Affirmed and Memorandum Opinion filed June 19, 2003

Affirmed and Memorandum Opinion filed June 19, 2003.

In The

Fourteenth Court of Appeals

____________

NO. 14-02-00756-CV

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ANANT N. MAUSKAR, Appellant

V.

JOSEPH E. HARDGROVE, Individually, and as Agent and/or Broker for GENERAL AMERICAN LIFE INSURANCE COMPANY, GENERAL AMERICAN LIFE INSURANCE COMPANY, GOGU DAMODHAR REDDY, Individually, and as Agent and/or Broker for NEW ENGLAND LIFE INSURANCE COMPANY, and NEW ENGLAND LIFE INSURANCE COMPANY, Appellees

On Appeal from the 164th District Court

Harris County, Texas

Trial Court Cause No. 2000-33777

M E M O R A N D U M   O P I N I O N

Appellant, Anant N. Mauskar, appeals the summary judgments granted in favor of appellants, Joseph E. Hardgrove, Individually, and as Agent and/or Broker for General American Life Insurance Company, General American Life Insurance Company, Gogu Damodhar Reddy, Individually, and as Agent and/or Broker for New England Life Insurance Company, and New England Life Insurance Company, on the affirmative defense of statute of limitations.  We affirm. 

                                                             I. Background

This case involves the sale of several insurance policies issued by Security Mutual Insurance Company of New York, General American, and New England Life to Mauskar.  In December 1982, Joseph Hardgrove sold Mauskar a whole life policy issued by Security Mutual with a death benefit of $750,000 and an annual premium of $21,595. In January 1988, Joseph Hardgrove sold Mauskar a whole life policy issued by General American with a death benefit of $950,000 and an annual premium of $31,085.50.  In August 1990, and May 1992, Gogu Damodhar Reddy sold Mauskar two policiesCan ordinary life policy with a death benefit of $600,000 and an annual premium of $21,695 and another ordinary life policy with a death benefit of $250,000 and an annual premium of $10,075, issued by New England Life. 

Mauskar claims he explained to Hardgrove and Reddy that he wanted to purchase insurance policies similar to policies he had previously purchased in India and England that were for definite term, which, through dividends and bonuses during the life of the policies, in addition to a return of the premiums plus interest, would pay approximately two or three times the death benefit when he reached age 65.  Mauskar alleges Hardgrove and Reddy represented to him that the Security Mutual, General American, and New England Life policies met his requirements, i.e., they would pay at least two to three times the death benefit when he reached age 65. 

On September 13, 1997, Mauskar turned 65, but he did not cash in the policies at that time.  In his petition, Mauskar asserts that on July 9, 1998, he “started becoming aware that the insurance which had been purchased for him offered no retirement income and payments continued as long as the policies were in effect or until the age of 95 years.”  Mauskar cashed in the policies in 1999, but did not receive the return he alleges to have been promised. 

On July 5, 2000, Mauskar sued Hardgrove, Reddy, General American, and New England Life for negligent procurement, negligent misrepresentation, fraud, and violations of the Texas Deceptive Trade PracticesBConsumer Protection Act (ADTPA@) and the Texas Insurance Code, and sought an award of the Abenefit of the bargain@ or, alternatively, rescission of the insurance policies.  In response to appellees= assertion that Mauskar=s claims were time-barred by the statute of limitations, Mauskar asserted the discovery rule, fraudulent concealment, continuing tort, promissory estoppel, and the existence of a fiduciary relationship.  Each appellee moved for summary judgment on statute of limitations.  The trial court granted all motions for summary judgment and on June 17, 2002, entered a final judgment.^[1]

                                                    II. Standard of Review

If the defendant moves for summary judgment on the basis of an affirmative defense such as limitations, it has the burden to prove conclusively all the elements of the affirmative defense as a matter of law.  Gross v. Kahanek, 3 S.W.3d 518, 520 (Tex. 1999); KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999); Velsicol Chem Corp. v. Winograd, 956 S.W.2d 529, 530 (Tex. 1997).  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.  KPMG Peat Marwick, 988 S.W.2d at 748. 

