition in this case,

DMAC's principal and owner, Don F. McIntyre, testified that the defects had been

"fixed." (SCR2: 94, p.41:8-1O).

Unfortunately for Mahler, matters continued to get worse. In approximately

Fall 2010, the flooring in the reception hall began to show signs of wear and tear

and by the 20ll-year had deteriorated to the point that Mahler replaced the

flooring in the ballroom (SCR 2: 30-31, ~1O). The flooring in the Chapel building

has yet to be replaced. In May 2011, the installer of the new floors in the ballroom

inquired why Mahler had installed residential flooring. Id. At that same time,

Mahler contacted the manufacturer and confirmed the residential grade of the

flooring installed by DMAC and discovered that the seven-year warranty was

voided upon installation. Id. Thereafter, Mahler contacted Lance McIntyre of

DMAC and told him about the floors and McIntyre stated that "You know we were

on a tight budget" and he asked whether Mahler intended to sue DMAC over the

defective construction. Id.

Mahler later learned that it would have been more expensive for DMAC to

install commercial grade floors and exterior grade doors at the Project (SCR 2: 31,

~12). Mahler paid the $1,368,516.00 stipulated in the contract for the Project. Id.

About one year into the Project, DMAC requested a change order to increase the

-7- contract price by $355,000.00 for a total contract price of $1,723,516.00. Id.

Mahler paid it. !d.

In April 2012, Mahler noticed a portion of the soffit detaching from the

structure of the porches (SCR 2: 30, '1[9). This was the first sign of structural

defects Mahler had seen with the soffits since DMAC made its repairs in

December 2007. Id. In May 2012, Mahler obtained a second professional

inspection focused on the doors, the floors, and the porches (SCR 2: 31, '1[11).

Mahler hired a structural engineer, Steven Schilder of SMS Engineering, to

perform the inspection. !d. After conducting his inspection, Schilder's report notes

that (1) the doors are deteriorating due to exterior use and are an interior grade

door and not suitable for exterior locations, (2) the flooring material is residential

grade and installed in a commercial application, and (3) the porch roofs and

ceilings suffer from multiple structural defects that were originally built into the

framing by DMAC (SCR 2: 8-28).

Schilder's report on the condition of the structure of the porch roofs and

soffits is statiling (SCR 2: 8-28). DMAC constructed a facility for Mahler that

falls into a category that must be designed by a structural engineer (SCR 2: 17, '1[2).

DMAC did not retain or use a structural engineer in connection with the Project

(SCR 2: 6, '1[4).5 Schilder reports that the porch roof deficiencies were structural in

5According to DMAC's owner, Don McIntyre, an engineer was not required (SCR 2: 89, p.22:

-8- nature, not visible, and included the following: (l) in adequate and improper

connection of rafters to columns; (2) no beam supports between columns

supporting exterior ends of rafters; (3) undersized rafters for span; (4) excessive

rafter spacing; and (5) inadequate and improper connection of rafter top end to

nailer plate (SCR 2: 14, ,-r5). In fact, Schilder noted that DMAC's application of

the interior grade compound to texture the underside of the porch soffit was done

to mask the inadequate and insufficient nailing of soffit material (Hardi-Board) to

the underside of the rafters (SCR 2: 9, ,-r3biii; 14, ,-r4). As confirmed by Barry

Tarver's affidavit later (SCR 2: 6, ,-r4), Schilder correctly opined that the structural

defects with the porches existed at the time of the construction and were built into

the structure of the porch roofs (SCR 2: 10, ~2). As Schilder notes, "[t]he numbers

tell us what our eyes are seeing; that the framing is near to failure under its own

weight" (SCR 2: 16, ~3). However, not even Schilder, a professional structural

engineer, could confirm the extent of the structural defects with the porch roofs,

and opined that based on the extent of "the widespread substandard construction

observed at the visible areas of the porch roof, I suspect that other issues may exist

deeper in the structure" (SCR 2: 16, ~4). Mahler certainly didn't discover the

nature of the injury with the doors, the floors, and the porch roofs until after

reading Schilder's report (SCR 2: 29-32).

12-23).

-9- As stated by Jorden Mahler, "the issue with the doors was a different story"

(SCR 2: 31, ~ll). On April 9, 2007, Mahler contacted the manufacturer of the

doors, VT Industries, and requested the detail and spec sheets for the doors DMAC

installed (CR 1: 196). Mahler also mentioned that the veneer had separated from

the wood in certain locations. Id. VT Industries representative, Janet Richter,

responded to Mahler's request and informed him that any doors hung in a exterior

application carry no warranty. Id. In fact, the detail and spec sheets provided to

Mahler provided that same information but didn't disclose that the doors DMAC

installed were rated as interior grade doors and not suitable for use at exterior

locations (CR 1: 197-201).

At the time of the Robinson inspection four months later, Mahler expressed

concern to Robinson that the doors were not intended for exterior use (SCR 2: 114,

~18). However, according to the report, Robinson did not substantiate Mahler's

concern and, in fact, Robinson noted that the doors "appeared to perform

satisfactorily" and that an exterior grade weather resistant finish had been applied

to the doors, which also "appeared to be performing satisfactorily" at the time of

the inspection. !d.

However, DMAC knew from the beginning that the warranty for the doors

was void upon installation because the doors DMAC installed were rated only for

interior use (CR 1: 196). According to Schilder, the doors supplier confirmed by

- 10- letter that DMAC was aware of that fact prior to installation of the doors at the

Project (SCR 2: 8).

Mahler repeatedly inquired of DMAC about the doors and he was

consistently assured it was appropriate to install the doors for an exterior

application (SCR 2: 31, ~11). On December 8, 2007, Mahler asserted in the email

to Roger Tornga that DMAC had hung doors rated for only interior use at Briscoe

Manor (SCR 2: 79). However, on December 28, 2007, Cooper reassured Mahler

that the doors were entirely appropriate for exterior use and the issue was put to

rest for the next several years.

• You continually keep bringing up the exterior doors, time and time again, thus labeling them 'interior doors.' Do you or Bill have P- lam or metal doors on any or all of your doors at your home? Of course not, they are wood! Solid wood doors that are sealed and either painted or stained and varnished properly are used as ''Exterior Doors" as well as metal or glass doors. If these doors were hollow core doors, that would be different. They are not! If you remember, we bought heavy duty marine varnish to add over the manufacture's coat for longer protective measures. So your decision to take our check 'back to the bank' because of your perceived 'scenario, and being mislead about the doors' comes across to me as being a very inappropriate decision on your part!

(SCR 2: 82, ~4). Cooper and other DMAC representatives continuously told

Mahler from the stmi of the construction that the doors would be fit for Mahler's

commercial purpose (SCR 2: 31, ~11).

However, according to the Schilder report dated May 22, 2012, the wood

stile doors with glass panels installed at the exterior locations at Briscoe Manor are

- 11 - interior grade doors (SCR 2: 15). Schilder noted in the report that doors are rated

by a number of agencies including the Window and Door Manufactures

Association (WDMA). Id. According to documentation provided by the door

supplier and confinned by the door manufacturer, VT Industries, the door type

purchased and installed by DMAC are a style SS3l5l OVOLO, which are rated for

interior use only. Id.

E. Procedural History

On October 26, 2012, Mahler filed Plaintiffs Original Petition asserting

causes of action for breach of contract and breach of warranty in connection with

the defects with the doors, the floors, and the porches. Mahler also asserted the

counter-defenses of the discovery rule, fraudulent concealment, and equitable

estoppel (CR 1: 6).

On July 18, 2014, DMAC filed Defendant's Amended Traditional and No-

Evidence Motion for Summary Judgment (CR 1: 135). DMAC moved for

summary judgment its defense oflimitations (CR I: 136-137). DMAC only sought

to negate the defenses of estoppel and fraudulent concealment as it related to the

doors and floors (CR 1: 145). The motion did not seek to negate fraudulent

concealment as it related to the porches. !d. DMAC also sought to negate the

discovery rule as it related to the doors, the floors, and the porches. Id.

- 12 - On August 1, 2014, Mahler filed Plaintiffs Response to Defendant's

Traditional & No-Evidence Motion for Summary Judgment (CR 1: 264). Mahler

also filed its Appendix of Evidence (SCR 2: 3-84).

On August 7, 2014, DMAC filed its Reply to Mahler's Response to DMAC's

Amended Motion for Summary Judgment (CR 1: 279). In the Reply, DMAC

sought to negate Mahler's defense of fraudulent concealment as it related to the

porches (CR 1: 287-290). Also on August 7, 2014, out of an abundance of caution,

Mahler filed Plantiffs First Amended Petition clarifying that it was asserting

fraudulent concealment in connection with the porches (CR 1: 303-04). Mahler

also sought leave of the trial court for the filing of the amended petition and set the

motion on the trial court's submission docket (SCR 3: 3-5, 8). Although proposed

orders were filed, the trial court never denied Mahler's motion (SCR 3: 9). DMAC

filed a written objection (CR 1: 307).

On August 8, 2014, the trial court considered DMAC's Amended Motion for

Traditional and No-Evidence Motion for Summary Judgment. During the oral

hearing, the tIial court orally denied DMAC's no-evidence motion for summary

judgment (CR 1: 310, f.n.l).

On August 14, 2015, Mahler filed Plaintiffs Sur-Response to DMAC's

Reply (CR 1: 310). Mahler also filed Plaintiffs Motion for Leave to File Late

Summary Judgment Evidence in connection with Plaintiffs Sur-Response (SCR 2:

- 13 - 107-114).

On August 26, 2015, the trial court sigued an Order Granting Plaintiffs

Motion for Leave to File Late Summary Judgment Evidence (SCR 2: 115).

