COURT OF APPEALS
SECOND
DISTRICT OF TEXAS
FORT WORTH
NO. 2-04-034-CV
WILLIAM
H. DEAN AND MADELYN S. DEAN APPELLANTS
V.
FRANK
W. NEAL & ASSOCIATES, INC., APPELLEES
HBC
ENGINEERING, INC., DAVID LEWIS
BUILDERS,
INC., AND DAVID T. LEWIS, INDIVIDUALLY
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FROM
THE 348TH DISTRICT COURT OF TARRANT COUNTY
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OPINION
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This
construction defect case involves multiple summary judgments granted on
limitations grounds. In three issues, William H. and Madelyn S. Dean contend
that the trial court erred in granting summary judgments on their claims against
appellees Frank W. Neal & Associates, Inc., HBC Engineering, Inc., David
Lewis Builders, Inc., and David T. Lewis, individually, because the limitations
period was tolled by application of the discovery rule and because the appellees
are equitably estopped from asserting limitations as a result of their conduct.
Because the Deans failed to raise a fact issue on the discovery rule and
equitable estoppel, we affirm the summary judgments for all of the appellees on
limitations grounds.
Background
On
November 10, 1995, the Deans entered into a contract with Nader Design Group
(NDG) and David Lewis Builders, Inc. (DLBI) for the construction of a home,
James Nader of NDG was the architect for the project, and DLBI was the builder.
As part of the design process, the Deans’ architect hired Frank W. Neal &
Associates, Inc., a structural engineering firm, to design the home’s
foundation. When preparing the design, Neal used some information in a soils
report that HBC Engineering, Inc., another engineering firm, prepared in 1994
for a different architect. The soils report indicated a potential for movement
in the soil below the house of approximately 2.1 inches. Consequently, Neal
recommended that the house be designed with a suspended slab, or pier and beam,
foundation. The Deans rejected this recommendation because it was too costly,
and Neal designed a foundation that was slab-on-grade with some piers. According
to Neal’s deposition testimony, he told Nader the new design would be less
costly but not as good as a suspended slab. Construction of the home took place
in 1996.
During
construction, Neal and the Deans noticed some cracks in the foundation. Neal did
not think the foundation was structurally compromised at that point, so he
recommended that the cracks in the garage be repaired with an epoxy patch and
that a flexible bed be laid under the tile in the other parts of the house where
cracking had occurred.1 There is no evidence
that Neal’s recommendations were implemented, but construction was completed,
and the Deans closed on the house in December 1996.
After
they moved in, the Deans noticed cracks in the garage and “various places”
in the house. By October 1997, more cracks had appeared, and later that month
Nader met with Neal, Lewis, and Ralph Barnes of HBC to discuss how to mitigate
the problem. At this meeting, the participants discussed chemically injecting
the soil underneath the house to stop potential movement related to moisture in
the soil caused by groundwater. Mrs. Dean was aware of this meeting and its
purpose. In her deposition, Mrs. Dean admitted that she knew there had been some
movement as of October 1997, which is why chemically injecting the soil was
considered.
Between
1998 and 2002, Nader met with various parties, including Neal and Barnes,
regarding the home’s foundation. The Deans believed that some or all of the
appellees would pay for any necessary repairs to the home’s foundation. But at
a meeting on January 23, 2002, the Deans discovered that there was no general
agreement among the appellees to pay for such repairs.
The
Deans filed suit against NDG, Neal, DLBI, Lewis, and HBC on January 28, 2002.
They asserted negligence, breach of warranty, fraud, fraud-failure to disclose,
fraud in a real estate action and fraud-false promise, DTPA, and breach of
contract claims against the various parties. They later nonsuited NDG, Nader’s
architectural firm.2 Neal, DLBI and
Lewis, and HBC subsequently filed separate motions for summary judgment
contending that all of the Deans’ claims were barred by the applicable
statutes of limitations.3 The Deans filed a
third amended petition alleging that the discovery rule applied to their claims
and that the appellees were equitably estopped from asserting limitations
because their conduct induced the Deans not to file suit. The trial court
granted separate summary judgments in favor of each of the appellees.
Standard of Review
A
defendant who moves for summary judgment on the affirmative defense of
limitations has the burden to conclusively establish the defense. KPMG Peat
Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.
1999). The defendant must, therefore, conclusively prove when the cause of
action accrued. Id. Additionally, the defendant must negate the discovery
rule, if it applies and has been pleaded or otherwise raised, by proving as a
matter of law that there is no genuine issue of material fact about when the
plaintiff discovered, or in the exercise of reasonable diligence should have
discovered, the nature of its injury. Id. If the movant
establishes that the statute of limitations bars the action, the nonmovant must
then adduce summary judgment proof raising a fact issue in avoidance of the
statute of limitations. Id.
