DocketNumber: NO. 01-17-00515-CV
Citation Numbers: 571 S.W.3d 324
Judges: Bland, Keyes, Massengale
Filed Date: 12/20/2018
Status: Precedential
Modified Date: 10/19/2024
This is an appeal from a case dismissed based on a limitations defense. The appellants are the adult children of Ernal Lewis, Sr., who died in 1982. The appellants were minors at the time of their father's death. In 2014, they sued Walker Arenson, who was the independent administrator of their father's estate, seeking an accounting and alleging causes of action for fraud by nondisclosure, negligent misrepresentation, breach of fiduciary duty, professional negligence, and violation of the Deceptive Trade Practices Act. The trial court granted Arenson's motion for summary judgment *328on the affirmative defense of limitations.
On appeal, the appellants contend that the court erred by granting summary judgment in Arenson's favor. They raise various challenges to the summary-judgment evidence, including an argument that the court should not have considered Arenson's affidavit because it contradicted his earlier deposition testimony. In asserting that genuine issues of material fact precluded summary judgment, they argue their claims did not accrue when they received their inheritance checks because Arenson breached his fiduciary duties by failing to make a full disclosure of all material facts. Thus they contend that the discovery rule and the doctrine of fraudulent concealment deferred accrual of their causes of action.
The summary-judgment evidence showed that with the exception of a petition for an accounting, the appellants' claims were first filed and served on November 29, 2014. But because they were on inquiry notice by the early 1990s, more than four years before asserting their claims against Arenson, the relevant claims were barred by limitations. Accordingly, we affirm.
Background
Ernal Lewis, Sr. died in a car accident in April 1982. At the time of his death, he was 70 years old and married to his wife, Gertrude. He also was survived by three children he had with his ex-wife, Zella Mae Brown, all of whom were still minors at the time of his death-Mary (age 13), Lenthan (age 9), and Ernal, Jr. (age 7).
Zella hired attorney Walker Arenson to probate a 1980 will. That will purportedly bequeathed all of Lewis's real property to his children in trust, and it named Zella as trustee and executor. Representing Zella in her capacity as the children's guardian ad litem, Arenson filed an application to probate the will and for issuance of letters testamentary.
Zella later renounced her right to serve as executor and trustee, and Arenson was appointed temporary administrator with the power to take possession of all of Lewis's assets, to pay probate court costs and attorney's fees, to sue and defend lawsuits, to protect the estate, and "to disburse" money from the estate to "Zella Mae Brown, as agreed upon by all of the Decedent's heirs." Arenson filed a document titled "Verified Exhibit Showing Condition of Estate," which showed that the estate consisted of real property in Lee County, Texas valued at $250,000 and a one-half community interest in real property in Travis County valued at $8,500. The court authorized Arenson to sell the Lee County property "in order to pay expenses of the administration and allowances."
Meanwhile Lewis's brother, L.V. Bradshaw, filed a will contest and argued that the 1980 will had been procured by Zella's undue influence at a time when Lewis lacked testamentary capacity. Bradshaw ultimately withdrew his challenge. The court ruled that Lewis died intestate, appointed Arenson as independent administrator, and identified Lewis's heirs as his widow and his three children. The court's order stated that "the heirship of Decedent has been fully and satisfactorily proved as well as the identity of the nature of Decedent's property as being separate or community and the interest and shares of each of the heirs therein." The order further stated that, at the request of "all distributees of the Decedent," "no other action shall be had in this Court in relation to the settlement of Decedent's Estate other than the return of an Inventory, Appraisement, and List of Claims as required by law."
*329Due to Zella's inability to fulfill parental responsibilities, the children were placed in foster care and separated from each other for the rest of their childhood. Still, Mary and Lenthan knew that their father had left them money. Mary learned it from a counselor in a group home. In 1986, when Mary turned 18, Arenson invited her to his office and gave her a check. She testified: "He just said that this is what your father left and I got the check and that was it." She did not ask Arenson any questions. Mary estimated that the check was for $25,000, which she used for housing and living expenses.