Accordingly, the Affidavit of Jordan Mahler and attached exhibits conclusively

establish that Mahler was unsophisticated in construction, that Mahler had no legal

counsel in connection with the executed contract with DMAC (which was an

adhesion contract), and that DMAC failed to correct its work in accordance with

Article 12 of the Contract.

On October 17, 2014, the Court signed an order granting DMAC's Amended

Traditional and No Evidence Motion for Summary Judgment (SCR 1: 5). At that

time, DMAC's counterclaim, previously filed on September 5, 2014, was still

pending before the trial court (CR 1: 330).

On April 27, 2015, DMAC non-suited its counterclaim (SCR 1: 3).

On May 5, 2015, the trial court signed a clarifying Order stating that its

October 17, 2014, Final Summary Judgment is now a final and appealable

judgment (SCR 1: 4-5).

- 14- SUMMARY OF THE ARGUMENT

Mahler's first argument is that the trial court erred in granting DMAC's No-

Evidence Motion for Summary Judgment because the motion lacks specificity as

required by Civil Rule l66(a)(i). Timpte Indus. v. Gish, 286 S.W.3d 306, 310

(Tex. 2009).

Mahler's second argument is that the trial court erred in granting DMAC's

traditional motion for summary judgment because, again, it lacks specificity.

DMAC used its Reply to assert fraudulent concealment as it related to the porches

as one of DMAC's "grounds" for summary judgment. Allowing the Reply to

provide the requisite specificity would be in violation of the Texas Supreme

Court's insistence that a motion for summary judgment must "stand or fall on the

grounds expressly presented in the motion." See McConnell v. Southside Ind. Scll.

Dist., 858 S.W.2d 337, 341 (Tex. 1993) (motion that fails to present grounds is

legally insufficient as a matter of law); see also Specialty Retailers, Inc. v. Fuqua,

29 S.W.3d 140,2000 WL 675127, at *5 (Tex. App.---Houston [14th Dist.] May 25,

2000, no pet. h.) (challenges must be presented in motion) ..

Mahler's third argument is that the trial court erred in granting DMAC"s

traditional motion for summary judgment because DMAC failed to negate the

discovery rule by mean of the contractual accrual provision because Mahler was

unsophisticated, not represented by counsel, and DMAC is guilty of fraudulent

- 15 - concealment of the construction defects. Moreover, the accrual of Mahler's causes

of action are deferred under the discovery rule because the nature of Mahler's

injury is inherently undiscoverable and objectively verifiable.

Mahler's' fourth argument is the trial court erred III granting DMAC's

traditional motion for summary judgment on Mahler's claim for fraudulent

concealment because the motion did not move for summalY judgment on that

ground and the trial court granted more relief that was requested. Moreover,

Mahler raised a fact question on reasonable diligence and DMAC's purposeful

concealment.

- 16 - ARGUMENT

ISSUE ONE

I. The Trial Court Erred In Granting DMAC's No-Evidence Motion for Summary Judgment because it Lacks Specificity.

At the oral healing conducted on August 8, 2014, the tlial court orally

announced that DMAC's no-evidence motion was denied because it did not satisfy

the specificity requirement under Civil Rule l66a(i) (CR 1: 118, f.n. 1). However,

in the Final Summary Judgment, signed on October 17, 2014, the trial court

"ORDERS that Defendant's Amended Traditional and No-Evidence Motion for

Summary Judgment should be and hereby is GRANTED" (CR 1:349) (Emphasis

added).

A no evidence motion for summary judgment must state that there is no

evidence to support one or more specific elements of a claim or defense on which

the nOillnovant has the burden of proof at tlial. TEX. R. CIV. P. 166(a)(i); Timpte

Indus. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). The motion cannot be

conclusory or generally allege that there is no evidence to support the non-

movant's claim or defense. Id.; see also Ortiz v. Collins, 203 S.W.3d 414, 425

(Tex. App.---Houston [14th Dist.] 2006, pet. denied). When a no-evidence motion

for summary judgment does not challenge specific elements, it should be treated as

a traditional motion for summary judgment under Civil Rule 166a(c), which

imposes the burden of proof on the movant. See Weaver v. Highlands Ins. Co., 4

- 17 - S.W.3d 826,829 n.2 (Tex. App.---Houston [1st Dist.] 1999, no pet.).

In the instant case, DMAC's motion for summary judgment is entitled

"Defendant's Amended Traditional and No-Evidence Motion for Summary

Judgment." (CR 1: l35). In Plaintiff's Original Petition, Mahler asserted causes of

action for breach of contract and breach of warranty. (CR 1: 9-10). However,

DMAC's motion did not assert no-evidence in connection with one or more

elements associated with Mahler's causes of action (CR 1: l35-149). In fact, the

motion is void of any section or paragraph related to any request for a no-evidence

motion for summary judgment on either breach of contract or breach of warranty.

Id. Rather, DMAC's motion is entitled, in part, as "Defendant's ... No-Evidence

Motion for Summary Judgment," and the words "no-evidence" are never again

asserted in the motion. Id.

Accordingly, as to DMAC's No-Evidence Motion for Summary Judgment,

the trial court erred and the judgment should be reversed and remanded to the trial

court for further proceedings.

ISSUE TWO

H. The Trial Court Erred because DMAC failed to Assert Fraudulent Concealment relating to the Porches As "Grounds" in its Motion.

DMAC's motion stated "Plaintiff's petition also asserts application of

equitable estoppel and fraudulent concealment with respect to the claims pertaining

to the doors and floors." (CR 1: 145) (Emphasis added). The motion does not

- 18 - address Mahler's claim of fraudulent concealment as it relates to the porch roofs

(CR 1: 145-148). On August 7, 2014, DMAC filed a Reply and for the first time

asserted new grounds for summary judgment relating to Mahler's claim of

fi:audulent concealment in connection with the porches (CR 1: 287-290).

Specifically, DMAC asserts the following: "Neither the discovery rule nor

fraudulent concealment can save Plaintiffs claims concerning the porch roofs."

(CR 1: 290, 'Ill) (emphasis added).

It is Texas law that the grounds for summary judgment must be stated

"specifically" and "expressly set out in the motion." See TEX. R. Crv. P. 166a(c)

(Vernon's Supp. 2015). Although DMAC asserts fraudulent concealment in

connection with the porch framing in the Reply, DMAC's ability to use its Reply

to provide the requisite specificity is procedurally defective. Allowing the

specificity to be satisfied by DMAC's Reply allows a movant to avoid complying

with the specificity requirement until the day before the summary judgment

hearing or later. See Justice Michol O'Connor, O'Connor's Texas Rules: Civil

Trials 2012 §6.6 (2012) (noting that rule 166a does not contain a deadline for a

movant to file a reply to a non-movant's response). Furthermore, allowing the

Reply to provide the requisite specificity would be in violation of the Texas

Supreme Court's insistence that a motion for summary judgment must "stand or

fall on the grounds expressly presented in the motion." See McConnell v.

- 19- Southside Ind. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993) (motion that fails to

present grounds is legally insufficient as a matter of law); see also Specialty

Retailers, Inc. v. Fuqua, 29 S.W.3d 140" at *5 (Tex. App.---Houston [14 th Dist.]

May 25, 2000, no pet. h.) (challenges must be presented in the motion).

A summary judgment on a claim not addressed in the motion is generally

reversible error. G&H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011).

When a summary judgment disposes of more claims than the motion requested, the

appellate court should affirm the grounds on which the judgment was properly

granted and reverse only those portions that are erroneous. Id. at 298; Page v.

Geller, 941 S.W.2d 101, 102 (Tex. 1997); e.g., Bandera Elec. Coop. v. Gilchrist,

946 S.W.2d 336, 337 (Tex. 1997) (Plaintiffs motion for SJ did not address

counterclaim).

DMAC did not amend its motion for summary judgment to address Mahler's

fraudulent concealment claim as it relates to the defective porches ("entire

record"). A summary judgment may not be granted, as a matter of law, on a cause

of action not addressed in the summary judgment proceeding. Chessher v.

Southwestern Bell Tel. Co., 658 S.W.2d 563, 564 (Tex.l983); Johnson v. Rollen,

818 S.W.2d 180, 183 (Tex.App.--Houston [1st Dist.] 1991, no writ). Thus, the

trial court erred in attempting to enter an all inclusive final summary judgment.

Where the summary judgment purports to grant more relief than requested, an

- 20 - appellate court must reverse and remand, rather than dismiss. Mafrige v. Ross, 866

S.W.2d 590, 591-92 (Tex. 1993).

That is precisely the posture of this case. The trial court in granting the

summary judgment motion, which was based only on DMAC's limitations

defense, Mahler's counter-defense of fraudulent concealment and equitable

estoppel relating to the doors and floors, and Mahler's counter-defense of the

discovery rule related to the doors, the floors, and the porches, purported to dispose

of all claims by Mahler against DMAC including fraudulent concealment in

connection with porches (CR 1: 138-148). Since the summary judgment purported

to be final, rather than partial, this Court must, in accordance with Maji-ige, treat it

so.

DMAC's counsel narrowly construed Mahler's petition to exclude

fraudulent concealment in connection with the porches. Accordingly, out of an

abundance of caution, Mahler amended its pleadings to clearly assert fraudulent

concealment to cover the complaint with the porches before the hearing (CR 1:

303-304). Mahler also sought leave of court to file the amended pleading (SCR 3:

3-5). DMAC objected (CR 1: 307). However, the record does not reflect that the

trial court denied leave to amend (SCR 3: 9). Therefore, this Court should assume

Mahler's motion for leave was granted and that the trial court considered Mahler's

amended pleading. Goswami v. Metropolitan S&L Ass 'n, 751 S. W.2d 487, 490

- 21 - (Tex. 1988). If a late amendment creates a fact question, the appellate courts will

reverse the summary judgment. Id. at 491.

