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

What limitations period applies to a claim of civil conspiracy? Texas Supreme Court answers the question: It will depend

CIVIL CONSPIRACY DOES NOT HAVE ITS OWN SOL 
-  

TAKES IT FROM THE UNDERLYING TORT 

The Texas Civil Practice & Remedies Code (CPRC) specifies the limitations period for a number of different categories of claims, but civil conspiracy is not one of them. So, is it two years (as is true of personal injury torts) or should it mirror the statute of limitations that governs to the underlying tort, given that civil conspiracy implicates an underlying tort (with a range between 1 to 4 years)? Or should it be four years because there is a residual statute of limitations of that length that could fill the void in the absence of a specific provision to cover the conspiratorial scenario?

Several intermediate courts of appeals have held that a 2-year SOL applies to civil conspiracy, a rule whose logic is debatable. On April 5, 2019 the Texas Supreme Court resolved the conundrum in a case from the Fourteenth Court of Appeals in Houston. CITE: Agar Corp. Inc. v. Electro Circuits International, LLC, No. 17-0630 (Tex. 2019, motion for rehearing due May 22, 2019) (derivative tort of civil conspiracy subject to limitations period that applies to the underlying tort).

Comment: While the new rule makes good sense as a matter of jurisprudential policy, it also happens to cut both ways (shortening or lengthening the limitations period depending on the nature of the claim and under what theory it is actionable). So some would-be plaintiffs may have their not-yet-barred claim nixed by the SOL-shortening and may not have viable alternative theories of legal liability to avoid the harsh impact of the new rule, e.g., in a defamation case, which involves a 1-year limit. Unless appellate courts come up with some grandfathering doctrine to exempt claims that would not have been time-barred before the Supreme Court handed down its decision in Agar Corp. v Electro Circuits. For other cases, however, the newly-established rule will result in an extension of time to initiate a lawsuit or add a co-conspirator. See legal news coverage, e.g. Texas High Court Kills 2-Year Limits For Civil Conspiracy - Law360 Apr. 5, 2019; Texas Supreme Court Ditches Long-Standing Precedent to Hold Conspiracy Is a Derivative Claim Governed by the Statute of Limitations for the Underlying Tort - TEXAS LAWYER Apr. 10, 2019. 

In the case before the supreme court, some conspiracy claims were found to be time-barred based on the nature of the underlying tort, but the record did not establish that all were so barred. The high court accordingly reversed the court of appeals, which had affirmed the summary judgment on limitations granted by a Harris County district court, and remanded to the trial court to proceed with the claim that may not yet be time-barred. 

AGAR CORPORATION, INC., Petitioner,
v.
ELECTRO CIRCUITS INTERNATIONAL, LLC AND SURESH PARIKH, Respondents.

No. 17-0630.

Supreme Court of Texas.

Argued January 23, 2019. Opinion delivered: April 5, 2019.   

Matthew A. Kornhauser, Dylan B. Russell, for AGAR Corporation, Inc., Petitioner.

Terri Silver Morgan, Megan N. Brown, Kenneth M. Krock, for Electro Circuits International, LLC and Suresh Parikh, Respondent.

On Petition for Review from the Court of Appeals for the Fourteenth District of Texas.

JUSTICE DEVINE delivered the opinion of the court.

JUSTICE BUSBY did not participate in the decision.

JOHN P. DEVINE, Justice.

In this summary-judgment appeal we must determine what statute of limitations applies to a claim of civil conspiracy. Following its own precedent, the court of appeals applied the two-year statute generally applicable to torts, including trespass, and affirmed the trial court's summary judgment concluding that the civil conspiracy claims were indeed barred by limitations. 565 S.W.3d 12, 18 (Tex. App.-Houston [14th Dist.] 2016) (mem. op.) (citing TEX. CIV. PRAC. & REM. CODE § 16.003 and cases applying it to civil conspiracy). We do not agree that section 16.003 universally applies to such claims.

Because civil conspiracy is a derivative tort that "depends on participation in some underlying tort," we conclude that the applicable statute of limitations must coincide with that of the "underlying tort for which the plaintiff seeks to hold at least one of the named defendants liable." See Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996) (describing the nature of a civil conspiracy claim). And because at least one of the underlying torts asserted as the basis for the conspiracy claims here may not be barred by its applicable statute of limitations, we reverse the court of appeals' judgment in part and affirm it in part.

I. Background

Agar Corporation designs, manufactures, and sells measuring devices for use in the oil and gas industry. Agar sued more than a dozen individuals and entities, including Sanjay Shah and Pandurang Nayak, who they alleged sold Agar's technology in the scheme to produce the knock-off products. Electro Circuits and its owner Suresh Parikh (collectively "Electro") were subsequently implicated in the scheme and added to Agar's lawsuit in November 2011. Electro once manufactured circuit boards for Agar, and its alleged role in the conspiracy was that it used Agar's proprietary information to manufacture circuit boards for the knock-off products.

In its seventh amended petition filed on February 10, 2012, Agar asserted claims against Electro for tortious interference, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, fraud, fraud by non-disclosure, misappropriation of trade secrets, violations of the Texas Theft Liability Act, conversion, and civil conspiracy and asserted similar claims against the other defendants. Electro answered and, as pertinent here, filed a counterclaim against Agar seeking attorney's fees under the Texas Theft Liability Act.