Discovery Rule
The
discovery rule is a limited exception to the statute of limitations. Computer
Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996). The
discovery rule is applied when the nature of the injury is inherently
undiscoverable. Id. at 456. Thus, the discovery rule should be applied
only when “it is difficult for the injured party to learn of the negligent act
or omission.” Id. A cause of action accrues when the plaintiff knew or
should have known of the wrongful injury. KPMG Peat Marwick, 988 S.W.2d
at 749-50. A plaintiff need not know the full extent of the injury before
limitations begins to run. Murphy v. Campbell, 964 S.W.2d 265, 273 (Tex.
1997).
Here,
Mrs. Dean’s deposition testimony shows that the Deans first observed cracking
in the garage in July 1996 while the house was under construction. In an
affidavit attached to the Deans’ summary judgment responses, Mrs. Dean
testified that after they moved into the house, they noticed “more minor
problems” with cracking in the garage and “various places” in the house,
but they were assured that “these were normal cosmetic cracks that would occur
with settlement of the [r]esidence.” But there is no indication as to who
assured them so. Lewis’s affidavit states that after construction of the home
was completed, he received a letter from Mr. Dean indicating that there had been
movement in the foundation. But he could not locate the original letter, and the
Deans did not produce it. The evidence also shows that by October 1997, when
Nader began to call meetings regarding the problem, the parties had begun
investigating chemically injecting the soil to dry up the moisture level.
According to Nader’s deposition testimony, the October 1997 meeting was called
because the Deans noticed cracking in the dry wall in the house, indicating
movement. And Mrs. Dean admitted that she was aware at that time that movement
in the soil precipitated this investigation.
Mrs.
Dean’s affidavit testimony indicates that several repairs were made in 1997
and 1998 and that in 1998 DLBI made repairs to the sheetrock. In his affidavit
testimony, Lewis stated that after the October 1997 meeting, he sent one of his
employees to the house to dig a hole in front of the slab so that the parties
could inspect it. A January 27, 1998 memorandum written by Nader, which was
copied to the Deans, says that in January, Nader conducted the third in a series
of monthly meetings at the Deans’ house. The memorandum states that Pro
Chemical conducted “experimental probes” in December 1997, and that same
month, holes were dug in the garage floor. Nader indicates that Mrs. Dean
reported to him on January 14, 1998 that water was present in one of the holes.
Thus, the evidence shows that no later than December 1997 the Deans themselves
were aware that soil movement was causing cracking in their home to the extent
that testing and monitoring of the foundation was necessary.
The
Deans contend that they could not have discovered the soil movement that caused
the foundation problems until August 1998, when they received a report by an
engineer that concluded the soil under the house had expanded more than HBC
originally predicted. The Deans say this report at least creates a fact issue as
to whether they could have discovered the full extent of the problem before
August 1998. Until they received the report, they thought the foundation
problems were only minor and could be repaired cosmetically. Mrs. Dean’s
summary judgment affidavit states that she “realized the foundation needed
repairs” when she read the report. But the Texas Supreme Court tells us that
the discovery rule does not linger until a claimant learns of actual causes and
possible cures. Instead, it tolls limitations only until a claimant learns of a
wrongful injury. Thereafter, the limitations clock is running, even if the
claimant does not yet know:
•
the specific cause of the injury;
•
the party responsible for it;
•
the full extent of it; or
•
the chances of avoiding it.
PPG
Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79,
93-94 (Tex. 2004) (footnotes omitted). The summary judgment evidence shows that
the Deans knew there was some cracking in the house and, thus, movement in the
foundation in 1996 and 1997; they just did not know the extent of the work or
expense necessary to repair it. Moreover, Nader testified in his deposition that
in October 1997, when the parties first began meeting to address these very
concerns, the Deans could have hired an engineer to do the same type of
engineering report that they eventually received in August 1998. In addition,
the summary judgment evidence supports the conclusion that Nader was acting as
the Deans’ agent with regard to the investigation of the cause of the cracks
in the home’s foundation;4 thus, Nader’s
knowledge of the foundation problems can be imputed to the Deans. See Gibson
v. Bostick Roofing & Sheet Metal Co., 148 S.W.3d 482, 491 (Tex.
App.—El Paso 2004, no pet.). According to Lewis’s affidavit, the
participants at the October 1997 meeting discussed that there was some movement
in the foundation of the Deans’ home. Thus, the evidence shows that
Nader was aware of such movement as early as October 1997. Accordingly,
the evidence shows that the Deans knew or should have known of the injury to
their home no later than October 1997. Therefore, the statute of
limitations began to run at that time so that by the time the Deans filed suit
in January 2002, the limitations period had expired on all of their claims
against the appellees.