However, Mahler's original petition alleged fraudulent concealment in

connection with the porches (CR 1: 6-12). It is Texas law that pleadings must only

provide "fair notice" of a plaintiffs claims so that a defendant can prepare a

defense. TEX. R. CIV. P. 45(b) (Vernon's Supp. 2015). When, as here, pleadings

are not challenged by special exceptions, the court will construe them liberally in

favor of the pleader. Horizon/CMS Healthcare CO/po v. Auld, 34 S.W.3d 887,897

(Tex. 2000). The court will look to the pleader's intent and will supply every fact

"that can reasonably be inferred from what is specifically stated." Roark v. Allen,

633 S.W.2d 804,809 (Tex. 1982).

Mahler's original petition begins with a factual summary section discussing

the defects with the doors, the floors, and the porches (CR 1: 7-9). Mahler then

asserts causes of action for breach of warranty and breach of contract and neither

theory was restricted to anyone of Mahler's factual complaints about the doors,

the floors, or the porches (CR 1: 9-10). In fact, Mahler alleged that the defects

with the doors, the floors, and the porches amount to both a breach of warranty and

a breach of contract. !d.

Mahler used general language in the opening paragraphs under all three

legal theories asserted to defer the accrual date on his causes of action for breach of

- 22- contract and breach of warranty. In the paragraph entitled, Fraudulent

Concealment, Mahler asserts "the accrual period related to MAHLER's causes of

action should be deferred until the date MAHLER learned of, or should have

discovered, the deceitful conduct or facts giving rise to the causes of action

asserted herein." (CR 1: 11) (emphasis added). Similarly, under the section

entitled, Discovery Rule, "MAHLER asserts the discovery rule in cOlmection with

all of its causes of action asserted herein." (CR 1: 10) (emphasis added). In other

words, Mahler sought to resuscitate all of its claims for breach of warranty and

breach of contract as each theory related to the complaints about the doors, the

floors, and the porches through the defenses of fraudulent concealment and the

discovery rule.

Accordingly, as for the trial court's reliance on the Reply to assert Mahler's

defense of fraudulent concealment as it related to the porch roofs as "grounds" for

summary judgment, the trial court erred and the judgment should be reversed and

remanded to the trial court for further proceedings.

ISSUE THREE

III. The Trial Court Erred in Granting DMAC's Traditional Motion for Summary Judgment on Mahler's Counter-Defense of the Discovery Rule.

To prevail on its summary judgment motion, DMAC had to demonstrate that

there were no genuine issues of material fact and that it was entitled to judgment as

- 23 - a matter of law. See TEX. R. ClY. P. 166a(c) (Vernon's Supp. 2015); American

Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). Accordingly, DMAC

had to (1) conclusively prove when the cause of action accrued, and (2)

conclusively negate the discovery rule as a matter of law. Rhone-Poulenc, Inc.,

997 S.W.2d at 224.

A. Standard of Review

On appeal, the trial court's summary judgment will be reviewed de novo.

See FM Props. Operating Co. v. City ofAustin, 22 S.W.3d 868, 872 (Tex. 2000).

When reviewing error under a de novo standard, this Court has much discretion

and conducts an independent analysis of the record to arrive at its own legal

conclusions, does not defer to the trial court's conclusions, and may substitute its

conclusions for those made by the trial court. See Quick v. City of Austin, 7

S.W.3d 109, 116 (Tex. 1998).

In reviewing the grant of a summary judgment, all evidence favorable to the

non-movant must be taken as true and all reasonable inferences, including any

doubts, must be resolved in the non-movant's favor. See Southwestern Elec.

Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); Sci. Spectrum, Inc. v.

Martinez, 941 S.W.2d 910, 911 (Tex. 1997).

- 24- B. DMAC failed to negate the Discovery Rule under Article 13.7 of the Contract because Mahler was unsophisticated and not represented by counsel.

DMAC sought to negate the discovery rule by means of Article 13.7.1.2 of

the Contract (CR 1: 284). According to Article 13.7.1.2, "any alleged cause of

action shall be deemed to have accrued in any and all events not later than the date

of issuance of the final Certificate for Payment (SCR 2: 74).6 DMAC has cited to

no Texas law enforcing this same language in the AIA standard fonn contract (CR

1: 284-85).

DMAC relies principally on Brisbane Lodging, L.P. v. Webcor Builders,

Inc., 216 Cal. App. 4th 1249, 1260 (Cal. Ct. App. 2013), for the proposition that

paragraph 13.7.1.2 of the Ccontract abrogates, as a matter of law, the applicability

of the discovery rule. First of all, Brisbane Lodging, as a matter of law, is only

persuasive authority in Texas.

Second, as a matter of fact, paragraph 13.7.1.2 of the Contract cannot dictate

the date of accrual in this case because the facts in Brisbane Lodging are

distinguishable. In fact, in Brisbane Lodging, the California court of appeals

6Based on Article 13.7.1.2, DMAC must argue that Mahler's causes of action "shall be deemed to have accrued" no later than the date of the final Certificate for Payment for acts and omissions "occurring subsequent" to the "date of Substantial Completion and prior to issuance of the final Certificate for Payment." (SCR 2: 74).

- 25 - emphasized acommon thread among the jurisdictions cited by DMAC7 that have enforced such accrual clauses

Although we are not bound to foIIow these out-of-state authorities, they reflect a broad consensus as to the proper interpretation of the AlA's standard agreement's accrual provision under circumstances identical to the circumstances present in this case; that is, where the provision was freely entered into by parties represented by legal counsel engaged in a sophisticated commercial construction project.

Brisbane Lodging, L.P. v. Webcor Builders, Inc., 216 Cal. App. 4th 1249, 1260

(Cal. Ct. App. 2013) (emphasis added). The trial court in Brisbane Lodging also

emphasized the sophistication of the parties noting, "that the agreement was one

between sophisticated parties seeking to define the contours of their liability." Id.

at 1253.

In Brisbane Lodging, the parties entered into a contract for the design and

construction of an eight-story hotel. Brisbane Lodging, 216 Cal. App. 4th at 1254.

The appeIIate court noted that "[b]efore execution, the agreement had been

extensively negotiated between the parties." Id. Five months before the parties

executed the contract, Brisbane wrote the foIIowing to Webcor: "It is understood

and agreed that negotiation of contract documents and satisfaction of customary

closing conditions and due diligence must be satisfactOlY in form and substance to

7Contrary to DMAC's assertion that the California court 'joined a long list of jurisdictions" that have enforced this AIA standard fonn provision, DMAC could only cite to five other states: Kentucky, Maryland, Massachusetts, New York, and Pennsylvania (CR I: 284- 85). Again, DMAC didn't cite to any Texas law on that issue. !d. Also, Mahler's counsel couldn't locate any Texas authority on that issue.

- 26 - the parties and their respective counsel." !d. Both parties revised the contract by

striking out unacceptable provisions and inserting additional terms. Id. Brisbane

approved the form of the agreement with "mutually acceptable language." Id.

The Brisbane Lodging court also relied on other state law. Specifically, it

noted "[p]arties represented by counsel have even been allowed to waive the

protection of Civil Code section 1542, thereby giving up the right to bring suit on

unknown and unsuspected claims at the time the contract is executed." Brisbane

Lodging, 216 Cal. App. 4th at 1263. In rejecting the argument that in all cases

involving latent defects limitations cannot begin to run until the defects were or

should have been discovered, the California court again emphasized the

sophistication ofthe parties

Instead, we believe that where parties are on equal footing and where there was considerable sophisticated give and take over the terms of the contact, those parties should be given the ability to enjoy the freedom of contract and to structure risk-shifting as they see fit without judicial intervention.

Id. at 1263. It distinguished other cases where plaintiffs were unsophisticated in

construction matters and emphasized that the parties in Brisbane Lodging

"occupied positions of equal bargaining strength" and "had the commercial and

technical expertise to appreciate fully the ramifications of agreeing to a defined

limitations period" and that conclusion "is reinforced by the fact that both parties

had the participation and advice of legal counsel during contract negotiations." !d.

- 27 - at 1267 (citing Moreno v. Sanchez, 106 Cal. App. 4th 1415,1424,131 Cal. Rptr. 2d

684 (2003)).

In Moreno v. Sanchez, the California court of appeals reversed the trial

court's dismissal of the plaintiffs' claim based on a one year contractual limitations

period. See Moreno v. Sanchez, 106 Cal. App. 4th 1415, 1424, 131 Cal. Rptr. 2d

684 (2003). In doing so, the Moreno court acknowledged the proposition that

parties to a contract may stipulate therein for a limitation period shorter than fixed

by statute provided that the period fixed does not show imposition or undue

advantage. Id. at 1430. Nevertheless, the court concluded that in order for a

contractual agreement establishing an accrual date for lawsuits against home

inspectors to be enforceable, a homeowners cause of action against a home

inspector cannot commence to run from the date of inspection, but instead, had to

run from the date the homeowner discovers, or with the exercise of reasonable

diligence should have discovered, the breach. Id. at 1428-29.

The Moreno court based its ruling on the judicial concern toward protection

of homeowners. Moreno, 106 Cal.App.4th at 1425. Throughout the court's

opinion in Moreno, it emphasized the impoliance of the relationship between the

parties, where the home inspector was a professional in possession of special skills

and knowledge upon whom the homeowners relied completely for counsel and

advice. Id. The court further reasoned that although the discovery rule originated

- 28 - in cases involving the acts of licensed professionals, the rule may also be applied to

trades people who hold themselves out as having a special skill, or who are

required by statute to possess a certain level of skill. Id. at 1424.