The statute of limitations does not begin to run until the cause of action accrues.  Houston Endowment, Inc. v. Atlantic Richfield Co., 972 S.W.2d 156, 159 (Tex. App.CHouston [14th Dist.] 1998, no pet.).  Generally, a cause of action accrues when a wrongful act causes some legal injury, even if the fact of injury is not discovered until later, and even if all resulting damages have not yet occurred.  Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997).  When a cause of action accrues is a question of law for the court.  Loyd v. ECO Resources, Inc., 956 S.W.2d 110, 126 (Tex. App.CHouston [14th Dist.] 1997, no pet.); Ross v. Arkwright Mut. Ins. Co., 892 S.W.2d 119, 131 (Tex. App.CHouston [14th Dist.] 1994, no writ). 

                            III. Accrual of Mauskar=s Causes of Action

Mauskar argues his claims did not accrue until 1999, when he cashed in his policies.  In support of this contention, Mauskar cites a denial of insurance case decided by the First Court of Appeals.  See All-Tex Roofing, Inc. v. Greenwood Ins. Group, Inc., 73 S.W.3d 412 (Tex. App.CHouston [1st Dist.] 2002, pet. denied).  In that case, All-Tex contacted Greenwood about purchasing a $2 million general liability policy.  Id. at 414.  Greenwood wrote a $1 million policy and asked a broker, Jensvold, to procure an additional $1 million in coverage.  Id.  Jensvold obtained another policy from Resure, Inc., but later learned that Resure was insolvent.  Id. Greenwood informed All-Tex of Resure=s insolvency and that the policy would be cancelled effective March 27, 1997.  Id.  Greenwood explained in a letter to All-Tex that the Illinois Exchange Guaranty Fund would provide up to $300,000 per claimant on any claims that occurred under Resure=s policies.  Id.  On March 27, 1997, All-Tex answered a personal injury suit, and on March 26, 1999, a judgment was entered against All-Tex for $1.3 million.  Id.  All-Tex sued Greenwood and Jensvold on June 2, 1999, for negligence and violations of the DTPA for placing its insurance with an insolvent insurer.  Id.  On July 23, 1999, the Illinois Exchange Guaranty Fund refused the $300,000 indemnity to All-Tex because the claim was excluded under the Resure policy.  Id. 

The court of appeals rejected Greenwood=s argument that All-Tex suffered damages authorizing a judicial remedy on March 6, 1997, when All-Tex learned of Resure=s insolvency or on March 27, 1997, when the Resure policy was cancelled and All-Tex learned its coverage would not exceed $300,000.  Id. at 415.  The court explained the loss of $700,000 in liability coverage did not authorize All-Tex to seek a remedy before the day it suffered a judgment.  Id.  All-Tex had not made a claim for indemnity until the judgment had been rendered against it and, therefore, no claim had been denied; a cause of action accrues at the moment an insurer should pay a claim but fails to do so.  Id. (citing Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990)).  Therefore, All-Tex could not have made a demand in March 1997, for payment of any amount under its indemnity coverage because it “was not then liable to anybody for anything.”  Id. at 415B16.

Mauskar claims that he similarly did not know and could not have known the full extent of his damages until he cashed in his policies in 1999, at which point he then had a legal remedy he could exercise against appellees. We disagree with this proposition. This is not a case involving the denial of coverage where a claim for denial of coverage does not accrue until the denial, but, instead, Mauskar asserts he was attempting to purchase policies with large payoffs, but was actually sold policies with smaller than promised payoffs because of negligence and fraud. 

As we have previously noted, a cause of action accrues when the wrongful act causes a legal injury, even if the fact of the injury is not discovered until later, and even if all resulting damages have not yet occurred. Murphy, 964 S.W.2d at 270.^[2]  Mauskar=s claims for fraud^[3] and rescission,^[4] which have four-year statutes of limitations, would have to have accrued after July 4, 1996; Mauskar=s claims for negligent procurement,^[5] negligent misrepresentation,^[6] and Insurance Code^[7] and DTPA^[8] violations, which have two-year statutes of limitations, would have to have accrued after July 4, 1998. 

Mauskar=s causes of action accrued at the time he purchased the Security Mutual, General American, and New England Life policies in 1982, 1988, 1990, and 1992, when Hardgrove and Reddy allegedly falsely or negligently represented to him that the policies would pay two to three times their face value at age 65 and he would not be required to pay premiums beyond age 65.  See Murphy, 964 S.W.2d at 270; Sabine Towing & Transp. Co. v. Holliday Ins. Agency, Inc., 54 S.W.3d 57, 63 (Tex. App.CTexarkana 2001, pet. denied) (holding that with regard to claim for negligent misrepresentation in procurement of insurance, two-year statute of limitations expired two years after insured first received certificate of insurance).  Moreover, the summary judgment evidence shows that around the time Mauskar purchased the Security Mutual, General American, and New England Life policies in 1982, 1988, 1990, and 1992, he received written descriptions of the policies. Mauskar testified, however, that he did not read the policies, which state that premiums are to be paid through the ages of 95 (Security Mutual policy) and 98 (General American and New England Life policies), and do not state that he would be paid two to three times the face value of the policies.  Had Mauskar read the policies at the time he purchased them, he would have known that the policies were not going to meet his alleged pay-out expectations.