Lenthan was injured in the accident that killed his father. He testified that his memory was "kind of vague," but he was "probably 13, 14" years old when he first learned from his foster-care providers that his father had left him some money, and they advised him to speak to Arenson when he turned 18. Lenthan did not ask how much money he had inherited. Like his sister, when he turned 18, he went to Arenson's office. Lenthan received a check for $37,000, and he did not ask Arenson any questions.
Ernal, Jr., the youngest sibling, testified that he received a check in 1993, before his eighteenth birthday. Unlike his siblings, he was surprised when his foster parents told him they had received a phone call from a lawyer about a check. Accompanied by his foster father, Ernal, Jr. visited Arenson's office. He testified: "I remember this very well. He opened the door and he just reached out and handed me a check and he didn't say two words to me. And he walked right back in his office, and that was it." Ernal, Jr. received a check for approximately $38,000. He said the check looked like a personal check, and he recalled that "Austin National Bank" was printed on it. Neither Ernal, Jr. nor his foster father asked Arenson any questions. Ernal, Jr. said he "thought maybe it came from the State or something." After he received the check, he never called Arenson.
According to Lewis's now-adult children, they learned in 2011 that their father signed a will that purported to create a trust for them. Ernal, Jr. averred:
There was more than $250,000 in my father's estate in 1983 but there is NO record of what happened to these funds. The only thing we have recently learned is that all of this $250,000 was entrusted to Walker Arenson as independent administrator of my father's estate and as the trustee of our children's trust. We have no idea where the money went over the years.
Lewis's children hired an attorney. In a letter dated July 12, 2012, the attorney sent a letter to Arenson that stated: "My clients were quite young when their father ... passed away. At the moment, I am reviewing certain matters for them." The letter requested information and files relating to Lewis's estate. Arenson did not respond to the initial request.
A month later, the lawyer sent another letter. It stated:
Over one month ago, I wrote to you concerning your prior representation of my clients-Ernal Lee Brown Jr. (a.k.a. Ernal Lee Lewis Jr.), Mary Ola Brown (a.k.a. Mary Ola Lewis and Mary Williams), Lenthan Dwayne Brown (a.k.a. Lenthan Dwayne Lewis) (collectively, "my clients"). My clients are heirs of the Estate of Ernal Lee Lewis, Sr., (the "Estate"). It appears that you have also represented the Estate and Zella May Brown, who is the mother of my clients.
I asked you to provide certain information, including your attorney files, but you have not done so, nor have you given me the courtesy of a reply.
*330My clients have advised me that they have called you in the past few months and that you have talked to them on the phone several times and invited them to your office to locate materials. You delivered checks of a large amount to each of my clients in your office on three separate occasions. My clients believe that you were their former attorney as well as the former attorney for their mother, from whom they have heirship. Court records appear to confirm such.
In April 2013, Lewis's children filed a petition for an accounting and inventory. Arenson was deposed in July 2014, and he testified that he had disposed of all the records he had relating to Lewis's estate in 2007. This included bank statements and tax returns.
In November 2014, Lewis's children amended their petition to add claims for fraud by nondisclosure, negligent misrepresentation, breach of fiduciary duty, professional negligence, and violation of the Deceptive Trade Practices Act. They subsequently amended their petition again to specify actual and exemplary damages and to request certain findings of fact.
Arenson filed a motion for summary judgment. Among other grounds, he asserted the affirmative defense of limitations, arguing that the claims against him were barred because they accrued when the appellants "received their allegedly insufficient checks upon turning 18." He contended that the claims accrued between 1986 and 1993, and by 2014 the limitations periods had long since expired. His summary-judgment evidence included his affidavit, court filings, and orders in the Lewis probate matter, and excerpts from the depositions of Lewis's children.
Among other things, Lewis's children responded that the limitations period should be tolled because of Arenson's fraud and application of the discovery rule. They argued that Arenson was their fiduciary and that he fraudulently concealed material facts and intentionally destroyed records.
The trial court granted Arenson's motion for summary judgment on limitations *331grounds, denied summary judgment on all other grounds, and severed the petition for an accounting into a separate cause number. The appellants filed a motion for new trial, which the trial court denied.
Analysis
Lewis's children asserted claims against Arenson for fraud by nondisclosure, negligent misrepresentation, breach of fiduciary duty, professional negligence, and violation of the Deceptive Trade Practices Act. The generally applicable limitations periods for these claims are two or four years.