Like the plaintiffs in Moreno, Mahler was unsophisticated in construction

matters (SCR 2: 29, ~2). In fact, Mahler's representative on site at the Project

during construction, Jorden Mahler, had recently graduated from college in 2004

with a degree in criminal justice. !d. That is why Mahler hired DMAC in the first

place. Mahler and DMAC occupied positions of unequal bargaining sh'ength and

only DMAC, as a professional contractor, had the commercial and technical

expertise to appreciate fully the ramifications of agreeing to a defined accrual

period. See College of Notre Dame of Mmyland, Inc. v. Morabito Consultants,

Inc., 132 Md.App. 158 (Md.App.2000) (court observed that the standard form

contract drafted by AIA enjoyed significant history and widespread use in the

construction industry and was drafted by a staff of highly trained professionals).

That conclusion is reinforced by the fact that Mahler did not have the participation

and advice of legal counsel during contract negotiations (SCR 2: 11 0, ~2). Mahler

did not participate in drafting the terms and conditions of the contract. Id.

According to Jorden Mahler, "[I]t was a take it or leave it negotiation in the sense

that Mahler understood the contract presented had to be signed." !d. These facts

alone take the instant case outside the parameters of the persuasive authority cited

- 29- by DMAC, which should be disregarded by this Court paIiicularly in light of Texas

public policy.8

C. Article 13.7.1.2 did not negate the Discovery Rule pursuant to Texas public policy.

Texas public policy does not support enforcing paragraph 13.7 of the

Contract where there are facts of intentional non-disclosure of latent construction

defects. See TEX. CIV. PRAC. & REM CODE §16.009(e)(3) (Vernon's Supp. 2015)

(the ten year Statute of Repose does not apply to fraudulent concealment of

construction defects).

However, the Texas legislature has limited the scope of the discovery rule,

even where the parties have not waived it by contract. Id. Specifically, section

16.009 CPRC provides that damage "arising out of a defective or unsafe condition

of the real property or a deficiency in the construction or repair of the

improvement," the claim must be brought no later than ten years after the

construction is substantially complete, regardless of whether the plaintiff actually

SAssuming Article 13.7 of the Contract is enforceable, which is denied, Mahler asserts that the relevant provision is Article 13.7.1.3. Accordingly, as to DMAC's acts or omissions occurring after issuance of the final Certificate for Payment, Mahler's causes of action are deemed to have accrued not later than (1) the date of any act or failure to act by DMAC pursuant to any Warranty under Article 3.5, (2) the date of any correction of the Work or failure to correct the Work by DMAC under Article 12.2, or (3) the date of actual commission of any other act or failure to perform any duty or obligation by DMAC, whichever occurs last. Accordingly, assuming Article 13.7 is enforceable, DMAC committed a breach after substantial completion when it refused to correct and pay for the corrections to the doors, floors, and porches under Article 12.2 of the Contract (CR 1: 374-7S).

- 30- discovers the injury within the ten year period. See TEX. CIV. PRAC. & REM CODE

§16.009 (Vernon's Supp. 2015).

However, under section l6.009(e)(3), the statute of repose does not bar an

action "based on willful misconduct or fraudulent concealment in connection with

the perfonnance of the construction or repair." !d. at §16.009(e)(3). Accordingly,

Texas law recognizes the non-applicability of the statute of repose in construction

cases where the contractor is guilty of willful or fraudulent concealment thereby

potentially extending the accrual of the plaintiffs cause of action under the

discovery rule to a date beyond ten years after substantial completion.

In the cases cited by DMAC, there was no suggestion of duress, fraud,

misrepresentation, or unequal bargaining power.9 In those situations the outcome

may be different. For example, in William L. Lyoll & Associates, Inc. v. Superior

Court, 204 Cal.AppAth 1294 (2012), the trial court's denial of the defendant's

motion for summary judgment on the basis of a statutory period of limitations was

affinned on appeal. In doing so, however, the appellate court ruled that the

9See College oj Notre Dame oj Mmyland, Inc. v. Morabito Consultants, Inc., 132 Md.App. 158 (Md.App.2000) (parties may modifY limitations result if there is no statute to the contrary, it is reasonable, and it is not subject to defenses such as fraud, duress, or misrepresentation); Oriskany Central School District v. Edmund J. Booth Architects, A.I.A, 615 N.Y.S2d 160, 206 A.D.2d896 (1994) (waiver of discovery rule provisions will govern in the absence of duress, fraud or misrepresentation); William L. Lyon & Associates, Inc. v. Superior Court, 204 Cal.App.4th 1294, 1308-1309, 139 Cal.Rptr.3d 670 (2012) (following Moreno; in the case alleging intentional nondisclosure of construction defects by real estate broker).

- 31 - plaintiffs breach of contract action was subject to the limitations period in a buyer-

broker agreement, but that the discovery rule applied. !d. at 1306.

In LYOIl, the facts involved intentional nondisclosure of construction defects.

LYOIl, 204 Cal.App.4th at 1301-1302. The plaintiffs alleged that the sellers knew

of the construction defects and problems but did not disclose them as part of the

sale. !d. Instead, the sellers painted the house a dark brown color to conceal many

of the problems. Id. While the house was listed for sale, rain caused many of the

painted-over defects to reappear. Id. The sellers purchased more dark brown paint

and covered up the newly visible damage prior to inspection by the plaintiffs. Id.

In concluding that the discovery rule applied to the contractual two-year

limitations period, the Lyon court cited to the MorellO case and reasoned that the

breach in question was nonobvious and inherently difficult to detect and Lyon &

Associates should not reap the benefit of a shortened limitations period when its

own malfeasance contributed to the delay in the discovery of the buyer's injury.

LYOIl, 204 Cal.App.4th at 1308-1311. Similarly, DMAC should not reap the

benefit of a shortened accrual date through contractual elimination of the discovery

rule when its own proven malfeasance caused the delay in the discovery of

Mahler's injury. Moreover, DMAC cannot be permitted to avoid liability for its

actions by intentionally creating the construction defect and thereafter deceitfully

- 32- concealing the wrongdoing until limitations has run. The contractual waiver of the

discovery rule should be disregarded.

Here, the summary judgment evidence genuinely raises a fact issue if not

dictates that DMAC knew about the structurally defective framing in the porches

and intentionally built them in that manner and in violation of the law (CR 1: 6, ~4;

369-71; SCR 2: 17). Accordingly, Mahler asserts that enforcement of section 13.7

of the Contract would offend Texas public policy under these circumstances. See

TEX. CIV. PRAC. & REM CODE §16.009(e)(3) (Vernon's Supp. 2015) (the ten year

Statute of Repose does not apply to fraudulent concealment of construction

defects). A contract with provisions that are against public policy cannot be

enforced. City of the Colony v. North Tex. Mun. Water Dist., 272 S.W.3d 699, 730

(Tex. App.---Fort Worth 2008, pet. dism'd) (contract violates public policy ifit has

tendency to injure public good).

D. Under the Discovery Rule, Mahler's Causes of Action Accrued No Sooner than May 22, 2012.

To obtain summary judgment, DMAC had to conclusively negate the

discovery rule as a matter of law. Velsieol Chem. CO/po v. Winograd, 956 S.W.2d

529,530 (Tex. 1997). In order for the discovery rule to apply, the nature of the

injury and its general cause must be inherently undiscoverable and the injury itself

must be objectively verifiable. Moreno v. Sterling Drug, Inc., 787 S.W.2d 348,351

(Tex. 1990); Bayou Bend Towers Council of Co-Owners v. Manhattan

- 33 - Construction Co., 866 S.W2d 740, 742-743 (Tex. App.---Houston [14th Dist.]

1993, writ denied). An injury is inherently undiscoverable if by its nature, it is

unlikely to be discovered within the prescribed limitations period despite due

diligence. Shell Oil Co. v. Ross, 356 S.W.3d 924,930 (Tex. 2011).

Applying that standard, limitations do not begin when the full extent of the

damage is known or when the first damage is observed, but rather when Mahler

knew or should have known of the facts giving rise to its cause of action exercising

reasonable diligence. See Tenowich v. Sterling Plumbing Co., Inc., 712 S.W.2d

188, 189-190 (Tex. App.---Houston [14th Dist.] 1986, no writ).

1. Porch roofs.

DMAC relies on the Robinson inspection report dated August 16, 2007 as

evidence that Mahler lmew of the structural defects with the porch roofs and

ceilings in the 2007-year (CR 1: 139-40). The Robinson inspection report notes

"sag and unevenness" at the surface of the roof and at the ceiling below that area

that "may be due to structure of insufficient stiffuess to prevent the sag." ld.

Notably, Mahler initiated the Robinson inspection and shared the inspection report

with DMAC in 2007 (CR 1: 151, ~4). However, limitations does not begin to run

when the first damage is observed, but when Mahler knew or should have known

of facts giving rise to his causes of action through reasonable diligence. Tenowich,

712 S.W.2d at 189-190.

- 34- DMAC makes essentially two arguments. First, DMAC contends Mahler

should have discovered the structural defects in the porch roofs sooner through

additional inspections. Second, DMAC argues that the Schilder inspection report

dated May 22, 2012 discloses structural defects with the porch roofs "exactly like

the observations of the original inspectors" of August 16, 2007 (CR 1: 70, ,-r3).

DAMC's arguments fail for multiple reasons.