                                                        III. Discovery Rule

In the alternative, Mauskar asserts his claims were tolled by the discovery rule and his summary judgment evidence created fact issues regarding when his causes of action accrued and for how long the statute of limitations was tolled. 

One exception to the general rule for determining when a cause of action accrues is the “discovery rule.”  S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996).  The discovery rule tolls the statute until the plaintiff has knowledge of facts, which through reasonable diligence, would lead to the discovery of the injury, rather than discovery of the full extent of the damages. Cornerstone Mun. Util. Dist. v. Monsanto, 889 S.W.2d 570, 576 (Tex. App.CHouston [14th Dist.] 1994, writ denied); Bayou Bend Towers Council of Co-Owners v. Manhattan Constr. Co., 866 S.W.2d 740, 744 (Tex. App.CHouston [14th Dist.] 1993, writ denied).  Whether the plaintiff knew or should have known of an injury is generally a question of fact for the jury, unless the defendant establishes that there is no genuine issue of material fact establishing that the plaintiff knew or should have known of the injury.  Houston Endowment, Inc., 972 S.W.2d at 160. 

For the discovery rule to apply, the nature of the injury must be inherently undiscoverable and the injury must be objectively verifiable.  HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998).  With regard to the “inherently undiscoverable” element, accrual of the cause of action is delayed when the wrong and injury were unknown to the plaintiff because of the very nature of the injury and not because of the fault of the plaintiff.  S.V., 933 S.W.2d at 7.  An injury is inherently undiscoverable if it is by nature unlikely to be discovered within the prescribed limitations period despite the claimant=s due diligence.  Id.  An injury is “objectively verifiable” if the presence of injury and the producing wrongful act cannot be disputed.  Computer Assocs. Int=l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996); S.V., 933 S.W.2d at 6B7. 

Mauskar cannot satisfy the “inherently undiscoverable” prong of the discovery rule.  His injury was not inherently undiscoverable because he easily could have discovered his injury by reading the policies.  Mauskar admitted the policies do not state there is a guaranteed value three times the face value or that he would not have to pay premiums beyond age 65. Moreover, by 1995, Mauskar started having doubts about the policies= promised payoff. 

Mauskar complains that although he told Hardgrove and Reddy he wanted to purchase policies that would pay two to three times their face value when cashed in, they did not explain to him that the policies he purchased would not have the promised payoff.  Mauskar testified that he did not understand either the terms of the policies or that the policies he purchased would not pay two to three times their face value, and though he called and wrote to the insurance companies to inquire about the terms of the policies, he received no response.

An insurance agent, however, has no duty to explain policy terms to an insured.  Ruiz v. Government Employees Ins. Co., 4 S.W.3d 838, 841 (Tex. App.CEl Paso 1999, no pet.); Garrison Contractors, Inc. v. Liberty Mut. Ins. Co., 927 S.W.2d 296, 300 (Tex. App.CEl Paso 1996), aff=d, 966 S.W.2d 482 (Tex. 1998); Amarco Petroleum, Inc. v. Texas Pac. Indem. Co., 889 S.W.2d 695, 699 (Tex. App.CHouston [14th Dist.] 1994, writ denied); Heritage Manor of Blaylock Props., Inc. v. Petersson, 677 S.W.2d 689, 691 (Tex. App.CDallas 1984, writ ref=d n.r.e.).  Instead, an insured has a duty to read the policy, and failing to do so, is charged with knowledge of the policy terms and conditions.  Ruiz, 4 S.W.3d at 841; Amarco Petroleum, Inc., 889 S.W.2d at 699; Heritage Manor of Blaylock Props., Inc., 677 S.W.2d at 691. 

Mauskar should have discovered the terms of the policies were not as allegedly promised by reading the policies or descriptions of the policies at the time they were issued in 1982, 1988, 1990, and 1992.  Further, Mauskar admitted he had Adoubts@ about the policies= payoffs as early as 1995.  The discovery rule will not toll the limitations period on Mauskar=s causes of action to defeat the statute of limitations. 