"The primary purpose of statutes of limitations is to compel the exercise of a right of action within a reasonable time so that the opposing party has a fair opportunity to defend while witnesses are available and the evidence is fresh in their minds."
On appeal, we review a trial court's summary-judgment ruling de novo.
To prevail on a traditional summary-judgment motion, a movant must prove that there is no genuine issue regarding any material fact and that he is entitled to judgment as a matter of law.
Lewis's children assert that the trial court erred by granting summary judgment on limitations. They raise evidentiary objections to Arenson's summary-judgment proof. They further contend that the discovery rule should apply, and that because Arenson breached his fiduciary duty by failing to fully disclose material facts, he was not entitled to a limitations defense.
I. Challenges to movant's supporting affidavit
Lewis's children argue in their brief, as they did in the trial court, that Arenson's affidavit supporting his motion for summary judgment was "a compendium of self-serving conclusions disguised as an affidavit of fact," and that it "contained unsubstantiated opinion." As such, they argue that the affidavit was inadequate to establish the limitations defense for purposes of summary judgment. Lewis's children also complain that the affidavit conflicted with his prior deposition testimony.
Objections to a summary-judgment affidavit must be specific and non-conclusory.
The argument that Arenson's affidavit conflicts with his earlier deposition testimony suggests that the affidavit was "not credible" and the deposition should be "given greater weight." However, Lewis's children do not identify any particular statement from Arenson's affidavit that directly conflicts with his deposition testimony that he could not remember various facts relating to the claims against him. The appellants make no argument that the affidavit should have been struck or disregarded for this reason. A trial court may require an explanation when an affidavit conflicts with prior testimony and appears to be a sham to avoid summary judgment, and it may grant summary judgment despite the conflicting evidence in the absence of a sufficient explanation.
We overrule the evidentiary challenges to Arenson's summary-judgment proof.
II. Limitations defense
The Supreme Court of Texas has recognized two distinct doctrines that may delay accrual of a claim or toll limitations: the discovery rule and fraudulent *333concealment.
"The fraudulent concealment doctrine, unlike the discovery rule, resembles equitable estoppel."
A. Application of discovery rule
Lewis's children contend that the court improperly applied the discovery rule in their case.
"Texas courts have refused to apply the discovery rule to claims arising out of probate proceedings in most instances, however, even in the face of allegations of fraud."
The argument that Lewis's children's injury was undiscoverable to them because of their lack of education and support is a fact-specific argument rather than a categorical argument. The Supreme Court has "restricted the discovery rule to exceptional cases to avoid defeating the purposes behind the limitations statutes,"
*334and it has repeatedly determined the applicability of the discovery rule based on a "categorical approach," rather than a fact-specific approach, to bring "predictability and consistency to the jurisprudence."
"A person is charged with constructive notice of the actual knowledge that could have been acquired by examining public records."
The summary-judgment evidence showed that on December 14, 1982, Arenson filed a verified exhibit in the probate court indicating that Lewis's estate was valued at approximately $258,500, including land in Lee County, which was later sold with court approval. Arenson was later appointed as the independent administrator of Lewis's estate, and the order appointing him identified the heirs as Lewis's children and his widow. Between 1986 and 1993, each of the children received checks upon turning eighteen, which came to a total value of approximately $100,000. Each appellant provided summary-judgment evidence that upon delivering a distribution check, Arenson did not provide any other information about the inheritance or the extent of Lewis's estate. To the extent these facts establish or suggest the possibility of an injury, a person exercising reasonable diligence could have discovered it based on known information, supplemented by the public record. Thus the injury alleged by the plaintiffs was not inherently undiscoverable, and the discovery rule does not apply.
B. Fraudulent concealment
Lewis's children also contend that the trial court erred by granting summary judgment on limitations because they raised genuine questions of material fact on their allegation of fraudulent concealment. Because the discovery rule does not apply, it was the appellants' burden to adduce summary-judgment proof raising a fact issue concerning their fraudulent-concealment affirmative defense against the application of the statutes of limitations.
"Fraudulent concealment requires either the active suppression of truth or the failure to disclose when there is a duty to speak."