Equitable Estoppel
The
Deans also contend that they raised a fact issue as to whether the appellees
were equitably estopped from asserting limitations. The Deans contend that the
appellees’ conduct induced them to believe that the appellees would pay for
any necessary repairs to the home’s foundation. The doctrine of equitable
estoppel requires (1) a false representation or concealment of material facts;
(2) made with knowledge, actual or constructive, of those facts; (3) with the
intention that it should be acted on; (4) to a party without knowledge or means
of obtaining knowledge of the facts; (5) who detrimentally relies on the
representations. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc.,
962 S.W.2d 507, 515-16 (Tex. 1998). Estoppel in avoidance of limitations may be
invoked in two ways: either a potential defendant conceals facts that are
necessary for the plaintiff to know he has a cause of action or the defendant
engages in conduct that induces the plaintiff to forego a timely suit regarding
a cause of action that the plaintiff knew existed. Rendon v. Roman Catholic
Diocese of Amarillo, 60 S.W.3d 389, 391 (Tex. App.—Amarillo 2001, pet.
denied). The Deans contend that the appellees engaged in the latter.
In
order for the Deans to raise a fact issue on their estoppel by conduct claim,
they must have presented some evidence that the appellees’ conduct
affirmatively induced them into delaying suit beyond the limitations period,
unmixed with any want of diligence on their part. See id.; Ladd v.
Knowles, 505 S.W.2d 662, 669 (Tex. App.—Amarillo 1974, writ ref’d n.r.e.).
“Implicit in this test are the requirements that the plaintiffs knew they had
a cause of action, that the cause of action had accrued at the time the
inducement occurred, and that their initial and continued reliance upon the
original inducement was reasonable.” Rendon, 60 S.W.3d at 391. A
plaintiff may not “blindly rel[y] upon a situation as being what it seemed
rather than as being what it in reality was.” Leonard v. Eskew, 731
S.W.2d 124, 129 (Tex. App.—Austin 1987, writ ref’d n.r.e.) (op. on reh’g).
According
to Mrs. Dean’s affidavit, she did not seek legal counsel between August 1998
and December 2001
based upon: (i) the numerous meetings between the Architect and other engineers
and contractors; (ii) the work activity performed at the Residence to study the
problem; (iii) the estimates for the repairs generated by Extra Mile
Corporation; (iv) [her] understanding that once a repair plan was agreed upon,
repairs would be made to the foundation at no cost to Mr. Dean and [her]; and
(v) [her] respect and trust of the Architect and Builder. If the meetings or
work would have stopped, or it was communicated to [her] that [she and] Mr. Dean
. . . were required to pay for some or all of the repairs to the foundation,
[she] would have sought legal advice and filed suit, if that was necessary.
The
thrust of the Deans’ assertions that they raised a fact issue on equitable
estoppel is that none of the appellees ever told the Deans that they would not
pay for any and all necessary foundation repairs—not that any of the appellees
affirmatively told the Deans they would pay for such repairs—and that that
silence, along with the summary judgment evidence showing that the appellees had
met about the foundation problem, hired professionals to investigate the source
of the problem and provide price estimates for necessary repairs, and made at
least some attempts to repair damage at no cost to the Deans, induced the Deans
to forego filing suit until after the applicable limitations periods had
expired. The Deans do not claim that any appellee made any affirmative
misrepresentation to prevent them from filing suit.
