law-fraudulent-concealment-tolling-of-limitations | summary judgment based on limitations | statute of limitations
|
accrual of claim | invoking the discovery rule to extend limitations period |

Shah v. Moss, 67 S.W.3d 836, 841 (Tex. 2001) (fraudulent concealment tolls limitation)
Kerlin v. Sauceda, 263 S.W.3d 920, 925 (Tex. 2008) (fraudulent concealment will not bar limitations when
plaintiff could have discovered wrong through exercise of reasonable diligence).

Contract claim is governed by a four-year statute of limitations. Tex. Civ. Prac. & Rem. Code Ann. § 16.051
(Vernon 2008); Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002). The limitations period begins to run when a
contract is breached. Stine, 80 S.W.3d at 592. However, a defendant’s fraudulent concealment of the breach
tolls the
statute of limitations until the fraud is discovered or should have been discovered with reasonable
diligence. Kerlin, 263 S.W.3d at 925.

HOUSTON CASE LAW ON FRAUDULENT CONCEALMENT AS TOLLING THEORY

Generally, a defendant’s fraudulent concealment of wrongdoing will toll the running of limitations. Kerlin v.
Sauceda, 263 S.W.3d 920, 925 (Tex. 2008) (citing Shah v. Moss, 67 S.W.3d 836, 841 (Tex. 2001)); see also
Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 228 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (“[T]he
fraudulent-concealment doctrine is an affirmative defense to limitations that resembles equitable estoppel”). To
prove fraudulent concealment, a plaintiff must show that the defendant actually knew a wrong occurred, had a
fixed purpose to conceal the wrong, and did conceal the wrong. Shah, 67 S.W.3d at 841; see also Seureau,
274 S.W.3d at 228 (stating that plaintiff must demonstrate defendant had “(1) actual knowledge that a wrong
occurred, (2) a duty to disclose the wrong, and (3) a fixed purpose to conceal the wrong”); Santanna Natural
Gas v. Hamon Operations, 954 S.W.2d 885, 890 (Tex. App.—Austin 1997, pet. denied) (defining elements of
fraudulent concealment as “first, actual knowledge by the defendant that a wrong has occurred, and second, a
fixed purpose to conceal the facts necessary for the plaintiff to know that it has a cause of action”). Accordingly,
the “gist of the fraudulent concealment defense is the defendant’s active suppression of the truth or its failure
to disclose the truth when it is under a duty to speak.” Hay v. Shell Oil Co., 986 S.W.2d 772, 778 (Tex. App.—
Corpus Christi 1999, pet. denied).
Importantly, however, fraudulent concealment will not “bar limitations when the plaintiff discovers the wrong or
could have discovered it through the exercise of reasonable diligence.” Kerlin, 263 S.W.3d at 925; see also
Shah, 67 S.W.3d at 841 (“Fraudulent concealment tolls limitations until the plaintiff discovers the fraud or could
have discovered the fraud with reasonable diligence.”). Determining when a plaintiff knew or reasonably should
have known of the cause of action is normally a question of fact. Santanna Natural Gas, 954 S.W.2d at 892.
A party should discover a defendant’s fraudulent concealment when the 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 fraud. Borderlon v. Peck, 661 S.W.2d 907, 909 (Tex. 1983). “Knowledge of such facts is in
law equivalent to knowledge of the cause of action.” Id.
[We] hold that the trial court did not err in denying Shell’s motions for a directed verdict and for judgment
notwithstanding the verdict on the ground that the evidence is legally insufficient to show that Shell fraudulently
concealed its underpayment of royalties to the Rosses.
[We] hold that the evidence is legally sufficient to support the jury’s finding that the Rosses should, “in the
exercise of reasonable diligence, have discovered that Shell failed to pay royalty in accordance with the Reuss
Lease” for reasons “other than the ‘weighted average/blended price’ issue” in “2002.”
Having concluded that the Rosses could not have reasonably discovered Shell’s fraudulent concealment based
on public records at the Land Office, we further conclude that these public records did not create an
irrebuttable presumption of notice. Therefore, the proposed instruction was inapplicable to the situation
presented by the evidence in this case. Accordingly, we hold that the trial court did not err in not submitting
Shell’s proposed instruction on constructive notice.
Shell Oil Company v. Ross (Tex.App.- Houston [1st Dist.] Feb. 25, 2010)(Jenning)
(
oil & gas law litigation - dispute over royalties, breach of contract, unjust enrichment, and fraud theories)
(
fraudulent concealment as tolling theory, constructive notice based on public record)
AFFIRM TRIAL COURT JUDGMENT: Opinion by
Justice Jennings     
Before Justices Jennings, Alcala and Higley   
01-08-00713-CV  Shell Oil Company, SWEPI LP d/b/a Shell Western E&P, Successor in Interest to Shell
Western E&P, Inc. v. Ralph Ross    
Appeal from 133rd District Court of Harris County
Trial Court Judge:
Hon. Lamar McCorkle
Dissenting Opinion by Justice Alcala in Shell Oil Co. v. Ross (would hold that lawsuit is barred by
limitations because no evidence establishes
fraudulent concealment of royalty underpayment by Shell)