                                           IV. Fraudulent Concealment

Mauskar also asserted fraudulent concealment of his causes of action on the part of appellees.  Fraudulent concealment is an affirmative defense to the statute of limitations.  Weaver v. Witt, 561 S.W.2d 792, 793 (Tex. 1977); Work v. Duval, 809 S.W.2d 351, 354 (Tex. App.CHouston [14th Dist.] 1991, no writ).  Fraudulent concealment concerns whether, and for how long, the statute of limitations is tolled.  Arabian Shield Dev. Co. v. Hunt, 808 S.W.2d 577, 585 (Tex. App.CDallas 1991, writ denied).  The defense of fraudulent concealment defers the accrual of the plaintiff=s cause of action until he has discovered or should have discovered the fraud.  Computer Assocs. Int=l, Inc., 918 S.W.2d at 455.  Unlike the discovery rule, deferral in the context of fraudulent concealment resembles equitable estoppel, precluding the defendant from relying on the statute of limitations as an affirmative defense.  Id. at 456. 

On summary judgment, the plaintiff has the burden to present proof raising an issue of fact on fraudulent concealment.  Houston Endowment, Inc., 972 S.W.2d at 163 (citing Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996)).  To defeat summary judgment based on fraudulent concealment, the plaintiff must establish (1) an underlying tort, (2) the movant=s knowledge of the tort, (3) the movant=s use of deception to conceal the tort, and (4) the nonmovant=s reasonable reliance on the tort.  Id.; Arabian Shield Dev. Co., 808 S.W.2d at 584.  Mere allegations are insufficient to establish a fact issue on fraudulent concealment in a summary judgment proceeding.  See Work, 809 S.W.2d at 354 (finding that bare allegation of fraudulent concealment did not present genuine issue of material fact precluding summary judgment). 

When a defendant has a duty to disclose, but fraudulently conceals the existence of a cause of action, it is estopped to rely on the affirmative defense of statute of limitations until the party learns of or should have learned of his right of action through the exercise of reasonable diligence.  Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983). 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.  Id. at 909.  Knowledge of such facts is in the law equivalent to knowledge of the cause of action.  Id. The fraudulent concealment doctrine is limited to those situations in which the defendant has a duty of disclosure. Patrick v. Howard, 904 S.W.2d 941, 945 (Tex. App.CAustin 1995, no writ).  Therefore, fraudulent concealment applies in cases such as those involving doctor-patient, attorney-client, or fiduciary relationships.  Id.  Whether the duty of disclosure exists is a question of law.  Id. 

Although an insurance agent has no duty to explain policy terms to an insured,^[9] Mauskar, nonetheless, asserts he had a fiduciary or confidential relationship with both Hardgrove and Reddy.  There are two types of fiduciary relationships.  The first is a formal fiduciary relationship, which arises as a matter of law, and includes the relationships between attorney and client, principal and agent, and partners and joint venturers.  Insurance Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex. 1998); Texas Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980); Hoggett v. Brown, 971 S.W.2d 472, 487 (Tex. App.CHouston [14th Dist.] 1997, pet. denied); Miller-Rogaska, Inc. v. Bank One, Tex., N.A., 931 S.W.2d 655, 663 (Tex. App.CDallas 1996, no writ).  

The second is an informal fiduciary relationship, which may arise from “a moral, social, domestic or purely personal relationship of trust and confidence, generally called a confidential relationship.”  Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998).  To impose an informal fiduciary duty in a business transaction, the requisite special relationship of trust and confidence must exist prior to, and apart from, the agreement made the basis of the suit.  Id. at 288. 

We know of no authority imposing a fiduciary relationship as a matter of law between an insured and his insurer or its agent; therefore, Mauskar must establish an informal fiduciary or confidential relationship.^[10]  In support of his claim of a fiduciary relationship with Hardgrove and Reddy, Mauskar asserts he had known Hardgrove and Reddy for many years, had repeated business transactions with them, and had placed a high degree of trust in them as his financial advisors.  The fact that a business relationship has been cordial and of extended duration is not by itself evidence of a confidential relationship.  Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962); Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 675 (Tex. App.CHouston [1st Dist.] 1996, no writ).  Nor is subjective trust sufficient to transform an arms-length transaction into a fiduciary relationship.  Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex. 1997). 

Moreover, investment decisions inherently require that the investor exercise due diligence rather than relying on oral representations.  Prieto v. John Hancock Mut. Life Ins. Co., 132 F. Supp. 2d 506, 520 (N.D. Tex. 2001). 

