Life Forms, Inc. v. Woodlands Operating Co.

304 S.W.3d 591, 2010 Tex. App. LEXIS 202, 2009 WL 5276583
CourtCourt of Appeals of Texas
DecidedJanuary 14, 2010
Docket09-09-00091-CV
StatusPublished
Cited by5 cases

This text of 304 S.W.3d 591 (Life Forms, Inc. v. Woodlands Operating Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Life Forms, Inc. v. Woodlands Operating Co., 304 S.W.3d 591, 2010 Tex. App. LEXIS 202, 2009 WL 5276583 (Tex. Ct. App. 2010).

Opinion

OPINION

STEVE McKEITHEN, Chief Justice.

In this appeal, we must determine whether the defendants conclusively established their limitations defense. The appellant contends the trial court erred: (1) in entering summary judgment in the face of unrefuted evidence of fraudulent concealment; (2) in determining that the appellant’s fraud claims accrued more than four years before the suit was filed; and (3) in failing to grant a continuance and reconsider the motion for summary judgment after additional discovery. In a cross-appeal, the appellees contend that the trial court erred in denying a second combined traditional and no-evidence motion for summary judgment concerning claims for fraud in connection with transactions that occurred within four years of suit.

On September 18, 2006, Life Forms, Inc. (“Life Forms”), a production home builder, filed a fraud suit against real estate devel-opex's, The Woodlands Operating Company, L.P., and The Woodlands Land Development Company, L.P. (collectively “The Woodlands”). 1 Life Forms alleged that it purchased lots in reliance upon The Woodlands’ false representations that all production homebuilders pay the same prices for the same types of lots. The Woodlands sought a partial summary judgment on the grounds that Life Forms’s fraud claim accrued more than four years before it filed suit. In response, Life Forms argued that The Woodlands’ fraudulent concealment of the difference in prices paid by Life Forms and other production builders tolled limitations. The trial court denied The Woodlands’ separate motion for final summary judgment that challenged each element of Life Forms’s fraud claim. After the tidal court granted The Woodlands’ motion for partial summary judgment on grounds of limitations, Life Forms nonsuit-ed all of its claims that had not been disposed of in the partial summary judgment. The tiial court severed a counterclaim filed against Life Forms by The Woodlands, and this appeal followed.

“In conducting our review [of a summary judgment], we take as true all evidence favorable to the nonmovant, and we make all reasonable inferences in the nonmovant’s favor.” KPMG Peat Marivick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). Defendants moving for a traditional summary judgment on the affirmative defense of limitations must conclusively establish when the cause of action accrued. Id. “Generally, in a case of fraud the statute of limitations does not commence to run until the fraud is discovered or until it might have been discovered by the exercise of reasonable diligence.” Little v. Smith, 943 S.W.2d 414, 420 (Tex.1997). Fraudulent concealment estops a defendant from relying on limitations as an affirmative defense. Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex.1983); Nichols v. Smith, 507 S.W.2d 518, 519 (Tex.1974) (“When the *594 defendant is under a duty to make a disclosure but fraudulently conceals the existence of a cause of action from the one to whom it belongs, the guilty party will be estopped from relying on the defense of limitations until the right of action is, or in the exercise of reasonable diligence should be, discovered”). “The estoppel effect of fraudulent concealment ends when a party learns of facts, conditions, or circumstances which would cause a reasonably prudent person to make inquiry, which, if pursued, would lead to discovery of the concealed cause of action.” Borderlon, 661 S.W.2d at 909. The party asserting fraudulent concealment as an affirmative defense to the statute of limitations has the burden to raise it in response to the summary judgment motion and to present summary judgment evidence that raises a fact issue on each element of the fraudulent concealment defense. KPMG Peat Marwick, 988 S.W.2d at 749.

In this case, Life Forms alleged: (1) that it built approximately 3,000 homes in over thirty-five communities in The Woodlands; (2) that throughout their relationship The Woodlands made consistent representations regarding their lot pricing practices; and (3) that Life Forms now knows that the repeated representations were false. Life Forms contends it discovered the lot prices paid by its competitors in a meeting held September 26, 2002, and argues its cause of action accrued no earlier than that date. Thus, Life Forms sued for an on-going fraud it allegedly discovered on September 26, 2002.

Most of the communications in the record were between either Scott Mitchell or Mark Alvis on behalf of Life Forms, and Roger Galatas, Tim Welbes, or Virgil Yoa-kum for The Woodlands. On May 1, 1991, Mitchell wrote to Galatas after a meeting about square foot máximums and lot pricing in Lake Pointe and Cochran’s Green subdivisions. Mitchell explained that he tabulated all first quarter sales from the monthly residential sales report and arrived at approximate lot prices for the sales. Mitchell suggested comparing Life Forms’s lot programs to other production programs and stated that “[a]t 17.5% [of list price] we would be paying more than Village and Weekley for the same size lot and same location. Would this work for everyone?” According to Mitchell, “This will be the first time in several years we will pay more for MH-P [Medium High-Production] lots than other production builders.” In a response dated May 9, 1991, Welbes agreed to amend their existing contracts to what was apparently 17.5% of list price, a figure Mitchell stated would result in Life Forms paying more for its lots than the other builders mentioned in his correspondence.

An affidavit by Alvis states that in early 1992 “Life Forms became concerned that The Woodlands might be charging Life Forms more than it was charging other builders for comparable lots.” On March 11, 1992, Mitchell sent a memorandum to Welbes. Mitchell stated that “[apparently there has been tiered lot prices for MH-P and MH-C [Medium High Custom] except for Life Forms lots since last June 1, 1991.” Mitchell complained that Life Forms had not received complete historical information and noted that the escalators for other builders appeared to be inconsistent with those of Life Forms. The memorandum compares lot prices for Life Forms with those for two other builders and claims there is a $3,500 approximate difference between the two program tiers. The memorandum suggests a credit be applied to compensate Life Forms for the difference.

In a memorandum to Welbes dated April 3, 1992, Mitchell proposed lot prices for a particular section in development. *595 Included in the proposal were lot prices for Life Forms’s competitors and “back credit” of $49,000, representing $3,500 each for fourteen lots built at 3200 square feet or less under a May 30,1991, contract.

On April 23, 1992, Galatas wrote to Mitchell. In this letter, Galatas stated that “[o]ur pricing policy as it affects Life Forms is to be governed by two principal considerations:

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304 S.W.3d 591, 2010 Tex. App. LEXIS 202, 2009 WL 5276583, Counsel Stack Legal Research, https://law.counselstack.com/opinion/life-forms-inc-v-woodlands-operating-co-texapp-2010.