Texas Supreme Court blesses contractual SOL circumvention in Godoy v. Wells Fargo Bank, N.A. - Within Reason

Gerald Godoy v. Wells Fargo Bank, N.A., No. 18-0071 (Tex. May 10, 2019) 

This is a rare instance where the all-Republican Texas Supreme Court agreed to hear an individual's petition for review in a dispute with a major bank. But it didn't do the individual much good, as the high court affirmed the lower courts' judgment in the bank's favor. No big surprise here. The opinion in Godoy v. Wells Fargo is nevertheless important because the Supreme Court did not wholeheartedly embrace the rationale of the majority in the court below when it affirmed summary judgment for the bank on a guaranty Godoy had signed. The bank sued him on the guaranty agreement when the foreclosure and sale of the real estate that secured the promissory note did not generate proceeds sufficient to pay off the loan balance. See related post on the intermediate court of appeal's decision:

-- >  S.O.L. - Did two justices on the Houston Court of Appeals just gut the statute of limitations?  

When Godot's appeal was heard by the Fourteenth Court of Appeals in 2017, the Chief of that Court vigorously dissented on the key issue in the case, a contractual provision in a guaranty agreement purporting to waive the statute of limitations, concluding that the contractual waiver of the two-year statute of limitations governing deficiency claims -- TEX. PROP. CODE § 51.003(a) -- was void on public policy grounds, and that the summary judgment in the bank's favor should accordingly have been reversed.

Dissent by Chief Justice Frost 

The supreme court agreed with Chief Justice Frost's dissent to an extent. This included the issue of whether it was enough for Godoy to raise the public policy defense at the summary judgment stage, when he had not expressly raised it in his pleadings (on top of pleading limitations as an affirmative defense). But the partial vindication of Chief Frost's take on the void-as-against-public-policy issue in the case wasn't enough to change the outcome.

Blanket pre-dispute waivers of all statutes of limitation are unenforceable, but waivers of a particular limitations period for a defined and reasonable amount of time may be enforced.

Rather than reversing the judgment grant for Wells Fargo, as unsuccessfully urged by Chief Justice Frost on her own court, or agreeing that the statute of limitations had been rendered inapplicable by the fine print in the Bank's shrewdly and self-servingly drafted guaranty agreement, the Texas High Court ended up taking what might look like a middling position.

In an opinion written by Justice Blacklock, the Court concluded, without any dissent, that the contractual waiver in the contract at issue substituted a four-year limitations period for the statutory limitations period of two years that governs deficiency suits, and that the contractual doubling to a four-year period (the SOL generally applicable to suits on debt) was not contrary to Texas public policy.

Because the Bank had filed suit against Godot within the four-year period, limitations did not bar its claim. The supreme court accordingly affirmed the summary judgment for Wells Fargo, albeit on a different basis.

The Supreme Court further noted that the waiver language in the guaranty agreement contained a savings provision, buy declined to decide whether a blanket waiver of all statutes of limitations (as opposed to the specific one governing deficiency claims) could be made compliant with public policy by judicially limiting it to four years, as opposed to striking the contractual waiver as void and therefore ineffective in its entirety because it would allow the bank to bring claims in perpetuity.

Once section 51.003(a)’s two-year statute of limitations is waived by operation of section (A), the four-year statute of limitations applying to suits to collect debts found in section 16.004(a)(3) of the Civil Practice and Remedies Code becomes applicable. The concern about litigating long stale claims is absent, and Godoy does not contend that a four-year limitations period is unreasonable. The backstop of section 16.004(a)(3) is sufficient to satisfy the requirement that contractual statute-of-limitations waivers must be only “for a reasonable time.” 

The bottom line here is that the Bank prevailed; that the statute of limitations was not expressly gutted, but that Wells Fargo and other banks have been given a green light to work their way around it.

Old Harris County Courthouse,
now the seat of the First and Fourteenth Courts of Appeals 

The message to financial institutions is that they are free to require customers to agree to a contractual extension of the otherwise applicable limitations periods as long as the contracted-for limitations period is not unreasonable as ultimately judged by the Texas Supreme Court in case of a subsequent dispute.

The Godoy opinion won't lay to rest all questions that might arise, though. Case-dispositive here was the Court's substitution of the four-year statute of limitations governing debt for the statute of limitations that would govern deficiency suits (which is a special subcategory of suit on debt with its own statute of limitations) in the absence of a contractual waiver. That does not cover all scenarios. So there may be appellate litigation forthcoming on limitations waivers in other scenarios, such as when a contract purports to waive the four-year statute of limitations governing "debt" or the six-year statute of limitations governing promissory notes that meet the definition of negotiable instruments under the Texas version of the UCC. It is by no means clear how many contracted-for additional years would amount to too many years in the Supremes' estimation, thereby offending the state's public policy under the "reasonableness" criterion.   

Note also that Godoy opinion does not address the matter of contractual choice of law. In Godoy, the obligation arose from a guaranty Godoy had signed for a mortgage loan made to a corporation. There is no mention whether the contract was governed by Texas law or some other state's law. There is little doubt that it was Texas law. In credit card card agreements, however, Wells Fargo's contractual choice of law is South Dakota, not Texas, and federal laws also applies to extensions of consumer credit. That, and any distinctions between commercial vs. consumer credit cases, may create additional supreme litigation opportunities that remain for another day.

Corrected: Godoy, not Godot. There was quite a bit of wait, but not for Godot.

Clink hyperlink to opinion [in PDF] here ---> Godoy v. Wells Fargo Bank, N.A. 

SCOTX Docket sheet with hotlinks to briefs here --> 18-0071 

IN THE SUPREME COURT OF TEXAS

══════════

No. 18-0071

══════════

GERALD GODOY, PETITIONER,

v.

WELLS FARGO BANK, N.A., RESPONDENT

══════════════════════════════════════════

ON PETITION FOR REVIEW FROM THE

COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS

══════════════════════════════════════════

Argued February 19, 2019

Godoy v. Wells Fargo Bank, N.A., No. 18-0071 (Tex. May 10, 2019) 

JUSTICE BLACKLOCK delivered the opinion of the Court.
JUSTICE BUSBY did not participate in the decision.