Mahler's exercise of reasonable diligence simply did not result in the

discovery of the structural defects in the framing of the porches. Mahler contacted

DMAC after the Robinson inspection and furnished it with a copy of the report

(SCR 2: 29-30, ,-r4; 151, '\[4). On January 1, 2008, Mahler sent the email attached

as Exhibit A to DMAC's motion out of concern that the size ofthe header board in

the picture should be larger. The picture attached to the email of the 2x4 header

board was actually taken in the 2006-year as the construction of the porches

progressed but before completion and before Mahler observed any problems with

the porches. However, Mahler expressing concern about the structure of the

porches by inquiring about one picture of a 2x4 header board does not amount to

knowledge that the framing of the porches was defectively built. Notably, DMAC

never responded to Mahler's email. !d.

Robinson recommended that Mahler contact DMAC to perform an

additional inspection because latent defects with the roof were outside the scope of

- 35 - his inspection (CR 1: 173, 175). Mahler complied (SCR 2: 29-30, '\14). As a result,

on or about December 1,2007, DMAC sent a daily worker to inspect the porches

and perform repairs (SCR 2: 30, '\16). Approximately one week later, on December

8, 2007, Mahler contacted DMAC a second time stating that the "porch ceilings

have started to have a wave-look to them" and "were to be corrected." Id. On

December 17, 2007, Bob Cooper of DMAC responded to Mahler "I have a

contractor" to inspect the porches "in order to know exactly what his crew will

need" (SCR 2: 30, '\17). However, Cooper told Mahler that there were no structural

concerns noted in the Robinson report or as a result of DMAC's subsequent

inspections of the porches (SCR 2: 30, '\19).

DMAC argues Mahler should have obtained an additional, independent

inspection to satisfy reasonable diligence (CR 1: 141). Mahler didn't have to

because Mahler relied on DMAC. After the DMAC contractor conducted the third

inspection, on December 28, 2007, Cooper emailed Mahler stating that the

hardiplank ceiling covering noted as having sags and unevenness in the Robinson

report had been secured by using counter-sunk screws and caulked (SCR 2: 30,'\18).

Cooper proposed that Mahler either (1) fill the screws with caulk and paint or (2)

feather float with ceiling texture and paint. Id. Mahler elected the second option

and the results "looked great" (SCR 2: 30, '\19). DMAC told Mahler that the

problem had been fixed. !d.

- 36- The Schilder inspection report does not disclose structural defects with the

porches "exactly like the observations of the original inspectors" on August 16,

2007.10 Rather, the Robinson inspection report notes "sag and unevenness" at the

surface of the roof and at the ceiling below that area that "may be due to structure

of insufficient stiffness to prevent the sag" (CR 1: 103, 'j!5). It should be noted that

"sag and unevenness" that "may be due to structure of insufficient stiffness" would

only mean, if true, that the "deflection criteria required by building code and design

code were not met and are indicative of substandard material sizes and

construction methods" (SCR 2: 10, '\13). According to Schilder, Robinson's

comments about the porch roofs and ceilings as of August 16, 2007, assuming

same were true, which Robinson doesn't assume and merely recommends further

inspection by the builder, would amount to only about ten percent of the struchlral

defects Schilder reported in his report five years later. !d. As a result, Schilder

opines the Robinson report did not provide notice of structural defects with the

porch roofs. Id.

On April 24, 2012, Mahler hired an engineer to perform an inspection of the

Project and discovered the construction defects inherent within the porch roofs

IOThe Schilder report notes structural deficiencies such as "inadequate and improper connection of rafters to columns;" "no beam supports between columns supporting exterior ends of rafters;" undersized rafters for spans;" "excessive rafter spacing;" and "inadequate and improper connection of rafter top end to nailer plate" (SCR 2: 14-15).

- 37 - (SCR 2: 13). According to Schilder, all of the structural deficiencies he notes in

his report existed in the porch roofs and ceilings at the time of the Robinson

inspection. Id. at 10. The defects were not visible and outside the scope of the

Robinson inspection and report. DMAC agreed that the structural defects with the

porches would not have been "visible" in 2006 and 2007.

Q. So would you agree if there was any defect with the structure back in 2006 or 2007, it was not visible?

A. No visible.

Q. Yeah, not visible?

A. Right.

Q. There might have been problems with it. I'm just saying it wasn't visible, right?

A. Right, wasn't visible.

(SCR 2: 103). DMAC acknowledged that a licensed engineer or contractor like

DMAC would be better than Mahler to inspect and report structural deficiencies

with regard to the porches (SCR 2: 103, p.79:7-16, 17-22). In fact, DMAC

concedes that Mahler was justified in relying on DMAC in making the repairs to

porch framing. Id.

Accordingly, as for the questions of Mahler's exercise of diligence and

determining the date of Mahler's discovery of the structural defects in the porches,

- 38 - the trial court erred and the trial court's summary judgment should be reversed and

remanded for further proceedings.

2. Floors.

Mahler's complaint regarding the floors is that DMAC installed a

"residential grade" flooring product at Briscoe Manor, which is a wedding event

center requiring commercial grade flooring designed specifically for higher traffic,

higher loads, and higher abrasion occurrences (CR I: 3-4).

In the motion for summary judgment, DMAC makes the following assertion

unsupported, in part, by summary judgment evidence.

And with respect to the flooring, the type, grade, and quality of the materials was certainly discoverable. (here, DMAC's cites footnote 4 that references Mahler's deposition testimony where Mahler admits DMAC made no representations regarding the grade of the flooring). If there even exists a bright-line distinction between 'commercial grade' and 'residential grade,' such basic product information about the floors would have been readily available from the vendor and the manufacturer. Plaintiff worked directly with the flooring vendor to select the flooring product and had access to product information from the outset. Plaintiff also had possession of leftover samples of the flooring material and information on how to contact the manufacturer on its property continually from the time of the Project's construction (Ex. B. at 39-40).

(CR 1: 143-44).

First, Mahler has never claimed that DMAC made oral representations

regarding the grade of the flooring (CR 1: 6-12). However, Mahler does believe

DMAC warranted that the flooring was suitable for its intended purposes (SCR 2:

- 39 - 45, '1[3.5). According to the Contract, the tenn "Work" means "the construction and

services required by the contract documents .. and includes all other labor,

materials, equipment, and services provided. . to fulfill the Contractor's

obligations" (SCR 2: 41). Notably, in paragraph 3.5.1, DMAC warranted that

"materials and equipment furnished under the contract will be of good quality and

new" and that the "Work will be free from defects not inherent in the quality

required" (SCR 2: 45-46). In fact, DMAC agreed to perfonn the Work in a good

and workmanlike manner, which is universally known as an industly wide

acceptable standard (SCR 2: 92). To be sure, there is no summary judgment

evidence that Mahler required or pennitted a "residential grade" flooring ("entire

record") and the very nature of Mahler's complaint with respect to the floors is that

they were not intended for commercial use (SCR 2: 6-12).

Second, DMAC's argument presupposes that because product infonnation

existed and was allegedly available that Mahler should have discovered the truth

about the "residential grade" of the floors. By doing so, DMAC overlooks the

inertia affect of Mahler's ignorance about the nature of the injury being that the

flooring is actually rated for residential use and yet there is no ongoing effort to

discover the truth. Other than observing some general wear and tear or replacing

the floors in locations where the damage had become more substantial, Mahler had

- 40- no reason to obtain a professional inspection of the floors or even to contact the

manufacturer or supplier to identifY the type of flooring.

The breach of contract and warranty in this case arose out of intentional

concealment of the residential grade of the floors by DMAC combined with

DMAC's silence on the matter. This case is an example of a breach inherently

difficult to detect. But DMAC concedes the possibility that there was "no bright-

line distinction between 'commercial grade' and 'residential grade' in connection

with the floors and assumes that "[I]f there even exists" such a distinction "such

basic product information about the floors would have been readily available from

the vendor and the manufacturer" (CR I: 143-44). In that connection, DMAC

makes the bare assertion that "Plaintiff worked directly with the flooring vendor to

select the flooring product and had access to product information from the

outset."!! Although DMAC cites to no summary judgment evidence in support of

that assertion, it is pure conjecture to conclude Mahler had knowledge of the

"residential grade" of the flooring during the selection stage, assuming Mahler had

any involvement in the first place. Finally, the fact that Mahler had "possession of

leftover samples of the flooring material and information on how to contact the

manufacturer on its property" does not mean that it knew of the "residential grade"

IIDMAC has failed to point out where Jorden Mahler stated that in his oral deposition or by means of other summary judgment evidence ("entire record").

- 4! - of the flooring and this Court must resolve all doubts about the summary judgment

evidence in Mahler's favor.

The only summary judgment evidence that DMAC cites III its motion

regarding Mahler's discovery or notice of any problem or damage with the floors is

the following excerpts from the transcript of the oral deposition of Jorden Mahler,

Q. All right. So you would have noticed that you thought that there was some sort of premature wear issue in 2010, right?

A. That could be said.

Q. All right. And the floors that are in your lawsuit, you actually have already replaced those floors, right?

A. The majority of it. Q. Okay. And-

A. The common areas, yes.

Q. And when were those floors replaced?

A. The ballroom was replaced in May of 2011 and the chapel area was just done in December 2013.

(CR 1: 218). Although DMAC attached the following additional excerpts from the

oral deposition of Jorden Mahler, it did not emphasize in its motion Mahler's

testimony that reflects when he probably really first noticed "some premature wear

issue" with the floors.

Q. All right. So you replaced the floors that - or at least some of the floors that are at issue in this lawsuit.

- 42- Those in the ballroom were actually replaced in 2011, right?

Q. And that was a long time before this lawsuit was filed, true?

Q. And when you replaced those floors or when you started - well, let me ask you this: How long before you replaced them had you been noticing what you've described as premature wear?