However,
the Deans specifically point to the following evidence to support their
assertions:
• letters
from Nader to the Deans informing them about his site checks at the house, the
recommendation of the engineer who performed the 1998 site assessment, and the
“plan of action for the project”;5
• a
December 15, 1999 letter from Nader to Timothy Potvin, Senior Claims Examiner
for Lexington Insurance, Nader’s insurer, which states,
As you remember from the first mitigation project that was accomplished last
year, we have exceeded our deductible for this claim. We have forwarded copies
of this proposal to . . . Neal . . . and . . . HBC for their review. I have
requested that the costs for this project be shared as was done on the earlier
work with which you are familiar. If you concur with our plan for this project,
I will proceed to have an attorney negotiate a settlement agreement that might
encompass release of all claims upon completion of this project and the
following cosmetic repairs, which have not been estimated.6
• a
copy of what appears to be a check stub from Neal with the date “1-29-99,”
the amount of “$3,000.00,” and “Dean residence” written on it, and a
January 20, 1999 check request for $3,000 from Barnes, which appears to be on an
HBC form, that says it is to NDG for “part of an agreement to mitigate
movement [in] a house slab” and a letter to Nader stating the check is
enclosed pursuant to his “January 13, 1999 transmitttal”;
• references
in Mrs. Dean’s affidavit to letters from Nader (1) to the Deans regarding a
plan that could be used to obtain pricing from contractors, (2) to Extra Mile
Construction enclosing a floor plan of the property, project boundary, and
structural drawings, stating, “We would like to begin this project sometime
after the first of the year,” and (3) to Potvin dated March 2, 2001 that
Dean’s affidavit says “further confirmed to us that the [appellees] had
reached an agreement on a repair plan and that their insurance companies were
aware of the plan and would assist in repairs”;7
• a
copy of a May 22, 2001 letter from Nader to James Schwartz, who the Deans
contend is Lexington’s attorney, stating that a meeting is to be held among
the parties and that the purpose of the meeting is “to come to an agreement on
determining the success of the proposed project and its ramifications toward the
conclusion of this matter”;
• allegations
in Mrs. Dean’s affidavit that Capshaw, HBC’s attorney, said at a June 2001
meeting that the insurance carriers wanted a commitment that they would be
writing a check for an amount that would repair all of the problems and that he
advocated releasing the original design team and letting the insurance carriers
pay the new people to solve the problems; and
• an
August 23, 2001 letter from Nader stating that he had reviewed a design plan
Mrs. Dean gave him, expressing concerns about issues that might be encountered
executing that plan, and stating, “Otherwise, it looks as though you have a
plan with which to proceed. Let us know if there is anything else we can do to
help move the process along.”
Although
this evidence suggests that there may have been an agreement among Nader, Neal,
and HBC to undertake or to pay for some repairs to the residence, there is no
evidence that the Deans were personally aware of any specific payments from Neal
or HBC or that they were aware of any specific agreement among the appellees to
pay for foundation repair to the home. Moreover, although there is some evidence
that Nader was acting as an agent for the Deans, there is no evidence that Nader
was acting as agent for any of the appellees; thus, we do not believe that
Nader’s letters to the Deans regarding plans for “the project” raise a
fact issue as to whether the appellees’ conduct estopped them from asserting
limitations.
The
rest of the evidence pointed to by the Deans raises a fact issue only as to
whether HBC and Nader sought coverage from their insurance carriers for the
damages now claimed by the Deans. Although Nader’s 2001 letter to Schwartz,
the attorney for Nader’s insurance carrier, states that “the parties” were
to meet to discuss an agreement on the project, it does not state who the
“parties” are, and there is no mention of Neal or Lewis and DLBI by name.
Nor is there any reference to their attorneys. But Nader’s 1999 letter to
Potvin, an adjuster for Nader’s insurance carrier, indicates that Nader sought
coverage regarding the foundation problems. And in her affidavit, Mrs. Dean
references participation in a meeting by Capshaw, HBC’s attorney, and his
statements about the conditions on which the insurance companies8 would settle. Thus, we conclude the evidence raises a fact
issue only as to whether Nader and HBC sought insurance coverage for the claim.
The statement in Mrs. Dean’s affidavit that references a 2001 letter from
Nader to Potvin and avers that it “further confirmed . . . that the
[appellees] had reached an agreement on a repair plan and that their insurance
companies were aware of the plan and would assist in repairs,” standing alone,
is conclusory and, thus, not proper summary judgment evidence. See Seaway
Prods. Pipeline Co. v. Hanley, 153 S.W.3d 643, 653-54 (Tex. App.—Fort
Worth 2004, no pet.).
Thus,
the summary judgment evidence shows two courses of conduct by the appellees that
the Deans rely on: initial attempts to repair the foundation by Nader and the
appellees, and attempts by Nader and HBC to have insurance companies pay for the
more extensive repairs. We do not believe this evidence raises a fact issue on
the Deans’ equitable estoppel avoidance to appellees’ limitations defense.
An
unsuccessful effort to make repairs does not toll the statute of limitations for
purposes of determining when a cause of action accrued. See Pako Corp. v.
Thomas, 855 S.W.2d 215, 219 (Tex. App.—Tyler 1993, no writ); see also
Muss v. Mercedes-Benz of N. Am., Inc., 734 S.W.2d 155, 159-60 (Tex.
App.—Dallas 1987, writ ref’d n.r.e.) (applying same rule to equitable
estoppel case, but relying on case analyzing when cause of action accrued). And
we have not found any cases in which the mere making of repairs, without more,
estopped a defendant from asserting limitations. See, e.g., Gibson v. John D.