Seventy-five years ago in Simpson v. McDonald, this Court held that “an agreement in
advance to waive or not plead the statutes of limitation is void as against public policy.” 179
S.W.2d 239, 243 (Tex. 1944). We reaffirm that longstanding principle today, although we agree
with the courts of appeals that have since interpreted Simpson to allow a contractual waiver of the
statute of limitations if the waiver is “specific and for a reasonable time.” E.g., Am. Alloy Steel,
Inc. v. Armco, Inc., 777 S.W.2d 173, 177 (Tex. App.—Houston [14th Dist.] 1989, no writ). The
court of appeals found that Gerald Godoy waived the argument that his contractual waiver of the
statute of limitations is void as against public policy. 542 S.W.3d 50, 54 (Tex. App.—Houston
[14th Dist.] 2017). We hold that the court of appeals erred by declining to reach Godoy’s
argument, but we nonetheless agree with its ultimate disposition of the case. While portions of
2
Godoy’s contractual waiver are unenforceable under Simpson, other portions are sufficiently
specific and result only in the substitution of a four-year limitations period for a two-year period
rather than the abandonment of all limitations prohibited by Simpson. When the enforceable
portions of Godoy’s contractual waiver are applied, limitations do not bar Wells Fargo’s suit
against him. We therefore affirm the judgment of the court of appeals.
I. Background
GDG Mortgage, Inc., borrowed $250,000 from Wachovia Bank. The loan was secured by
real property owned by GDG Mortgage. Gerald Godoy guaranteed the loan. The guaranty
agreement Godoy signed included the following waiver of defenses:
GUARANTOR’S WAIVERS.
Guarantor also waives any and all rights or defenses arising by reason of (A) any
“one action” or “anti-deficiency” law or any other law which may prevent Lender
from bringing any action, including a claim for deficiency, against Guarantor,
before or after Lender’s commencement or completion of any foreclosure action,
either judicially or by exercise of a power of sale; (B) any election of remedies by
Lender which destroys or otherwise adversely affects Guarantor’s subrogation
rights or Guarantor’s rights to proceed against Borrower for reimbursement,
including without limitation, any loss of rights Guarantor may suffer by reason of
any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or
other defense of Borrower, of any other guarantor, or of any other person, or by
reason of the cessation of Borrower’s liability from any cause whatsoever, other
than payment in full in legal tender, of the Indebtedness; (D) any right to claim
discharge of the Indebtedness on the basis of unjustified impairment of any
collateral for the Indebtedness; (E) any statute of limitations, if at any time any
action or suit brought by Lender against Guarantor is commenced, there is
outstanding indebtedness of Borrower to Lender which is not barred by any
applicable statute of limitations; or (F) any defenses given to guarantors at law or
in equity other than actual payment and performance of the Indebtedness. . . .
GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS.
Guarantor warrants and agrees that each of the waivers set forth above is made with
Guarantor’s full knowledge of its significance and consequences and that, under
the circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or public
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policy, such waiver shall be effective only to the extent permitted by law or public
policy.
GDG Mortgage defaulted. Wells Fargo, Wachovia’s successor, foreclosed on GDG
Mortgage’s real property securing the loan. Wells Fargo purchased the property at the foreclosure
sale, which took place in November 2011. The purchase price of the property was not enough to
satisfy GDG Mortgage’s unpaid balance. Wells Fargo sued Godoy to recover the deficiency in
June 2015. Godoy moved for summary judgment, arguing that Wells Fargo’s claim was barred
by the Property Code’s two-year statute of limitations for deficiency claims, which provides:
If the price at which real property is sold at a foreclosure sale under Section
51.002 is less than the unpaid balance of the indebtedness secured by the real
property, resulting in a deficiency, any action brought to recover the deficiency
must be brought within two years of the foreclosure sale and is governed by this
section.
TEX. PROP. CODE § 51.003(a). In response, Wells Fargo moved for partial summary judgment,
arguing that Godoy waived section 51.003’s two-year statute of limitations when he signed the
guaranty agreement. The trial court denied Godoy’s motion for summary judgment and granted
Wells Fargo’s motion for partial summary judgment. Wells Fargo moved for final summary
judgment on its deficiency claim, and the trial court granted that motion.
Godoy appealed. He argued that, under court of appeals decisions applying Simpson v.
McDonald, a statute-of-limitations defense can only be waived if the language in the waiver is
specific and for a defined period of time. See Am. Alloy Steel, Inc., 777 S.W.2d at 177; Duncan v.
Lisenby, 912 S.W.2d 857, 859 (Tex. App.—Houston [14th Dist.] 1995, no writ); Squyres v.
Christian, 253 S.W.2d 470, 472 (Tex. App.—Fort Worth 1952, writ ref’d n.r.e.). Godoy claimed
that the waiver he agreed to was indefinite and thus void as against public policy because, he
contended, it allowed Wells Fargo to bring suit at any time in the future. 542 S.W.3d at 52. Citing
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our decision in Moayedi v. Interstate 35/Chisam Road, L.P., 438 S.W.3d 1 (Tex. 2014), Wells
Fargo argued that, by signing a broad waiver of all defenses, a party such as Godoy can waive all
statute-of-limitations defenses indefinitely. Id.
The court of appeals affirmed. Id. at 51. It held that, under Moayedi, Godoy’s agreement
to waive “all rights or defenses arising by reason of . . . any . . . anti-deficiency law” was sufficient
to waive section 51.003(a)’s two-year statute of limitations. Id. at 53. The court of appeals did
not consider Godoy’s argument that his contractual waiver of the limitations period was void as
against public policy under Simpson. It determined that Godoy waived this public-policy argument
by failing to affirmatively plead it as a “matter constituting an avoidance” under Rule 94. Id. at
54; TEX. R. CIV. P. 94.
Although it did not consider Godoy’s public-policy arguments against enforcement of the
waivers, the court of appeals did not decide whether the guaranty agreement’s waiver provision