A. Probably that year, probably really noticed.

Q. All right. So maybe for about a year leading up to when you replaced them?

A. Yes.

(CR 1: 219-20). Accordingly, DMAC proved that Mahler first noticed "premature

wear" with the ballroom floors sometime in the 20IO-year and in the chapel floors

sometime in the 2012-year. On October 26, 2012, Mahler filed this lawsuit well

within four years after those discoveries (CR 1: 6).12

However, what is required to commence the runnmg of the statute of

limitations is the discovery of the nature of injury and its general cause, not the

12In its motion, DMAC relies erroneously on a comment in the Robinson report regarding the floors. Specifically, Robinson commented that the "floor stain floor finish" at the reception hall entry foyer, among other areas, showed evidence of wear and tear and discoloration (CR I: 144). That is not the floor in question. Mahler has no complaint about the cement, stained floors but the vinyl composition tile flooring in the Ballroom, restrooms, the Chapel and foyer and total office space (SCR 2: 32, 'lI14).

- 43 - exact cause in fact, or the first discovery of damage, or even the extent of the

injury with the floors. See Tenowich v. Sterling Plumbing Co., 712 S.W.2d 188

(Tex. App.---Houston [14th Dist.] 1986, no writ). Aside from normal wear and

tear that Mahler observed in the Fall of 2010 with the ballroom floor and in 2013

with the chapel floor, Mahler didn't have any knowledge that the floors were a

residential grade until May 2011 when the installer of the new ballroom floor

asked Mahler why it had installed residential grade flooring in a commercial

setting (CR 1: 30, ~13). Even if Mahler's first discovery of premature wear with

the ballroom floor is sufficient to trigger the running of the statute of limitation,

Mahler filed this lawsuit just over two years before limitations would run for

breach of contract and breach of warranty, which DMAC concedes has a four year

statute oflimitation.

Accordingly, as for the defect with the floors in the form of either the

premature wear or the fact of a residential grade, the trial court erred, and the

summary judgment order should be reversed and remanded to the trial court for

nlrther proceedings.

- 44- ISSUE FOUR

IV. The Trial Court Erred in Granting DMAC's Motion for Summary Judgment on Mahler's Defense of Fraudulent Concealment.

Mahler incorporates by reference the discussion of Mahler's burden of proof

and the Standard of Review set forth in Issue III, A, pages 24-25 above by

reference here and for all purposes.

B. A fact question exists on the elements of fraudulent concealment in connection with the Porch Roofs.

DMAC's motion did not ask for summary judgment on Mahler's defense of

fraudulent concealment relating to the porches (CR 1: 145-148). As a result, the

trial court granted more relief than DMAC asked for in its motion and the

judgment should be reversed and remanded for that reason. In the Reply, however,

DMAC challenged certain elements that Mahler must prove in connection with its

defense of fraudulent concealment relating to the porches (CR 1: 287-290).

Assuming DMAC has properly invoked summary judgment on Mahler's defense

of fraudulent concealment, Mahler must raise a genuine issue of material fact in

connection with those challenged elements.

1. Mahler's reasonable diligence is a fact question.

To establish fraudulent concealment in connection with the porches, Mahler

must prove it reasonably relied on DMAC's concealment of the condition of the

- 45- porches and representation that the unevenness at the surface of the roof and the

sags and unevenness at the ceiling below that area had been "fixed." See Shah v.

Moss, 67 S.W.3d 836, 841 (Tex. 2001) (elements of fraudulent concealment). In

its Reply, DMAC argued that it "was simply a contractual counter-party, not

Plaintiffs fiduciary, and Plaintiff could not therefore simply rely on alleged

representations from DMAC in the face ofthe readily accessible information to the

contrary described above" (CR 1: 288).14

However, "fraud prevents the running of the statute of limitations until it is

discovered, or by the exercise of reasonable diligence might have been

discovered." Ruebeck v. Hunt, 176 S.W.2d 738, 739 (Tex. 1943). Generally,

"[c]auses of action accrue and statutes of limitation begin to run when facts come

into existence that authorize a claimant to seek a judicial remedy," Emerald Oil,

348 S.W.3d at 202, but "a person cannot be permitted to avoid liability for his

actions by deceitfully concealing wrongdoing until limitations has run," S. V. v.

R.V., 933 S.W.2d 1,6 (Tex. 1996). Because "fraud vitiates whatever it touches,"

Borderlon v. Peck, 661 S.W.2d 907, 909 (Tex. 1983), limitations does not start to

14DMAC is wrong. The fact that DMAC may not be Mahler's fiduciary means only that DMAC has no duty of disclosure because of a special relationship. However, DMAC may have a duty to disclose in other scenarios, as more fully discussed below. See. e.g.• Hogget v. Brown, 971 S.W.2d 472, 487 (Tex. App.---Houston [14th Dist.] 1997, pet. denied) (circumstances creating duty of disclosure). Finally, Mahler can rely on DMAC's representations if he didn't know enough to cause a reasonable person to disbelieve the misrepresentations. See lvfitchell Energy COlp. v. Bartlett, 958 S.W.2d 430, 442 (Tex. App.---Fort Worth 1997, pet denied).

- 46 - run until the fraud is discovered or the exercise of reasonable diligence would

discover it, Marshall, 342 S.W.3d at 69. Although "the date a cause of action

accrues is nonnally a question of law," Etan Indus., Inc. v. Lehmann, 359 S.W.3d

620, 623 (Tex. 2011) (per curiam), reasonable diligence is an issue of fact, Estate

of Stonecipher v. Estate ofButts, 591 S.W.2d 806,809 (Tex. 1979).15

In BP America Production Co. v. Marshall, the Texas Supreme Court held

the statute of limitations was not tolled when BP fraudulently represented that it

was maintaining continuous operations on a lease. 342 S.W.3d 59, 67, (Tex.

2011).16 Notably, that case involved a sophisticated plaintiff who "understood the

oil and gas industry." !d. at 69. The public record contained two public filings

15See also Shah v. Moss, 67 S.W.3d 836, 846 (Tex. 2001) ("To avoid summary judgment on limitations grounds, Moss must have raised a fact issue to support his fraudulent-concealment assertion"); Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987) ("[W]e agree that whether the plaintiffs knew or should have known of the fraud ... raises a fact issue ... "); Borderloll, 661 S.W.2d at 909 ("A fact issue exists whether, in the exercise of reasonable diligence, Borderlon knew, or should have known .... that the presence of the foreign object in her abdomen gave rise to a cause of action against Dr. Peck."); Cheny v. Victoria Equip. & Supply, IIlC., 645 S.W.2d 781, 782 (Tex. 1983) ("The ultimate duty to weigh the evidence, determine credibility and decide if fraudulent concealment achmlly existed rests upon the trier of fact."); Ruebeck, 176 S.W.2d at 740 ("What will constitute reasonable diligence to discover fraud and when the fraud might have been discovered by the exercise of such diligence are necessarily questions which must be determined from all the facts and circumstances in evidence in each particular case. When, under the facts in evidence, reasonable minds might differ on such issues, the findings of the jury thereon are binding on the appellate court.").

16DMAC relies extensively on the Marshall case in its Reply and, in quoting the Texas Supreme Court, incorrectly argued that "[t]he law in Texas is that 'reliance is not reasonable when information revealing the truth could have been discovered within the limitations period" (CR1: 287). Information revealing the truth could always be discoverable. However, in Marshall, the Texas Supreme Court held that fraud did not toll limitations because the plaintiffs "could have discovered wrongdoing by reviewing information in the public record. Marshall, 342 S.w.2d at 67-68.

- 47- with the Railroad Commission: a well log and a plugging report that contained

"highly technical infonnation." Id. at 66. Had the Marshalls read these those two

documents together, they would have discovered that BP was not conducting good-

faith continuous operations. Id. at 69. "[A]s a matter of law, the Marshalls would

have been able to discover BP's fraud through the use of reasonable diligence." !d.

Similar conclusions have been reached in other cases. For example, if the

plaintiff has "actual knowledge ... of injury-causing conduct," then this "starts the

clock on the limitations period" "in-espective of the potential effect of fraudulent

concealment." Emerald Oil, 348 S.W.3d at 209. The availability of court records

may indicate under some circumstances that reasonable diligence would have

found the infonnation. See Kerlin, 263 S.W.3d at 926. Land title records and

probate proceedings create constructive notice, "an in-ebuttable presumption of

actual notice," which prevents limitations from being delayed. Mooney v. Harlin,

622 S.W.2d 83, 85 (Tex. 1981); Sherman v. Sipper, 152 S.W.2d 319,321 (Tex.

1941). Those cases reveal that when there is actual or constructive notice. or when

infonnation is "readily accessible and publicly available," Ross, 356 S.W.3d at

929, then, as a matter of law, the accrual of a fraud claim is not delayed.

However, the instant case does not fall into any of the categories where one

can detennine, as a matter of law, that reasonable diligence would have timely

uncovered DMAC's fraud. DMAC argues that Mahler's reliance on DMAC's

- 48 - representations was unreasonable because "DMAC employs no engmeers

(structural or otherwise), Plaintiff lmew that day laborers and contractors were the

ones 'inspecting' the work for DMAC, and Plaintiff observed that DMAC's

subsequent work did nothing to address the structure or framing of the roofs" (CR

1: 288).

First of all, just when did Mahler lmow that DMAC employed no engineers

in connection with the Project? There is no evidence that Mahler lmew that fact

during construction ("entire record"). Schilder first inteIjected the legal

requirement of a structural engineer as an opinion asserted in his report dated May

22, 2012 (SCR 2: 17). He later concluded that DMAC was in violation of Texas

law when it constructed the porches without a structural engineer's involvement

(CR 1: 368-371).17 And, just when did Mahler lmow that having only DMAC

inspect and repair the porches without addressing the structure or framing would

not correct the sags and unevenness observed at the porch roofs and the ceiling

below that area? Mahler did not lmow about the structural defects with the

framing of the porches until April or May 2014 when Schilder produced his report

(SCR 2: 31, '1111). Accordingly, Mahler's reliance on DMAC's representations was

reasonable.