“As a general rule, a cause of action accrues and the statute of limitations begins to run when facts come into
existence that authorize a party to seek a judicial remedy.” Provident Life & Accident Ins. Co. v. Knott, 128 S.W.
3d 211, 221 (Tex. 2003). Thus, “[a] defendant who seeks summary judgment on the basis of limitations must
conclusively prove when the plaintiff’s cause of action accrued.” Seureau v. ExxonMobil Corp., 274 S.W.3d 206,
226 (Tex. App.—Houston [14th Dist.] 2008, no pet.). The date the cause of action accrues for purposes of
limitations is a question of law. Id. In most circumstances, “a cause of action accrues when a wrongful act
causes a legal injury, regardless of when the plaintiff learns of that injury or if all resulting damages have yet to
occur.” Id.; Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990).
Wilstein v. Dernick Resources, Inc. (pdf) (Tex.App.- Houston [1st Dist.] Dec. 31, 2009)(Keyes)
(limitations and fraudulent concealment,
fiduciary duty)
We conclude that Dernick breached its fiduciary duty to the Wilsteins by failing to disclose its sale of their interest in the
Bradshaw Field and that the Wilsteins were not put on constructive notice of the sale by the filing of the sale in the Kansas public
records. The trial court found that the Wilsteins discovered the sale of their interest in the Bradshaw Field following the 2002 audit
of that field. This finding is supported by the evidence. Because the Wilsteins filed their Bradshaw Field claims in 2003, their
claims were not barred by the four-year statute of limitations for breach of fiduciary duty and fraud.
REVERSE TC JUDGMENT AND REMAND CASE TO TC FOR FURTHER PROCEEDINGS:
Opinion by Justice Keyes    
Before Justices Keyes, Alcala and Hanks   
01-07-00491-CV   David Wilstein, and Leonard Wilstein, Individually and as Trustee v. Dernick Resources,
Inc.,   
Appeal from 164th District Court of Harris County
Trial Court Judge:
Hon. Martha Hill Jamison
The fraudulent concealment doctrine, however, is an affirmative defense to limitations that resembles equitable
estoppel. Seureau, 274 S.W.3d at 228. This doctrine estops a defendant from relying on limitations if he was
under a duty to make a disclosure but fraudulently concealed the existence of a cause of action from the party
to whom it belonged. Id. The accrual of a cause of action is deferred in a fraudulent concealment case until the
plaintiff discovers or should have discovered the deceitful conduct or facts giving rise to the cause of action.
Earle v. Ratliff, 998 S.W.2d 882, 888 (Tex. 1999). The fraudulent concealment doctrine defers accrual because
“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). For the doctrine to apply, however, the plaintiff
must prove the defendant: (1) had actual knowledge of the wrong; (2) had a fixed purpose to conceal the
wrong; and (3) did conceal the wrong from the plaintiff. See Shah v. Moss, 67 S.W.3d 836, 841 (Tex. 2001).
The fraudulent concealment doctrine does not bar limitations when the plaintiff discovers the wrong or could
have discovered it through the exercise of reasonable diligence. Kerlin v. Sauceda, 263 S.W.3d 920, 925 (Tex.
2008).

A breach of a fiduciary duty of disclosure is tantamount to concealment for limitations purposes. Id. at 645; see
Seureau, 274 S.W.3d at 228 (including as additional element of fraudulent concealment doctrine “a duty to
disclose the wrong”). Thus, the statute of limitations for a breach of fiduciary duty claim does not begin to run
until the claimant “knew or should have known of facts that in the exercise of reasonable diligence would have
led to the discovery of the wrongful act.” Little v. Smith, 943 S.W.2d 414, 420 (Tex. 1997); see also Willis, 760 S.
W.2d at 645 (accrual of cause of action of person to whom duty is owed is postponed until he discovers, or
should discover, material facts in issue); Seureau, 274 S.W.3d at 228 (“The estoppel effect of fraudulent
concealment ends when a party learns of facts, conditions, or circumstances that would cause a reasonably
prudent person to make inquiry which, if pursued, would lead to the discovery of the concealed cause of
action.”). “When a failure to notify is the basis for a cause of action, a plaintiff knows or should have known of
the failure to notify when it knows or should have known the facts about which it was to be notified,” and the
statute of limitations begins to run at that time. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998).

Because the Wilsteins and Dernick were joint venturers in both the McCourt Field and the Bradshaw Field, the
fraudulent concealment doctrine applies in both cases. See Willis, 760 S.W.2d at 645 & n.2; Seureau, 274 S.W.
3d at 228. The questions, therefore, for limitations purposes are whether Dernick breached its duty of
disclosure to the Wilsteins in both cases and, if so, when the Wilsteins learned of facts, conditions, or
circumstances that would cause a reasonably prudent person to make inquiry that, if pursued, would lead to the
discovery of the concealed cause of action for the breach. See Seureau, 274 S.W.3d at 228.



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