was sufficient to waive all Godoy’s possible statute-of-limitations defenses. Because Wells Fargo
sued within the four-year limitations period applying generically to suits to collect debts, the court
of appeals concluded that its suit was timely even if Godoy could not contractually waive all
limitations defenses. 542 S.W.3d at 55; see TEX. CIV. PRAC. & REM. CODE § 16.004(a)(3). The
court of appeals decided only that Godoy waived the two-year statute of limitations and that Wells
Fargo’s suit—filed three-and-a-half years after the foreclosure sale—was not barred by the fouryear limitations period that would apply in the absence of the two-year period. 542 S.W.3d at 55.
One court of appeals justice dissented. With respect to waiver, the dissent concluded that,
under Phillips v. Phillips, Godoy did not need to plead his public-policy defense in his answer
because the complete waiver of the statute of limitations “appears on the face of the petition” and
5
its voidness “is established as a matter of law.” 542 S.W.3d at 62–63 (Frost, C.J., dissenting)
(citing Phillips, 820 S.W.2d 785, 789–90 (Tex. 1991) (holding that a defense “is not waived by
the failure to plead it if it is apparent on the face of the petition and established as a matter of
law”)). The dissent also argued that Wells Fargo tried the defense by consent by not objecting to
Godoy’s alleged pleading defect before the trial court rendered judgment. Id. at 65 (citing Via Net
v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex. 2006) (per curiam)). With respect to the statute of
limitations, the dissent argued that Simpson prohibits enforcement of Godoy’s contractual waiver
of section 51.003(a)’s two-year statute of limitations. Id. at 58. The dissent reasoned that nothing
in Moayedi’s general holding regarding a contractual waiver of all defenses alters the specific rule
in Simpson governing contractual waiver of statutes of limitation. Id. at 60–61. The dissent
concluded that, because Godoy’s waiver of the two-year statute of limitations was void under
Simpson, the trial court’s summary judgment enforcing that waiver should be reversed. Id. at 57.
Before this Court, Godoy contends that he did not waive the argument that his contractual
abandonment of the statute of limitations is void as against public policy. Further, he continues to
argue that, under Simpson, his agreement to waive section 51.003(a)’s two-year limitations period
is void unless it is specific and for a pre-determined length of time. In Godoy’s view, if the court
of appeals is correct that he waived the two-year limitations period, then Wells Fargo could bring
its deficiency claims at any time in the distant future. However, Wells Fargo no longer argues that
the guaranty agreement waived all statute-of-limitations defenses such that it could bring suit in
perpetuity. Wells Fargo now asserts only that Godoy waived all defenses under section 51.003 of
the Property Code, including the two-year statute of limitations. The effect of waiving the twoyear limitations period, Wells Fargo contends, is that the four-year limitations period of section
6
16.004(a)(3) of the Civil Practice and Remedies Code applies as a backstop in the absence of the
waived two-year period. If a four-year limitations period applies, Wells Fargo’s suit—brought
three-and-a-half years after the foreclosure sale—is not barred by limitations.
II. Discussion
A. Standard of Review
“We review the trial court’s summary judgment de novo.” Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). “As the parties dispute not the facts” but questions of
law, we “determin[e] all legal questions presented.” Guynes v. Galveston Cty., 861 S.W.2d 861,
862 (Tex. 1993). As always, “[w]e review legal questions de novo.” Tex. Dep’t of Transp. v.
Needham, 82 S.W.3d 314, 318 (Tex. 2002).
B. Waiver
We first consider whether, by failing to plead it in his answer, Godoy waived the argument
under Simpson that his contractual abandonment of the statute of limitations is void. Rule 94 of
the Texas Rules of Civil Procedure requires that “[i]n a pleading to a preceding pleading, a party
shall set forth affirmatively” any matter “constituting an avoidance or affirmative defense.” An
affirmative defense is “[a] defendant’s assertion of facts and arguments that, if true, will defeat the
plaintiff’s or prosecution’s claim, even if all the allegations in the complaint are true.” Zorrilla v.
Aypco Constr. II, LLC, 469 S.W.3d 143, 155–56 (Tex. 2015) (quoting affirmative defense,
BLACK’S LAW DICTIONARY (10th ed. 2009)). An avoidance “derives from the historic English
common-law pleas of ‘confession and avoidance’” and means “a plea in which a defendant admits
allegations but pleads additional facts that deprive the admitted facts of an adverse legal effect.”
Id. at 156 (quoting confession and avoidance, BLACK’S LAW DICTIONARY (10th ed. 2009)). “[A]
7
statute of limitations is an affirmative defense . . . .” Id. Godoy pleaded the two-year statute of
limitations as an affirmative defense in his original answer. His argument about contractual
invalidity was not its own affirmative defense but rather an argument in support of his affirmative
statute-of-limitations defense. The need to make the argument arose in the course of summary
judgment briefing. It was a purely legal argument that did not involve “plead[ing] additional facts
that deprive the admitted facts of an adverse legal effect.” Id. The court of appeals nevertheless
strictly applied its precedent, under which “[a]n allegation that a provision in a contract is void,
unenforceable, or unconscionable is a matter in the nature of avoidance and must be affirmatively
pleaded.” 542 S.W.3d at 54 (quoting 950 Corbindale, L.P. v. Knotts Capital Holdings Ltd. P’ship,
316 S.W.3d 191, 196 (Tex. App—Houston [14th Dist.] 2010, no pet.)).
“Whenever possible, we reject form-over-substance requirements that favor procedural
machinations over reaching the merits of a case.” Dudley Constr., Ltd. v. Act Pipe & Supply, Inc.,
545 S.W.3d 532, 538 (Tex. 2018). We question whether a legal argument in support of an alreadypleaded affirmative defense amounts to its own “matter constituting an avoidance or affirmative
defense” under Rule 94. Requiring Godoy, on pain of waiver, to amend his answer just to make a
purely legal argument during summary judgment briefing—related to a matter he has already
pleaded—does not serve the stated purpose of the Rules of Civil Procedure, which is to “obtain a
just, fair, equitable and impartial adjudication of the rights of litigants under established principles
of substantive law.” TEX. R. CIV. P. 1.1