DMAC's conclusion that Mahler didn't satisfy reasonable diligence because

17See TEX. GOV'TCODE §1001.056 (Vernon's Supp. 2015).

- 49- it made no independent follow-up investigation and was fully aware that DMAC

made no repairs to the framing of the porches is premised on the theory that the

Robinson report in 2007 evidenced structural defects in the framing of the porches

(CR 1: 280-289). However, the Robinson report was generated after an inspection

initiated by Mahler and noted that the porch roofs and ceilings had "sags and

unevenness that may be due to structure of insufficient stijJiIess" (CR 1: 103, '1[5)

(Emphasis added). Notably, the discovery and disclosure of latent construction

defects was outside the scope of Robinson's inspection pursuant to the terms of the

report itself. The notation "sags and unevenness that may be due to structure of

insufficient stiffness" did not magically import actual knowledge of an issue with

the structural integrity of the porches (CR 1: 92-93, '1f1C) (emphasis added). It put

Mahler on notice of further inquiry and recommended reporting the issue to the

contractor, DMAC.

And, Mahler did exactly that. Mahler's act of engaging Robinson in August

2007 and thereafter disclosing the issue of the porches to DMAC as recommended

in the Robinson report satisfies, in part, his duty of reasonable diligence. At that

point, DMAC had built the porches in a defective manner and concealed it. As

pointed out by DMAC in its Reply, Mahler continued acting with reasonable

diligence when, after "the daily worker guy" came out to make repairs, Jorden

Mahler sent the December 8, 2007 email stating "the porch ceilings have started to

- 50 - have a wave-look to them and were to be corrected." (SCR 2: 30, ~6). After

DMAC then sent out another contractor to "feather float with ceiling texture and

paint," Mahler, again, sent another email, dated January 1, 2008, attaching

photographs of the porch roofs while they were under repair, which reflects the

actual rafters and other members of the structure, and Mahler expressed this

concern: "[L]ooks like only 2x4 (header) is what is attached at the building side.

I'm not an expert, but looks a little weak." (CR 1: 120-22). The summary

judgment record does not support that DMAC even responded to Mahler's inquiry

("entire record"). Applying the applicable SOR, this Court must resolve all doubts

in Mahler's favor and assume no additional information regarding the structural

integrity of the porches was conveyed to Mahler. Notably, the size of the headers

"at the building side" of the porches is not listed in the Schilder report prepared

four years later. DMAC's Bob Cooper, the on-site project manager, told Mahler

that there were no structural concerns noted in the Robinson report or as a result of

DMAC's post inspections and repairs of the porch roofs and ceilings (SCR 2: 30,

~9). Cooper and other DMAC employees told Mahler that the porch roofs and

ceilings had been "fixed." Id. It is Texas law that a plaintiff reasonably relied on

the defendant's conduct if, despite exercising reasonable diligence, it did not lmow

enough to cause a reasonable person in its place to disbelieve the defendant's

misrepresentation or question the defendant's silence. Mitchell Energy CO/po v.

- 51 - Bartlett, 958 S.W.2d 430,442 (Tex. App.---Fort Worth 1997, pet. denied).

On the issue of Mahler's reasonable diligence, it should be noted that

DMAC's counsel mischaracterizes Mahler's expert, Stephen Shilder's, affidavit

testimony that Mahler would have fully uncovered all of the structural deficiencies

with the porches through an earlier inspection than in May 2012 (SCR 2: 8-11).

To the contrary, Schilder merely stated that the structural deficiencies in the porch

roofs existed in August 2007, the date of the Robinson inspection and report,

because they were built into the structure of the porch roofs at the time of the

original construction in the 2006-year (SCR 2: lO). Schilder never speculated as to

what Mahler may have discovered had it done an earlier inspection during the four-

year period it believed there were no problems with the porches (SCR 2: 8-11). In

fact, Schilder actually opined that there was no visible evidence of any structural

defects (SCR 2: lO).

It cannot be said that, as a matter of law, Mahler should have discovered the

general cause of the sags and unevenness in the porches was structural in nature

after DMAC inspected them and represented that it had fixed the problem.

Although reasonable diligence should investigate visible sags and unevenness with

the porch roofs and the ceilings below that area, it may stop at DMAC's

subsequent inspection and representation that the problems have been fixed,

without needing to double-check DMAC's work and conduct a more invasive

- 52- inspection than performed by DMAC. As quoted above, "fraud vitiates whatever it

touches," Borderlon, 661 S.W.2d at 909, in tlllS case, the ceiling or soffit area

below the porch roofs. It has been held that fraudulent concealment is "an

equitable doctrine that ... is fact-specific." Marshall, 342 S.W.3d at 67. And, it

was also quoted above that "a person cannot be permitted to avoid liability for his

actions by deceitfully concealing wrongdoing until limitations has run." S. V, 933

S.W.2d at 6. Though reasonable diligence should lead to an inspection and

ultimately discovery through that inspection of the structural nature of the defects

with the porches, here, DMAC's inspection and repair itself taints the discovery of

the nature of the injury. To require, as a matter of law, that Mahler double-check

DMAC's work and obtain a more invasive inspection than Robinson recommended

is higher burden than reasonable diligence requires.

2. DMAC's purposeful concealment argument is procedurally defective and raises a fact question.

DMAC next contends that Mahler "has submitted no evidence" that DMAC

"acted with a fixed purpose to conceal" its wrongdoing in connection with the

framing of the porches (CR 1: 289). As discussed in detail above, DMAC has

again asserted a no-evidence "ground" for summary judgment in its Reply, which

is procedurally defective and should be disregarded.

Nevertheless, DMAC attempts to negate "purposeful concealment" by

arguing that the summary judgment evidence of DMAC's actual knowledge of its

- 53 - wrongdoing in the form of the Affidavit of Barry Tarver, which DMAC concedes

"provides some evidence that DMAC was aware of some deficiency in the porch

roofs," provides no support for the "purposeful concealment" element because "as

a non-fiduciary DMAC was under no obligation to disclose potential defects in its

work" (CR 1: 289). DMAC's contention is misplaced and confuses the issues and

the summary judgment evidence Mahler has offered to prove the element of

"purposeful concealment."

To prove fraudulent concealment, the plaintiff must establish the defendant

had a fixed purpose to conceal the facts the plaintiff needed to discover that a cause

of action had accrued. DiGrazia v. Old, 900 S.W.2d 499, 503 (Tex. App.---

Texarkana 1995, no writ) (silence does not constitute fraudulent concealment when

D does not owe P a duty to disclose). There must be evidence that the defendant

purposefully or intentionally concealed facts. [d. at 503. Purposeful concealment

can be established by direct and circumstantial evidence showing that the

defendant knew the statements were false when they were made. See Earle, 998

S.W.2d at 888-89.

By its argument, DMAC has conceded that by intentionally building the

porch framing in a defective manner DMAC had a "fixed purpose" to conceal

those facts. Mahler agrees. Mahler's summary judgment evidence that DMAC

underbid the job and, even after being paid an additional $355,000.00, had an out

- 54- of pocket loss of $65,000.00, also would enable reasonable and fair-minded people

to conclude that DMAC had a "fixed purpose" to conceal its intentional

misconduct because it was more expensive to build the porches in a good and

workman like manner (SCR 2: 31, 'jI12). See, e.g., Booker v. Real Homes, Inc., 103

S.W.3d 487, 494 (Tex. App.---San Antonio 2003, pet. denied) (contractor had

fixed purpose to conceal the wrong because more expensive to perform job

correctly).

DMAC's act of concealment in this case was not only accomplished through

its silence but also through affirmative representations that the defects in the

porches had been fixed or repaired (CR 1: 30, 'jI9). DMAC's affirmative

representations that the porches had been fixed also created a duty to disclose the

truth. See Booker, 103 S.W.3d at 494 (in construction-defect case, D had duty as

professional builder to disclose any problems with home that Ps, as layman, were

unable to discover on their own). It is Texas law that a person has a duty to

disclose in various situations including (1) when a party only voluntarily discloses

only partial information, (2) when a party makes a representation that causes an

earlier representation to be misleading or untrue, and (3) when a party makes a

partial disclosure that conveys a false impression. See Hogget v. Brown, 971

S.W.2d 472, 487 (Tex. App.--Houston [14th Dist.] 1997, pet denied). In his oral

deposition taken on July 16, 2014, McIntyre continued to insist that DMAC

- 55 - "fixed" the problems with the porch roofs (SCR 2: 94, pAl: 8-10): Q. "Well, what

did you do about it when you heard something about it in 20077 A. Fixed it.").

By stating that the porches had been fixed, DMAC was actually communicating

that it had cosmetically repaired the porch ceilings, which conveyed a false

impression, because the repair did not address the internal framing structure that

was the cause of the sags and unevenness manifesting in the porch ceilings and

roof tops noted in the Robinson report in 2007 and, again, in the Shilder report in

May 2012. Finally, Mahler's deposition testimony does not deny any

concealment, as argued by DMAC, but rather reflects that as of the date of his oral

deposition, Mahler knew that DMAC made no cosmetic repairs to the porch roofs

but only to the porch ceilings or soffit area by concealing the sags and unevenness

through the work of the repair and "they reassured me that it was okay." (CR 1:

242).

DMAC did not even attempt to negate the other elements of fraudulent

concealment as it relates to the porches. As a result, the trial court erred, and the

summary judgment on fraudulent concealment as it relates to the porches should be

reversed and remanded to the trial court for further proceedings.