Campbell & Co., 624 S.W.2d 728, 730, 732-33 (Tex. App.—Fort Worth
1981, no writ) (holding that builder was estopped from asserting limitations
when builder made initial repair to home and assured homeowner problem was
repaired and, after homeowner discovered foundation problems, repeatedly assured
homeowner that repairs would be made, sent agent to home to take out ruined
carpet and floorboards, and offered to pay for forty percent of cost of
replacement carpet). We believe such a rule would discourage parties providing
goods and services from extending warranties and attempting to repair minor
problems without first conducting an extensive investigation to determine
liability. Thus, we conclude that appellees’ attempts to make initial repairs
to the residence do not raise a fact issue as to equitable estoppel.
Further,
absent fraud or bad faith, statements made during settlement negotiations do not
waive a defendant’s right to assert limitations. Compare Lockard v. Deitch,
855 S.W.2d 104, 105-06 (Tex. App.—Corpus Christi 1993, no writ) (holding
statement in letter from defendant’s insurance carrier to plaintiff stating,
“Once you have the final specials and medical reports to submit to us for
evaluation, we will try to work towards a settlement with you,” did not raise
fact issue on plaintiff’s equitable estoppel claim) with Frank v. Bradshaw,
920 S.W.2d 699, 702-03 (Tex. App.—Houston [1st Dist.] 1996, no writ) (holding
that insurance adjuster’s statement to plaintiffs that if they sent him their
bills, he would pay them, raised a fact issue as to whether defendant was
estopped from asserting limitations). Thus, we do not believe that Nader’s and
HBC’s seeking insurance coverage is conduct that could have reasonably induced
the Deans into delaying suit. On the contrary, such conduct should have alerted
the Deans that Nader and HBC thought the Deans’ claims were actionable.
We
do not wish to appear unsympathetic to the Deans. Their willingness to give
appellees the opportunity to attempt a resolution of this matter without hastily
resorting to litigation is admirable. But however admirable, the Deans’
reliance on the appellees’ conduct presented as summary judgment evidence does
not support their equitable estoppel argument. That evidence indicates that the
majority of the conduct relied upon by the Deans was attributable to Nader,
rather than the appellees. It also indicates that Nader was acting as the
Deans’ agent throughout the time the Deans allege they were induced into
delaying their lawsuit.
Viewing
the evidence in the light most favorable to the Deans, we conclude that it does
not raise a genuine issue of material fact on their assertion that the appellees
are equitably estopped from asserting limitations. Thus, the trial court did not
err in granting summary judgment as to all causes of action and as to all of the
appellees on limitations grounds. We overrule the Deans’ first issue.
Conclusion
Having
determined that the trial court did not err in granting summary judgment for all
of the appellees on limitations grounds,9 we affirm
the trial court’s summary judgments in favor of the appellees on the Deans’
claims.
TERRIE
LIVINGSTON
JUSTICE
PANEL
B: LIVINGSTON, GARDNER, and MCCOY, JJ.
DELIVERED:
May 19, 2005
NOTES
1.
The laundry room, kitchen area, entry, and master bedroom.
2.
The Deans never sued their architect, Nader, individually.
3.
See Tex. Civ. Prac. & Rem.
Code Ann. §§ 16.003 (two years), 16.004 (four years) (Vernon 2002).
4.
In his deposition, Nader testified that the October 1997 meeting was called
because the Deans “had noticed cracking in their floor slab and movement or --
or cracking in drywall that indicated that there might be movement of the
foundation” and that they called him. Additionally, the summary
judgment record indicates that Nader coordinated all of the meetings and
investigations regarding the home’s foundation problems and obtained all plans
and pricing for any proposed mitigation. In fact, the 1998 engineering
report—which the Deans claim is the first indication they had that the soil
had caused foundation movement—was addressed to Nader, and Nader admitted that
he hired the engineer to prepare the report and paid his bills.
5.
One of these letters, dated September 28, 1999, states that Ralph Barnes of HBC
“is in the process of reviewing the attached site plan, which indicates the
proposed location of 3 monitoring wells and 1 permanent bench mark. These items
have been recommended by [the 1998 site assessment engineer] to monitor pre and
post construction water levels. Ralph will help to develop the implementation of
this element.”
6.
There is no evidence that the Deans were copied with or otherwise informed about
this letter or its contents.
7.
These letters are not in the appellate record.
8.
Mrs. Dean’s affidavit does not specify which insurance companies Capshaw was
referring to.
9.
Because we have determined that the trial court did not err in granting summary
judgment on limitations grounds, we need not address the Deans’ second and
third issues that contend the trial court erred in granting summary judgment on
substantive grounds. See Tex. R.
App. P. 47.1.