 1 “‘This court has labored long and hard to remove as many procedural traps from our rules as possible.
Litigants are entitled to have their disputes resolved on the merits, not on unnecessary and arcane points that can sneak
up on even the most diligent of attorneys.’ Tricky procedural rules threaten substantive rights.” In re Brookshire
Grocery Co., 250 S.W.3d 66, 73–74 (Tex. 2008) (Hecht, J., dissenting) (quoting Donwerth v. Preston II ChryslerDodge, Inc., 775 S.W.2d 634, 643 (Tex. 1989) (Ray, J., concurring)).
8
Ultimately, we need not decide whether Rule 94 required Godoy to amend his answer to
plead his public-policy argument based on Simpson. Even if it did, the dissenting justice in the
court of appeals was correct that under our decision in Roark v. Stallworth Oil & Gas, Inc., Wells
Fargo waived Godoy’s alleged pleading error by not raising it in the trial court prior to judgment.
813 S.W.2d 492, 495 (Tex. 1991). Wells Fargo did not alert the trial court to Godoy’s alleged
pleading defect during summary judgment proceedings or at any other time prior to judgment.
Instead, Wells Fargo waited until its response to Godoy’s motion for new trial to argue that Rule
94 required some of Godoy’s arguments to appear in his pleadings. Under Roark, this is too late.
Roark involved a scenario nearly identical to this case. Stallworth, the defendant, moved for
summary judgment, which the trial court granted based on an affirmative defense. Id. at 494.
Roark, the plaintiff, complained that Stallworth had failed to plead the affirmative defense as
required by Rule 94. Id. However, just like Wells Fargo in this case, Roark complained about this
pleading defect for the first time in new-trial briefing. Id. We held that this was too late, stating
that the party opposing summary judgment must “object to the lack of a rule 94 pleading in either
its written response [to a summary judgment motion] or before the rendition of judgment.” Id.
Because Wells Fargo did not alert the trial court to the alleged pleading defect before judgment, it
waived its complaint about Godoy’s pleadings. The court of appeals therefore erred by declining
to consider Godoy’s void-as-against-public-policy argument.
C. Statute of Limitations
Having determined Godoy did not waive his argument, we now consider it. Godoy
contends that his contractual waiver of limitations defenses is void as against public policy. In
Simpson v. McDonald, we stated: “It appears to be well settled that an agreement in advance to
9
waive or not plead the statutes of limitation is void as against public policy.” 179 S.W.2d at 243;
see also Nunn v. Edmiston, 9 Tex. Civ. App. 562, 563 (1895, no writ) (“It has been held that a
person may, by contract, waive the right to plead the statute of limitations. Such agreements are,
however, in our opinion, contrary to public policy, and subversive of a wholesome statute, and
should not be upheld.” (citation omitted)). Since Simpson was decided, courts of appeals have
built upon its holding to require that a waiver of a statute of limitations is void unless the waiver
is “specific and for a reasonable time.” Am. Alloy Steel, Inc., 777 S.W.2d at 177. See also Duncan,
912 S.W.2d at 859 (“The agreement must be specific and for a pre-determined length of time.”).
Indeed, the requirement that in order to be enforceable the statute-of-limitations waiver must be
“specific” and “only for a reasonable time” was already understood to be part of the law at the
time Simpson was decided. See Titus v. Wells Fargo Bank & Union Tr. Co., 134 F.2d 223, 224
(5th Cir. 1943) (“[W]aiver before the bar has fallen must be specific and only for a reasonable
time, and [] the purpose of such statutes may not be thwarted by general agreements to waive the
benefit of the statute permanently. The Texas courts have adopted this view.” (citation omitted)).
The courts of appeals have never understood Simpson as Godoy does, as an absolute bar
on contractual waivers of statutes of limitation. Instead, from even before Simpson was decided,
the general rule has been that such waivers must be specific and for a reasonable time. We agree
with the courts of appeals that have applied this understanding of Simpson’s holding. See, e.g.,
Am. Alloy Steel, Inc., 777 S.W.2d at 177. Blanket pre-dispute waivers of all statutes of limitation
are unenforceable, but waivers of a particular limitations period for a defined and reasonable
amount of time may be enforced.
10
This holding does not conflict with our recent decision in Moayedi v. Interstate 35/Chisam
Road, L.P. In Moayedi, we held that by agreeing to a general waiver of all defenses in a guaranty
agreement, a party waived the right of offset provided by section 51.003(c) of the Property Code.
438 S.W.3d at 2. However, Moayedi did not consider whether a party could waive the statute of
limitations provided by section 51.003(a) or whether such a waiver would run afoul of Simpson.
The fact that Moayedi did not consider waiver of statutes of limitation is important, because “[a]
limitations bar differs materially from a debtor’s or guarantor’s rights to valuation and offset under
chapter 51.” Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267, 281 (Tex. App.—Houston [1st
Dist.] 2004, pet. dism’d). Statutes of limitation are “the Legislature’s procedural device for
establishing a point of repose for past actions and for ‘ensur[ing] that the search for truth is not
impaired by stale evidence or the loss of evidence.’” Id. (quoting Childs v. Haussecker, 974
S.W.2d 31, 38–39 (Tex. 1998)). On the other hand, “a guarantor’s valuation and offset rights
under chapter 51 are substantive rights, not procedural bars to suit.” Id.
While “[i]n general, parties may waive statutory and even constitutional rights,” Moayedi,
438 S.W.3d at 6, a statute of limitations is not solely a right belonging to the party asserting it. It
“protect[s] defendants and the courts from having to deal with cases in which the search for truth
may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses,
fading memories, disappearance of documents or otherwise.” Murray v. San Jacinto Agency, Inc.,
800 S.W.2d 826, 828 (Tex. 1990) (emphasis added). In addition to affording comfort and repose
to the defendant, statutes of limitation protect the courts and the public from the perils of
adjudicating stale claims. Although this Court has “long recognized a strong public policy in favor
of preserving the freedom of contract,” Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007)
11
(quoting Lawrence v. CDB Servs., Inc., 44 S.W.3d 544, 553 (Tex. 2001)), under our precedent that
freedom does not include the authority to unqualifiedly waive statutes of limitation and thereby
require the courts to attempt to adjudicate claims long after they have become stale. Simpson
continues to prohibit enforcement of open-ended pre-dispute waivers that eliminate the limitations
period.
We turn now to whether Godoy’s contractual waiver of the two-year limitations period is
enforceable. The “Guarantor’s Waivers” section of the agreement contains three discrete sections
that potentially waive statutes of limitation: sections (E), (F), and (A). We analyze each separately.
Section (E) states that the guarantor “waives any and all rights or defenses arising by reason of . . .
any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is
commenced, there is outstanding indebtedness of Borrower to Lender which is not barred by any
applicable statute of limitations.” Section (F) purports to waive “any defenses given to guarantors
at law or in equity other than actual payment and performance of the Indebtedness.” Under
Simpson, sections (E) and (F) are both unenforceable with respect to statutes of limitation because
they purport to completely waive all limitations periods. See 179 S.W.2d at 243. Neither section
is “specific” to a particular limitations period, and neither section has a “reasonable time” period
limiting the waiver. See Am. Alloy Steel, Inc., 777 S.W.2d at 177 (“[A]ny agreement made before
the statutory bar has fallen must be specific and for a reasonable time.”). Instead, application of
either section (E) or section (F) would enable Wells Fargo to sue Godoy any time in the future, no
matter how distant. Godoy is correct that sections (E) and (F) are unenforceable as applied to
statutes of limitation.
Section (A) states:
12
Guarantor also waives any and all rights or defenses arising by reason of (A) any
“one action” or “anti-deficiency” law or any other law which may prevent Lender
from bringing any action, including a claim for deficiency, against Guarantor,
before or after Lender’s commencement or completion of any foreclosure action,
either judicially or by exercise of a power of sale . . . .
Unlike sections (E) and (F), section (A) is both “specific” and “for a reasonable time.” Id. As for
specificity, section (A) waives a particular, identifiable statute of limitations—the two-year period
provided by section 51.003. It does so by waiving all “defenses” arising from any “antideficiency” law. Section 51.003 is Texas’s “anti-deficiency law.” See Moayedi, 438 S.W.3d at 6
(referring to section 51.003 as “[t]his anti-deficiency law”). Its two-year limitations period is a
“defense” arising from this “anti-deficiency” law. Section (A) does not purport to waive all
statutes of limitation or any other statute of limitations. It waives one statute of limitations, and it
does so with sufficient specificity.
Section (A) also satisfies the “for a reasonable time” requirement. It does not state a
substitute limitations period or provide a specific end-date for the waiver, defects which might
make other such agreements unenforceable. In this instance, however, the law provides a
reasonable four-year limitations period as a backstop. Once section 51.003(a)’s two-year statute
of limitations is waived by operation of section (A), the four-year statute of limitations applying
to suits to collect debts found in section 16.004(a)(3) of the Civil Practice and Remedies Code
becomes applicable. The concern about litigating long stale claims is absent, and Godoy does not
contend that a four-year limitations period is unreasonable. The backstop of section 16.004(a)(3)
is sufficient to satisfy the requirement that contractual statute-of-limitations waivers must be only
“for a reasonable time.” Am. Alloy Steel, Inc., 777 S.W.2d at 177.
13
The guaranty agreement’s savings clause further supports this conclusion. It states, “[i]f
any such waiver is determined to be contrary to any applicable law or public policy, such waiver
shall be effective only to the extent permitted by law or public policy.” Enforcing the section (A)
waiver “to the extent permitted by law or public policy,” as the parties agreed we should, we
conclude that the four-year statute of limitations applying to suits to collect debts applies as a
backstop. See TEX.CIV. PRAC. &REM.CODE § 16.004(a)(3). With respect to statutes of limitation,
section (A) is effectively an agreement to move the limitations period for Wells Fargo’s deficiency
suit from two years to four years. Such an agreement does not run afoul of the policy concerns
animating Simpson because it is specific and for a reasonable time. Section (A) of the “Guarantor’s
Waivers” is enforceable.
2
III. Conclusion
The court of appeals correctly concluded that Godoy contractually waived the two-year
statute of limitations and that a four-year statute of limitations applied to Wells Fargo’s claims.
Because Wells Fargo sued Godoy within that four-year period, limitations did not bar the suit.
Although we disagree with portions of the court of appeals’ reasoning, its judgment is affirmed.
 2 Because we conclude that Section (A) is sufficient to waive the limitations period on which Godoy relies,
we do not address whether the otherwise unenforceable waiver of all statutes of limitation in Section (E) could be
enforceable on a limited basis by virtue of the guaranty agreement’s savings clause. The savings clause provides, “If
any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective
only to the extent permitted by law or public policy.” It could be argued that, under this clause, the Section (E)
waiver—while generally unenforceable on public-policy grounds under Simpson—should nevertheless be enforced to
the greatest extent public policy allows. Whatever that greatest extent is, it likely includes a two-year extension of the
statutory two-year limitations period. We do not address the validity of this argument, however, because it is not
necessary to the disposition of the case.
14
__________________________________
James D. Blacklock
Justice
OPINION DELIVERED: May 10, 2019