C. Fraudulent concealment and "equitable estoppel" preserve Mahler's claims pertaining to the doors and floors.

DMAC contended that Mr. Mahler testified that no DMAC representative

"ever lied to you about the doors or the floors" and; therefore, DMAC never made

- 56 - any misrepresentation to Mahler (CR 1: 145). DMAC claims that Mr. Mahler's

admission conclusively negates that DMAC misrepresented or concealed the

nature and quality of the doors and floors. Id.

With respect to the floors, the summary judgment evidence supports that the

flooring product installed is not approved or suitable for Mahler's purposes.

Specifically, residential grade floors were installed in place of commercial grade

flooring (SCR 2: 15). According to Schilder, "[t]his fact was confirmed by the

flooring manufacturer's specifications and the product submittals provided to the

general contractor prior to installation of the flooring material." (SCR 2: 9, ~1)

(emphasis added). Although DMAC knew about the commercial grade flooring

from the beginning, Mr. Mahler did not learn of that fact until May 2011 and

thereafter confirmed it though the manufacturer (SCR 2: 30-31, ~IO). Mr. Mahler

immediately contacted Lance McIntyre of DMAC and told him about the floors

and Mr. McIntyre stated that "You know we were on a tight budget" and inquired

whether Mahler intended to sue (SCR 2: 31, ~1 0).

Mr. McIntyre's statement further supports that DMAC concealed the fact of

installing the wrong type of flooring. DMAC's silence regarding the commercial

grade flooring amounts to a misrepresentation because DMAC had a duty to

disclose. See, e.g., Booker v. Real Homes, Inc., 103 S.W.3d 487,494 (Tex. App.---

San Antonio 2003, pet. denied) (in construction-defect case, D had duty as

- 57 - professional builder to disclose any problems with home that Ps, as laymen, were

unable to discover on their own). DMAC's duty of disclosure is particularly

appropriate here given that it agreed that the floors "will be of good quality and

new" and "free from defects not inherent in the quality required or permitted."

(SCR 2: 45-46, ~3.5.l).

With respect to the floors, DMAC argued again that Mr. Mahler's testimony

conceded he was never lied to about the doors and that Mr. Mahler learned in 2007

that the doors didn't have a walTanty if they were hung in an exterior application.

(SCR 2: 145-46, f.n.#5). However, Mahler's complaint with respect to both the

doors and floors has nothing to do with the loss of the manufacturer's walTanties

and instead with the fact that DMAC installed interior grade doors in exterior

locations and residential grade flooring in place of commercial grade flooring.

Contrary to Mr. Mahler's mistaken deposition testimony, DMAC representatives

indeed represented to Mahler and convinced Mahler that the doors installed were

appropriate and of good quality.

As late as December 28,2007, during the time that DMAC was completing

walTanty and punch-list work, Cooper continued to mislead Mahler to believe that

the doors installed for an exterior application was appropriate.

• You continually keep bringing up the exterior doors, time and time again, thus labeling them 'interior doors.' Do you or Bill have P- lam or metal doors on any or all of your doors at your home? Of course not, they are wood! Solid wood doors that are sealed and either

- 58 - painted or stained and varnished properly are used as "Exterior Doors" as well as metal or glass doors. If these doors were hollow core doors, that would be different. They are not! If you remember, we bought heavy duty marine varnish to add over the manufacture's coat for longer protective measures. So your decision to take our check 'back to the bank' because of your perceived 'scenario, and being mislead about the doors' comes across to me as being a very inappropriate decision on your part!

(CR 1: 30, 'lI8; 82). DMAC should be estopped from asserting the statute of

limitations because DMAC representatives intentionally misled Mahler. The

doctrine of equitable estoppel bars a defendant from raising the defense of

limitations when it, its agent, or its representative made representations that

induced the plaintiff to delay filing suit until after limitations ran. Villages of

Greenbriar v. Torres, 874 S.W.2d 259, 264 (Tex. App.---Houston [1st Dist.] 1994,

writ denied). Furthermore, Mr. Cooper's email certainly amounts to a

misrepresentation for purposes of satisfying the elements of fraudulent

concealment relating to the doors.

DMAC next argues that Mahler did not rely on anything DMAC said or

didn't say about the floors and doors and, even assuming such reliance, Mahler had

sufficient information in its possession to render any reliance unreasonable had

Mahler exercised reasonable diligence (CR 1: 146). Mr. Mahler's affidavit clearly

supports that Mahler relied on DMAC representations when he was told the doors

"were appropriate and that DMAC would apply some marine varnish to extend the

life." (SCR 2: 31, 'lIll). It is also clear that Mr. Mahler relied on DMAC's silence

- 59- regarding the floors because he was "shocked" by the floor installer's statement in

May 2011 about the fact that residential grade flooring had previously been

installed (SCR 2: 30-31, '1l10).

DMAC cites BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 68 (Tex. 2011),

for the proposition that Mahler's reliance on DMAC's representations and silence

regarding the floors and doors was not reasonable when information revealing the

truth could have been discovered within the limitations period. Again, however,

that case involved a sophisticated plaintiff who could have discovered the

defendant's wrongdoing by reviewing information available in the public record.

BP Amer. Prod. Co., 342 S.W.3d at 67-69. Here, Mahler was not sophisticated

and this case does not fall into the category where one can determine, as a matter

of law, that reasonable diligence would have timely uncovered DMAC's fraud.

Rather, the fact that DMAC installed residential grade floors and interior grade

doors was inherently difficult to detect as can be determined from reviewing

Schilder's descriptions in his affidavit (SCR 2: IS). Reasonable diligence is an

issue of fact, Estate of Stonecipher v. Estate of Butts, 591 S.W.2d 806, 809 (Tex.

1979).

There is a genuine issue of material fact. This Court should reverse and

remand to the trial court for further proceedings.

- 60- PRAYER

For the above reasons, the trial court erred in several significant ways.

Mahler requests this Court to reverse the granting of summary judgment III

DMAC's favor and remand to the trial court for further proceedings.

Respectfully submitted,

/s/ Christopher D. NUllnallee JEFFREY J. TOMPKINS Texas Bar No. 20125500 l4l3 Brittmoore Road Houston, Texas 77043 Telephone: 7l3-787-5333 Facsimile: 7l3-787-5334 OF COUNSEL: CHRISTOPHER D. NUNNALLEE Texas Bar No. 24025568 l4l3 Brittmoore Road Houston, Texas 77043 Telephone: 713-787-5333 Facsimile: 7l3-787-5334 ATTORNEYS FOR APPELLANT

- 61 - CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Motion to Extend Time to File Brief was served by Facsimile Transmission and the Court's Electronic Filing System on the 8th day of November, 2015, to all parties entitled to receive such notice, including the parties list below:

James A. Schuelke FACSIMILE TO 713.485.7250 REYNOLDS FRIZZEL LLP 1100 Louisiana Street, Suite 3500 Houston, Texas 77002 Attorney for DMAC Construction, Inc.

/s/ Christopher D. Nunnallee CHRISTOPHER D. NUNNALLEE

CERTIFICATE OF COMPLIANCE

I hereby certify that the above-referenced Appellant's Amended Brief contains text in a conventional type-face, which is no smaller than 14-point font, and consists of 12,972 words in accordance with Texas Rules of Appellate Procedure 9.4(e), (i)(2)(B).

- 62 - IN THE COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS AT HOUSTON

NO. 14-15-00061-CV

APPELLANT'S APPENDIX

LIST OF DOCUMENTS

1. Final Summary Judgment dated October 17, 2014 (CR 1:349) ...................................................................................................... Tab A

- 63 - P-I 7/18/20146:29:45 PM Chris Daniel - District Clerk ,li) Harris County Envelope No: 1880962 By: SMITH, SALENE

CAUSE NO_ 2012-64035

B. MAHLER INTERESTS, L.P. § IN THE DISTRlCT COURT § Plailltiff § § vs. § HARRIS CO~~, TEXAS § _..~S § ",:%)1 DMAC CONSTRUCTION, INC. § F"" ~J § 152ND J1;iI:!,It:rAL DISTRlCT Defelldallt § o '£F .,N § o ~~ @j) ,~~. FINAL SUMMARY JUDGlVJ]j}N'IJ) . , f'; ~?E~~ (IJ» On the 8th day of August 2014, came on for heru-{nl~ efendant's Amended Traditional .~ and No-Evidence Motion for Summary Judgment, ~~rCourt, having considered the Motion,

Plaintiff's Response, Defendant's Reply, and,~ argument of counsel, ORDERS that

Defendant's Amended Traditional and NO-E~~ce Motion for Sunamary Judgment should be II". .....:. .. ,d;.~ and hereby is GRANTED. IQ) it)- ~"JdJ The Court therefore RENDERSJUDGMENT for Defendant, DMAC Construction, Inc. ,,,,~,,,

d:~~ The Court ORDERS fb::ali Plaintiff take nothing on its claims against DMAC 'i, Construction, Inc, and that D~ Construction, Inc. recover all court costs from Plaintiff. iPQ . This judgment fiil!!.UY disposes of all claims and all parties, and is appealable, ~:'~ The Court q~ERS execution to issue for this judgment. IEc~~ i1.l.~~ "1..0-'"

'".{~ .-"",fOf' OCT 1 7 2014 SIQ,~b and ORDERED this __-;lay'uF1l:UgITSiF"4Qt4,

~ ~y=-\' fudge Presiding 4827.6643-9953, v. 2 E EXHIBIT "• ~

1 A RECORDER'S MEt.1QRAfJDUM This InstrumetU Is ofPDo; qualify al the time of Imaging