The investor who seeks to blame his investment loss on fraud or misrepresentation must himself exercise due diligence to learn the nature of his investment and the associated risks. . . .[T]he party claiming fraud and/or misrepresentation must exercise due diligence to discover the alleged fraud and cannot close his eyes and simply wait for facts supporting such a claim to come to his attention. This principle applies in a variety of contexts, including the issue presented in this case, when the applicable statutes of limitations begin to run.

Id. at 514 (quoting Martinez Tapia v. Chase Manhattan Bank, N.A., 149 F.3d 404, 409 (5th Cir. 1998)).  By reading the policies at the time they were issued, Mauskar could have discovered the alleged misrepresentations regarding the terms of the policies sufficient to put him on notice of his causes of action.  See id. at 520 (stating appropriate inquiry presumably would have disclosed sufficient information to detect alleged misrepresentations at early stage).  Because there was no fiduciary or confidential relationship with the accompanying duty to disclose, Mauskar has failed to raise a fact issue on fraudulent concealment. 

We conclude Mauskar=s causes of action, having accrued in 1982, 1988, 1990, and 1992, are not tolled by either the discovery rule or fraudulent concealment, but are barred by the statute of limitations.  Accordingly, the judgment of the trial court is affirmed. 

/s/        J. Harvey Hudson

Justice

Judgment rendered and Memorandum Opinion/Opinion filed June 19, 2003.

Panel consists of Justices Yates, Hudson, and Frost.

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^[1]  The trial court initially awarded Hardgrove attorney fees.  However, on Mauskar=s motion to modify the judgment, the trial court ordered that no defendant would recover attorney fees from Mauskar.  No issue on attorney fees has been raised on appeal. 

Mauskar also sued the Prudential Insurance Company of America, Security Mutual Insurance Company of New York, and Provident Life and Accident Insurance Company. Mauskar nonsuited Provident; Mauskar dismissed his claims against Security because of settlement; and the trial court severed and dismissed Mauskar=s claims against Prudential because they were subject to a class action settlement in another case.

^[2]  See also Tex. Bus. & Com. Code Ann. ' 17.565 (stating all actions under DTPA must be commenced within two years after the date on which the false, misleading or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence); Tex. Ins. Code Ann. art. 21.21, ' 16(d) (stating actions under art. 21.21 must be commenced within two years after date on which unfair method of competition or unfair or deceptive act or practice occurred or within two years after plaintiff discovered, or in exercise of reasonable diligence should have discovered the occurrence); Hoover v. Gregory, 835 S.W.2d 668, 676 (Tex. App.CDallas 1992, writ denied) ( stating cause of action for fraud accrues when defendant makes false representations and tort cause of action accrues when tortious act is committed).

^[3]  Tex. Civ. Prac. & Rem. Code Ann. ' 16.004(a)(4) (Vernon 2002).

^[4]  Tex. Civ. Prac. & Rem. Code Ann. ' 16.051 (Vernon 1997).

^[5]  Tex. Civ. Prac. & Rem. Code Ann. ' 16.003 (Vernon 2002).

^[6]  Martz v. Weyerhaeuser Co., 965 S.W.2d 584, 587 (Tex. App.CEastland 1998, no pet.).

^[7]  Tex. Ins. Code Ann. art. 21.21, ' 16(d) (Vernon Supp. 2003).

^[8]  Tex. Bus. & Com. Code Ann. ' 17.565 (Vernon 2002).

^[9]  Ruiz, 4 S.W.3d at 841; Garrison Contractors, Inc., 927 S.W.2d at 300; Amarco Petroleum, Inc., 889 S.W.2d at 699; Heritage Manor of Blaylock Props., Inc., 677 S.W.2d at 691. 

^[10]  The Texas Supreme Court has recognized that certain Aspecial relationships@ give rise to a tort duty of good faith and fair dealing.  See, e.g., Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210, 212B13 (Tex. 1988) (workers= compensation carrier); Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987) (insurer).  However, the duty of good faith and fair dealing has not been extended to the insurance company=s agent.  See Natividad v. Alexsis, Inc., 875 S.W.2d 695, 698 (Tex. 1994).  In any event, the duty of good faith and fair dealing only requires the parties to deal fairly with each other rather than requiring one party to place the interests of the other party ahead of his own as in the case of a fiduciary duty.  Crim. Truck & Tractor Co. v. Navistar Int=l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992).