Doctrine of laches (not the same as statute of limitations, but similar)

LACHES DOCTRINE IS EQUITABLE IN NATURE, WHILE SOL - BY CONTRAST - IS STATUTORY 

Laches is an equitable remedy that prevents a plaintiff from asserting a claim due to a lapse of time. Green v. Parrack,974 S.W.2d 200, 203-04 (Tex. App.-San Antonio 1998, no pet.); 

Bluebonnet Sav. Bank, F.S.B. v. Grayridge Apartment Homes, Inc., 907 S.W.2d 904, 912 (Tex. App.-Houston [1st Dist.] 1995, writ denied). To prevail, the party asserting laches must show two elements: (1) there was an unreasonable delay by the other party in asserting legal or equitable rights, and (2) the party asserting laches made a good faith change in position to his detriment because of the delay. Caldwell v. Barnes, 975 S.W.2d 535, 538 (Tex. 1998); Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 80 (Tex. 1989). 

SOURCE: AUSTIN COURT OF APPEALS
- No. 03-14-00738-CV - 1/20/2017

907 S.W.2d 904 (1995)

BLUEBONNET SAVINGS BANK, F.S.B., Appellant,
v.
GRAYRIDGE APARTMENT HOMES, INC. and John J. Harry, Appellees.

No. 01-94-00243-CV.

Court of Appeals of Texas, Houston (1st Dist.).

September 14, 1995. Rehearing Overruled October 26, 1995.

907*907 John A. Gilliam, David B. Dyer & Scot F. Rogers, Houston, for appellant.

Valorie W. Davenport, Houston, for appellees.

Before COHEN, WILSON and HEDGES, JJ.

OPINION

COHEN, Justice.

Appellant sought a deficiency judgment after it foreclosed its deed of trust on the Grayridge Apartments. The underlying promissory note was made by appellee Grayridge and was guaranteed by appellee Harry. The jury found that Bluebonnet was estopped from asserting its deficiency claim, and that its rights were both waived and barred by laches. On appellees' counterclaim, the jury found that Bluebonnet was grossly negligent in misrepresenting that the loan would be refinanced and awarded actual damages of $158,000 and exemplary damages of $474,000. The trial court rendered judgment on these verdicts. We reverse and render in part and reverse and remand in part.

In 1987, Grayridge borrowed from Reliance Savings Association to purchase apartments. Mr. Harry, Grayridge's president, personally guaranteed 50% of the note.

Bluebonnet acquired the note after Reliance failed. In May 1989, Bluebonnet gave notice of default. In June, Mr. Harry's attorney wrote Bluebonnet, disputing the default and stating that when Harry had borrowed the money, "all parties understood that the current structure of the loan would probably not be sufficient to allow (Grayridge) to perform according to its terms ... based on the projected cash flow ... and that further restructuring may well be necessary." The letter referred to the note's "sorrid [sic] and tortured history" and claimed that "the transaction was closed at the time with this expressed understanding and was subsequently affirmed by both parties after the closing."^[1]

Mr. Harry claims that Bluebonnet's agents subsequently orally agreed to accept partial payment, even though they knew or should have known that Bluebonnet's loan committee would refuse the deal and foreclose. Harry admitted, however, that the lengthy negotiations never produced any written agreement to restructure the loan, and that he knew loan committee approval was required and might be refused, as it ultimately was. Appellees allege that while these negotiations 908*908 dragged on from 1989 to 1991, occupancy in the apartments rose from 25% to 75%, and that Harry worked exclusively at the apartments, foregoing other business opportunities, all known to Bluebonnet. Harry complains that if he had known Bluebonnet would not agree to a workout, he would have abandoned the project, instead of managing it for two years, and would have earned money as a real estate broker, as he had in the five preceding years.

In its first point of error, Bluebonnet contends the evidence was legally and factually insufficient to prove a negligent misrepresentation to Mr. Harry, as the jury found in question 8.

On the no evidence point, we consider only the evidence and inferences tending to support the finding and disregard all evidence and inferences to the contrary. Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex.1988). The jury's findings cannot be overturned when the record reflects more than a scintilla of evidence in support of the verdict. Id. In reviewing factual sufficiency points, the jury's verdict must be upheld unless the verdict is so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King's Estate, 244 S.W.2d 660, 661 (Tex. 1951). When reviewing factual sufficiency, we review all of the evidence, including that which is contrary to the verdict. Id.

The jury refused to find any fraud by Bluebonnet. It found Bluebonnet guilty of grossly negligent misrepresentation. Negligent misrepresentation can arise when a party represents that a contract has been formed, though in fact, no contract agreement exists. Federal Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex.1991). The claimant must show:

1. that the informant supplied false information in a pecuniary transaction;

2. that the information was supplied for the guidance of others in their business transactions;

3. that the claimant justifiably relied upon this information;

4. that the claimant suffered a pecuniary loss; and,

5. that the informant failed to exercise reasonable care or competence in obtaining or communicating the information to the injured party.

Id.

As the El Paso court has cogently stated:

"[T]he tort of negligent misrepresentation frequently involves a defendant's statement that a contract exists, upon which plaintiff relies, only to later discover that the contract has been rejected or was never completed. Thus, negligent misrepresentation is a cause of action recognized in lieu of a breach of contract claim, not usually available where a contract was actually in force between the parties."

Airborne Freight Corp., Inc. v. C.R. Lee Enter., Inc., 847 S.W.2d 289, 295 (Tex.App.—El Paso 1992, writ denied) (emphasis added).

Here, the parties had a contract. The existence of a written contract makes it harder for a party to show reliance on subsequent oral representations. The contract itself is notice of binding duties, and when it requires that amendments be in writing, that is additional notice not to rely on oral representations. Thus, the court in Airborne Freight concluded, "The terms of the written contract simply belie any reliance on (the defendant's) verbal assurance. We distinguish this case from those negligent representation cases regarding failure to complete contracts. Here, a binding written agreement was entered by the parties and controlled their actions." Id. at 298. "The written contract contained ample cautionary language which would preclude exclusive reliance by a reasonable businessperson on verbal statements contradicting the written agreement." Id. at 297.