As the administrator of Lewis's estate, Arenson had a fiduciary duty to the appellants, who were heirs of their father and interested in his estate.
The legal effect of fraudulent concealment does not extend limitations periods indefinitely.
So too in this case. For the same reasons we concluded the claims in this case were not inherently undiscoverable, the exercise of reasonable diligence also would have led to their discovery within the applicable limitations periods. As the Supreme Court held in Mooney v. Harlin , a person "is charged with constructive notice of the actual knowledge that could have been acquired by examining public records," and "[w]hen evidence of fraud may be disclosed by examination of public *336records ... limitations will begin to run from the time the fraud could have been discovered by the exercise of ordinary diligence."
The summary-judgment evidence thus showed that Lewis's children were on inquiry notice of their potential claims against Arenson as of the time they reached the age of majority and received their inheritance checks. Accordingly, the trial court correctly granted summary judgment in Arenson's favor on limitations grounds with respect to the claims for breach of fiduciary duty and fraud by nondisclosure.
Conclusion
The trial court properly granted summary judgment on the basis of limitations as to all claims asserted in this litigation. We affirm the trial court's judgment.
In an affidavit submitted in support of his motion for summary judgment, Arenson averred:
In 2007 after going through a divorce I decided to stop renting a storage unit that I had rented for some time in north Austin. It contained old records that I did not believe were needed anymore, including records pertaining to Ernal's Estate. Any work for this Estate ended in 1983 or 1984, and, according to Ernal's children, the final distribution from the estate occurred at the latest in 1993. I had absolutely no reason to think that anything would ever come up again on this estate which by 2007 had ended twenty-five years earlier. I had any records pertaining to this Estate as well as many other records destroyed in 2007 when I gave up the storage unit.
The children alleged that Arenson acted as their fiduciary in multiple capacities: as a fiduciary holding funds belonging to them based on common-law agency principles; as an independent administrator of their father's estate; as a formal or informal trustee for a "Children's Trust" that was supposed to be established for them; as an informal guardian of their assets when they were minors and when they were in foster care; and as their attorney.
See Tex. Civ. Prac. & Rem. Code § 16.003(a) (two-year limitations period for torts); id. § 16.004(a)(4)-(5) (four-year statute of limitations for fraud and breach of fiduciary duty); id. § 16.051 (four-year residual statute of limitations); Tex. Bus. & Com. Code § 17.565 (two-year statute of limitations for DTPA claims); HECI Expl. Co. v. Neel ,
See Tex. Civ. Prac. & Rem. Code § 16.001(a)(1).
See
Willis ,
E.g. , Valdez v. Hollenbeck ,
Little v. Smith ,
Frost Nat'l Bank v. Fernandez ,
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding ,
Mack Trucks, Inc. v. Tamez ,
Tex. R. Civ. P . 166a(c) ; Little v. Tex. Dep't of Criminal Justice ,
KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp. ,
See Tex. R. Civ. P . 166a(f) ; Seaprints, Inc. v. Cadleway Props., Inc. ,
See Lujan v. Navistar, Inc. ,
See Valdez ,
Via Net v. TIG Ins. Co. ,
Shell Oil Co. v. Ross ,
HECI Expl. ,
Wagner & Brown, Ltd. v. Horwood ,
S.V. ,
BP Am. Prod. Co. v. Marshall ,
The appellants allude to the continuing-tort doctrine and the fact that Arenson filed an inventory in 2014 in which he stated that he was the independent administrator of the estate. They do not explain how or why this would defeat Arenson's motion for summary judgment on limitations. Their argument about the continuing-tort doctrine is inadequately briefed. See Tex. R. App. P . 38.1(i) ; see also Exxon Mobil Corp. v. Rincones ,
Little ,
Via Net ,
Apex Towing Co. v. Tolin ,
Mooney ,
See Tex. Est. Code § 22.018(1).
Mooney ,
See KPMG ,
BP Am. Prod. ,
AT&T Corp. v. Rylander ,
Valdez ,
Valdez ,
Willis ,
See Huie v. DeShazo ,
See Valdez ,
Kerlin v. Sauceda ,
E.g. , Hooks v. Samson Lone Star, Ltd. P'ship ,