The evidence at trial shows that around September 20, 1989, Mr. Harry and Bluebonnet's agent, Will Fulton, discussed restructuring the loan. Harry testified that Fulton orally agreed to a payoff of $1,025,000. In October 1989, Bluebonnet's agent, Mr. Lingle, 909*909 stated, that "everything looked fine; [and] that he [Lingle] was getting ready to present it [the agreement] to the [loan] committee" and that "everything would be okay." Appellees contend that Bluebonnet's agents made these statements to induce Mr. Harry to continue managing the apartments, even though Bluebonnet intended all along to foreclose.

We find, as a matter of law, that appellees failed to prove they justifiably relied to their detriment on the statements by Bluebonnet's agents.

Bluebonnet never promised in writing to refinance. Appellees rely heavily on Mr. Harry's testimony about the September 20, 1989 meeting, where Mr. Fulton stated that Bluebonnet was "allowed at that time to take 90% of the appraised value" to settle the debt. Mr. Harry first said he would "think about it," and then offered $1,025,000, which exceeded the appraised value. Fulton then stated that Harry should "send him the financial statements and then put all this in writing and send it up to him and that he would get that to the loan committee." From this, Mr. Harry "perceived in (his) mind that Bluebonnet had made a representation" to accept $1,025,000 as full payment.

Viewing this evidence in the light most favorable to the verdict, we find it is no evidence of justifiable reliance by a reasonable businessperson. See Airborne Freight, 847 S.W.2d at 297. Mr. Harry admits that Fulton required further financial statements, that he told Harry to "put all this in writing," and that Fulton said the loan committee would still have to be consulted. Such actions do not signify a deal; they constitute negotiations. Interestingly, Mr. Fulton and Mr. Harry signed a document entitled "settlement negotiations agreement" before their discussion of September 20, 1989. In it, they agreed as follows:

This meeting was held for the purposes of settlement negotiations and in the interest of open and frank discussions. All of the parties agreed that such discussions were in the context of settlement negotiations, and that none of the discussions or communications at the meeting could be introduced by either party against the other party in any litigation.^[2]

This document is relevant in determining whether Mr. Harry's reliance was reasonable. Mr. Harry was an experienced, self-employed businessman who had completed a number of large commercial real estate transactions involving many millions of dollars. Considering 1) the language in the "settlement negotiations agreement," 2) the additional conditions and requirements placed upon him at the end of meeting with Mr. Fulton, and 3) his considerable experience in real estate, we conclude that Mr. Harry should have known that these discussions did not constitute an agreement to refinance. A reasonable businessperson, especially one with Mr. Harry's experience, would not confuse this for a promise to refinance and therefore would not reasonably rely on it.

It is significant that Bluebonnet's attorneys had been sending threats of foreclosure by certified mail to Mr. Harry regularly, perhaps even monthly, beginning as early as November of 1988. Other threats to foreclose were made by mail dated May 16, September 8, and September 21, 1989. The property was repeatedly posted for foreclosure, but scheduled sales were postponed in October, November, and December 1989, and in January and February 1990. Other threats to foreclose were issued on August 30, October 11, November 9, and December 5, 1990, and several letters agreeing to pass scheduled sales cautioned that, "in no event shall the agreement of Bluebonnet to pass the foreclosure sale be construed as an agreement by Bluebonnet to accept 1.1 million in full satisfaction of its indebtedness or to present that offer to the applicable regulatory authorities for approval." These letters also stated that Bluebonnet reserved the right to post the property for foreclosure 910*910 during the next month, "pending their consideration of (Mr. Harry's) offer." Despite all of this evidence, Mr. Harry thought he had an oral deal that precluded foreclosure. What he actually had was a signed written contract that "contained ample cautionary language which would preclude exclusive reliance by a reasonable businessperson on verbal statements contradicting the written agreement." Airborne Freight, 847 S.W.2d at 297-98.

Mr. Harry relies on Bluebonnet's internal document of October 13,1989, stating that its "business plan" was "foreclosure." He contends this shows that Bluebonnet's true intent differed from what he was then and later told. We conclude that any reliance on some agents' perceived intention not to foreclose was unreasonable in light of the frequent correspondence from Bluebonnet's lawyers threatening foreclosure and repeatedly posting the property for sale. Bluebonnet's intent to foreclose was hardly a secret; on the contrary, it was repeatedly communicated in an apparent effect to motivate a settlement.

Mr. Harry relies on conversations in October of 1989 with Bluebonnet's agent Mr. Lingle, who stated that, "he had been reviewing the file and that everything looked fine; that he was getting ready to present it to the committee. But one thing that he did need was this letter here extending the commitment letter." Mr. Harry contends this was a promise on which he could reasonably rely, even though Lingle required further information and the committee had not yet been consulted.

On October 26, 1989, Mr. Harry met with Bluebonnet's agents, Lingle and Burttschell, who told him, "Everything would be okay. Everything was going fine." However, once again, Lingle stated that "he was getting ready to take it to the loan committee."

Mr. Harry relies on a memorandum of December 7, 1990, showing that Bluebonnet had, on July 31, 1990 requested FDIC approval to foreclose. Moreover, the memo stated that it had declined Mr. Harry's offer to settle for $1,025,000 at a time when he had a loan commitment from a third party for $1,075,000 because Bluebonnet was unwilling to allow him to keep the remaining $50,000 for repairs. We fail to see how these actions could create a basis for justifiable reliance on a promise to refinance. Bluebonnet was constantly threatening foreclosure, requiring additional information, and stating the need to get approval from its own loan committee or from regulatory authorities, while simultaneously posting the property for foreclosure.

Finally, there is no evidence that Bluebonnet's alleged misrepresentations caused more than a $20,000 loss to appellees. Appellees spent $20,000 in various fees directly related to attempting to refinance. Mr. Harry's other damages arose from the fact that he devoted all of his time to the Grayridge project and thus had to forego other business opportunities. Mr. Harry admitted, however, that he had given up his other real estate projects and decided to devote full time to the Grayridge Apartments in 1987—long before Bluebonnet made any representations to him. He did this because Reliance Savings, which made this loan to him, had promised to involve him in three or four other business opportunities, which would require all of his time; he knew he could not perform those obligations simultaneously with others. When Reliance failed, those opportunities were lost. Mr. Harry presented no evidence that he was considering "walking away" from the loan before Bluebonnet's representations, but then changed his mind. He presented no evidence that he stopped working in other real estate transactions due to Bluebonnet's misrepresentations. While Mr. Harry presented evidence of his annual income from real estate brokerage in the five years preceding his operation of Grayridge, he did not show any specific opportunities that he had to forego between 1989 and 1991, while he operated Grayridge.

For all of these reasons, point of error one is sustained.

In point of error two, appellants contend the evidence is legally and factually 911*911insufficient to support the jury's finding, in question 10, that Bluebonnet was guilty of gross negligence.

We sustain this point of error for the same reasons we sustained point of error one. If there was no negligent misrepresentation, there was no grossly negligent misrepresentation.

Moreover, we find no evidence that Bluebonnet knew that Mr. Harry was working solely on Grayridge and foregoing other opportunities as a result. In fact, Mr. Harry furnished a financial statement to Bluebonnet showing that he owned (and was therefore responsible for operating) another 80 unit apartment project and a rent house. To support a finding of gross negligence, there must be evidence that Bluebonnet had "actual subjective knowledge of an extreme risk of serious harm." Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 22 (Tex.1994). The magnitude of the risk is judged from the viewpoint of the defendant at the time the events occurred. Id. at 23. The harm anticipated must be extraordinary harm, not the type of harm ordinarily associated with breaches of contract or even with bad faith denials of contract rights, harm such as "death, grievous physical injury, or financial ruin." Id. at 24. Mr. Harry's damages were that he continued to incur expenses and forego other employment in order to preserve the corporate appellee's property and to avoid his own personal liability on the guaranty. But as president of the corporate appellee, Grayridge Apartment Homes, Inc., Mr. Harry was already obligated to manage these apartments, which were a corporate asset, and as an individual guarantor, it was to his benefit to avoid personal liability. He was devoting all his time to doing so before Bluebonnet's representations were made. The risk that a debtor will not walk away from a binding contract, that he will instead devote time and money in an unsuccessful attempt to comply with that contract, as happened here, is not, as a matter of law, the type of "serious injury" contemplated by Moriel.

Point of error two is sustained.

In point of error four, appellant contends there is legally and factually insufficient evidence of damages, actual and punitive. Based on our decision to sustain points of error one and two, this point of error is moot. See discussion of Moriel, supra, however, regarding punitive damages.

Point of error four is overruled.

In point of error five, Bluebonnet contends the evidence is legally and factually insufficient to support the jury's findings that Bluebonnet could not recover on its promissory note and guarantee because of waiver, estoppel, and laches. We agree.

Waiver is the intentional relinquishment of a known right or intentional conduct inconsistent with claiming it. Massachusetts Bonding & Ins. Co. v. Orkin Exterminating Co., Inc., 416 S.W.2d 396, 401 (Tex.1967). Waiver of some rights does not mean that the party relinquishes its rights to have the contract fully performed as to the remaining provisions. Ryan v. Thurmond, 481 S.W.2d 199, 206-07 (Tex.Civ.App.—Corpus Christi 1972, writ ref'd n.r.e.).

The note provides that failure to accelerate the debt upon a default "shall not constitute a waiver of the right to exercise it in the event of any subsequent default." Similarly, the guaranty agreement provides that neither delays, omissions, lack of diligence, nor lack of care by the holder in exercising its rights will "impair or affect the rights of the Holder or the Note and/or the Obligations and the liability of Guarantor hereunder." Bluebonnet's attorneys repeatedly wrote to Harry, stating that "passing" the various foreclosure sales was not a waiver of any debt or of any future right to foreclose.

No evidence showed that Bluebonnet intended to relinquish its rights. The negotiations on the $1,025,000 figure showed an intent to collect at least that amount. The repeated foreclosure postings are the opposite of waiver. Bluebonnet's conduct was not inconsistent with its rights under the note or 912*912 the guaranty. Therefore, there is no evidence to support a finding of waiver.

Estoppel precludes recovery by a person whose conduct causes another to give up some valid right against the first person. Finkelstein v. Southampton Civic Club, 675 S.W.2d 271, 278 (Tex.App.—Houston [1st Dist.] 1984, writ ref'd n.r.e.). Estoppel may be equitable or promissory. Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 937 (Tex.App.—Houston [1st Dist.] 1994, no writ). In either case, reliance is fundamental. Id. We have held that there was no justifiable reliance here; therefore, there is no evidence to support the affirmative defense of estoppel.

Finally, laches is an equitable remedy that prevents a plaintiff from asserting a claim due to a lapse of time. McMasters v. Mills, 30 Tex. 563, 567 (1868). The case is said to be "stale." Id. Although a court applying the doctrine of laches is not bound by any statute of limitations, the statute of limitations is one measure of whether a claim has become stale. See Barfield v. Howard M. Smith Co., 426 S.W.2d 834, 840 (Tex.1968). Laches and statutes of limitations are "analogs." McMasters, 30 Tex. at 566-67. Accordingly, laches does not bar a plaintiff's suit before the statute of limitations has run unless estoppel or "extraordinary circumstances" are present. Barfield, 426 S.W.2d at 840.

Bluebonnet sued within the limitations period. Moreover, Bluebonnet's claim is not barred by estoppel or by "extraordinary circumstances." In Barfield, the court held that "extraordinary circumstances" do not include claims that but for the plaintiff's delay in suing, the defendant would have tried to set aside its lease with the plaintiff, moved its business to another location, or refused to enter into a subsequent lease with the plaintiff. Barfield, 426 S.W.2d at 840. Mr. Harry claims that but for Bluebonnet's delay, he would have obtained alternate financing. This is not "extraordinary circumstances."

We sustain the fifth point of error.

In the sixth point of error, appellant contends the evidence is legally and factually insufficient to support the jury's answer of "none" as the amount due and owing as a deficiency on the note. We agree.

It is clear that a deficiency existed, that Grayridge Apartment Homes, Inc. owed it, and that Mr. Harry guaranteed half of it. The present amount is unclear. Therefore, unless the parties can stipulate in this court, we will remand the cause for the trial court to determine the amount. If the parties stipulate the amount, we will render judgment in favor of Bluebonnet and against Grayridge Apartment Homes, Inc. for the full amount and against Mr. Harry for half of the amount. Tex.R.App.P. 80(b).

Point of error six is sustained.

We need not decide point of error three, which complains of a fatal conflict in the jury findings.

The trial court's judgment is reversed. Judgment is rendered that Grayridge Apartment Homes, Inc. and John J. Harry take nothing from Bluebonnet Savings Bank on the claim for negligent misrepresentation. The cause is remanded to the trial court to determine the amount of the judgment to be rendered on the note and guaranty in favor of Bluebonnet and against Grayridge and Harry, respectively.

[1] Appellees cite no evidence supporting these claims, which are irrelevant to any issues raised in this appeal.

[2] Of course, they were. No complaint about that is before us.

Judicial Extension of Limitations Period - American Star Energy and Minerals Corporation v Stowers (Tex Feb. 27, 2015)

TEXAS SUPREME COURT LENGTHENS STATUTE OF LIMITATIONS FOR SOME CREDITORS BY RE-DEFINING POINT OF ACCRUAL  

A cause of action accrues when facts come into existence that authorize a claimant to seek a judicial remedy. At least that has been the general rule. On February 27, 2015, the Texas Supreme Court created an exception, and thereby revived a creditor's claim that had been dismissed as time-barred by the court below. 

A claim against a partner to enforce the partner's liability for partnership debt, says the Court, does not accrue when the underlying claim accrues even though the partner may be sued in addition to the partnership.

Acknowledging that the Texas Legislature has not defined accrual for this type of claim, though it has done so for other types of claims, and even citing the residual statute of limitations in the Civil Practice and Remedies Code (4 years), the Court nevertheless effectively extended the "statute" of limitations for a claim against the partner to many more years (depending on how fast the claim against the partnership is brought and how fast it is litigated to judgment) by holding that the claim for enforcement of the partners' liability on partnership debt does not accrue until judgment is entered against the partnership (plus an additional 90 days, unless an exception applies). 

It gives a whole new meaning to statutory construction: Extending the "statute" of limitations beyond the four year statute of limitations for breach of contract claims (and the residual statute of limitations for like number of years) by creating an exception to the general rule of accrual that other plaintiffs have to live by. 

American Star Energy and Minerals Corporation v Stowers (Tex Feb. 27, 2015)(Opinon by Jeff Brown).

Coverage of this case elsewhere:
Texas High Court Extends Limitations Period for Unpaid Partnership Liabilities
SCOTX rules on limitations period against partners: American Star Energy and Minerals Corp. v. Stowers

AMERICAN STAR ENERGY AND MINERALS CORPORATION, Petitioner,
v.
RICHARD "DICK" STOWERS, RICHARD W. STOWERS, FRANK K. STOWERS AND LINDA SUE JASURDA, Respondents.

No. 13-0484.

Supreme Court of Texas.

Argued October 14, 2014. Opinion delivered: February 27, 2015.

JUSTICE BROWN delivered the opinion of the Court.

JEFFREY V. BROWN, Justice.

In this case we must decide whether Texas partnership law requires a plaintiff seeking to enforce a partner's liability for a partnership debt to sue the partner within the limitations period on the underlying claim against the partnership. Here, a judgment creditor attempted to collect from a partnership after litigating a contract claim for over a decade and a half, only to find the partnership insolvent. When the creditor sought a judgment against the individual partners, the trial court ruled the limitations period began when the underlying cause of action accrued. Because that period had passed, limitations precluded pursuit of the partners' assets. The court of appeals affirmed. 

We hold today that the limitations period against a partner generally does not commence until after final judgment against the partnership is entered. Because this action was brought within that period, we reverse the court of appeals' judgment.

Suing lawyers: Are multiple causes of action / theories of liability available? - The rule against fracturing of legal malpractice claims may not always be clear-cut when it comes to application

  

ATTORNEY MALPRACTICE:  The fracturing-of-claims issue

 

Whether an attorney can be sued for something other than malpractice, i.e. professional negligence, is not a minor matter. Negligence and DTPA claims have a shorter limitations period than other theories of recovery, such as breach of contract, common-law fraud, and breach of fiduciary duty. A claim may thus be time-barred (or not) depending on its nature (or how the former clients' allegations against their former counsel are construed by the judge that presides over the malpractice lawsuit).

LEGAL MALPRACTICE CLAIMS

  

 “Legal malpractice is not the only cause of action under which a client can recover from [their] attorney.”  Goffney v. Rabson, 56 S.W.3d 186, 190 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) (citing Kahlig v. Boyd, 980 S.W.2d 685, 688 (Tex. App.—San Antonio 1998, pet. denied)).  “When the facts of a case support claims against a lawyer for something other than professional negligence,” the claims may be allowed.  Murphy v. Gruber, 241 S.W.3d 689, 695 (Tex. App.––Dallas 2007, pet. denied) (citing Latham v. Castillo, 972 S.W.2d 66, 68, 71 (Tex. 1998) (allowing pursuit of Deceptive Trade Practices Act (DTPA) cause of action for attorney’s allegedly unconscionable action in representing he was actively prosecuting client medical malpractice claim when he was not)).  But see Brescia v. Slack & Davis, L.L.P., No. 03-08-00042-CV, 2010 WL 4670322, at *7 (Tex. App.—Austin Nov. 19, 2010, pet. denied) (mem. op.) (attorneys may not be sued under DTPA unless misrepresentation cannot be characterized as advice, judgment, or opinion) (citing Tex. Bus. & Com. Code Ann. § 17.49(c)(1) (West Supp. 2011)). 

  
THE RULE AGAINST FRACTURING OF LEGAL MALPRACTICE CLAIMS
   
 “Texas law, however, does not permit a plaintiff to divide or fracture her legal malpractice claims into additional causes of action.”  Goffney, 56 S.W.3d at 190 (citing Greathouse v. McConnell, 982 S.W.2d 165, 172 (Tex. App.—Houston [1st Dist.] 1998, pet. denied); Kahlig v. Boyd, 980 S.W.2d 685, 688–91 (Tex. App.—San Antonio 1998, pet. denied); Smith v. Heard, 980 S.W.2d 693, 697 (Tex. App.—San Antonio 1998, pet. denied); Rodriguez v. Klein, 960 S.W.2d 179, 184 (Tex. App.—Corpus Christi 1997, no pet.); Am. Med. Elecs., Inc. v. Korn, 819 S.W.2d 573, 576 (Tex. App.—Dallas 1991, writ denied); Judwin Props., Inc. v. Griggs & Harrison, 911 S.W.2d 498, 506 (Tex. App.—Houston [1st Dist.] 1995, no writ); Bray v. Jordan, 796 S.W.2d 296, 298 (Tex. App.—El Paso 1990, no writ)). 

 
Therefore, in general, courts do not allow a case arising out of an attorney’s alleged bad legal advice or improper representation to be split out into separate claims for negligence, breach of contract, or fraud, because the “real issue remains one of whether the professional exercised that degree of care, skill, and diligence that professionals of ordinary skill and knowledge commonly possess and exercise.”  Kimleco Petroleum, Inc. v. Morrison & Shelton, 91 S.W.3d 921, 924 (Tex. App.––Fort Worth 2003, pet. denied) (citing Averitt v. PriceWaterhouseCoopers L.L.P., 89 S.W.3d 330, 333 (Tex. App.—Fort Worth 2002, no pet.); Sledge v. Alsup, 759 S.W.2d 1, 2 (Tex. App.—El Paso 1988, no writ) (“Nothing is to be gained by fracturing a cause of action arising out of bad legal advice or improper representation into claims for negligence, breach of contract, fraud or some other name.  If a lawyer’s error or mistake is actionable, it should give rise to a cause of action for legal malpractice with one set of issues which inquire if the conduct or omission occurred, if that conduct or omission was malpractice and if so, subsequent issues on causation and damages.”)). 

  

[Defendant-attorney ] Schleier and the firm contend that the [former clients'] claims are malpractice claims that are barred by a two-year statute of limitations.  See Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a) (West Supp. 2011).  “When the basis for summary judgment is the statute of limitations, the movant has the burden to show from the record that the suit is barred by limitations.  Kimleco, 91 S.W.3d at 923 (Tex. App.—Fort Worth 2003, pet. denied) (citing Delgado v. Burns, 656 S.W.2d 428, 429 (Tex. 1983); Wright v. Fowler, 991 S.W.2d 343, 349 (Tex. App.—Fort Worth 1999, no pet.)). 
  
“Whether allegations against a lawyer, labeled as breach of fiduciary duty, fraud, or some other cause of action, are actually claims for professional negligence or something else is a question of law to be determined by the court.”  Duerr v. Brown, 262 S.W.3d 63, 70 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (quoting Murphy, 241 S.W.3d at 692). 

  

SOURCE: TEXARKANA COURT OF APPEALS - 06-11-00050-CV – 12/7/11 (affirming the trial court’s summary judgment because the statute of limitations barred the former clients’ claims, and no tolling provisions applies).