Electro later filed a traditional motion for summary judgment based on the statute of limitations and a no-evidence motion that attacked the elements of Agar's various claims. See TEX. R. CIV. P. 166a(c), (i). The trial court (1) denied the no-evidence motion for summary judgment as to Agar's claims for civil conspiracy; (2) granted the no-evidence motion in favor of Electro "as to all other claims [by Agar] alleging direct liability;" and (3) granted "a traditional summary judgment on Plaintiff's claims against Defendants Electro Circuits International, LLC and Suresh Parikh only on the limited basis as to [their] . . . affirmative defense of statute of limitations." Following the severance of Agar's and Electro's adverse claims from the others in the case, Electro filed another motion for summary judgment in the severed case on the issue of attorney's fees under the Texas Theft Liability Act. The trial court granted that motion, awarded Electro its attorney's fees, and together with the previous summary judgment in Electro's favor disposed of all issues in the severed case.

Agar appealed, complaining about that part of the summary judgment that barred its civil conspiracy claims because of limitations and the subsequent summary judgment that awarded Electro attorney's fees. Agar argued that the trial court should not have applied a two-year statute of limitations to its conspiracy claims and thereby erred in concluding that such claims were barred by limitations. Agar also contended that the Texas Theft Liability Act did not provide for the award of fees to Electro, the defendant. The court of appeals rejected Agar's arguments and affirmed the summary judgments for Electro. 565 S.W.3d at 26. In a concurrence to the denial of rehearing en banc, Chief Justice Frost explained that the courts of appeals have uniformly applied section 16.003's two-year statute of limitations to civil conspiracy claims, even though the logic for that rule might reasonably be questioned. 529 S.W.3d 559, 563-64 (Tex. App.-Houston [14th Dist.] 2017) (Frost, C.J., concurring in order denying rehearing en banc). Having never passed on the question, we granted Agar's petition to consider the relevant statute of limitations for a claim of civil conspiracy.

II. Statute of Limitations

The statute of limitations is an affirmative defense that serves to "establish a point of repose and to terminate stale claims." Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990). Statutes of limitations vary from claim to claim as determined by the Legislature. See generally TEX. CIV. PRAC. & REM. CODE §§ 16.002.051. For example, a two-year limitations period applies to suits for trespass and conversion, whereas a four-year limitations period applies to suits for fraud or breach of fiduciary duty. Id. §§ 16.003(a), .004(a)(4), (5). For claims not expressly identified by the Legislature, a residual limitations period of four years is provided. Id. § 16.051.

None of the statutes of limitations mention civil conspiracy by name. Rather than apply the residual limitations period, the courts of appeals that have considered the issue have held civil conspiracy falls under the two-year statute of limitations applied to suits for trespass in section 16.003 of the Civil Practices and Remedies Code.^[1] Agar contends that these cases are wrong and that they misunderstand the nature of a civil conspiracy claim.

In civil conspiracy, the plaintiff seeks to hold the defendant liable for an injury caused by a third party who has acted in combination with the defendant for a common purpose. Chu v. Hong, 249 S.W.3d 441, 444-45 (Tex. 2008); Carroll v. Timmers Chevrolet, Inc.,592 S.W.2d 922, 925 (Tex. 1979). Agar therefore submits that the applicable statute of limitations for a civil conspiracy claim should be that of the underlying tort because that limitations period more accurately reflects civil conspiracy's status as a vicarious liability theory that hinges on an underlying tort.

Electro responds that civil conspiracy is not a vicarious liability theory but rather an independent cause of action in the nature of a trespass to which section 16.003's two-year statute of limitations applies. Electro accordingly concludes that the courts of appeals have correctly applied this limitations period to past civil conspiracy claims and that this uniform line of decisions should not be disturbed. The parties thus disagree about whether civil conspiracy is an independent tort or merely a theory of vicarious tort liability derivative of an underlying wrong.

A. Civil Conspiracy in Texas as a Vicarious Liability Theory

In most jurisdictions, civil conspiracy is a vicarious liability theory that imparts joint-and-several liability to a co-conspirator who may not be liable for the underlying tort. See, e.g., Mackey v. Compass Mktg., Inc., 892 A.2d 479, 485 (Md. 2006); Upah v. Ancona Bros. Co., 521 N.W.2d 895, 901 (Neb. 1994), disapproved on other grounds, Welsch v. Graves, 582 N.W.2d 312, 316 (Neb. 1998); Granewich v. Harding, 985 P.2d 788, 792 (Or. 1999); Dunn v. Rockwell, 689 S.E.2d 255, 269 (W. Va. 2009). Liability depends on injury from the underlying tort, not the conspiracy itself. Mackey, 892 A.2d at 485. By contrast, a minority of states treat civil conspiracy as an independent claim where defendants may be held liable for damages caused by the conspiracy itself, even in the absence of an unlawful act. See, e.g., Allegro, Inc. v. Scully, 791 S.E.2d 140, 144 (S.C. 2016). Our case law on civil conspiracy leaves Texas's position on the debate arguably unclear. Although we have not expressly said whether a civil conspiracy claim is in the nature of a vicarious liability theory or an independent tort, we have at various times used language implying that it was one or the other.

We have said a proven civil conspiracy means "each of [the] defendants in error is responsible for all acts done by any of the conspirators in furtherance of the unlawful combination." State v. Standard Oil Co., 107 S.W.2d 550, 559 (Tex. 1937). This is a statement of vicarious liability. See Carroll, 592 S.W.2d at 925-26 (citing Standard Oilwhile describing civil conspiracy as a theory of vicarious liability).^[2] We have repeatedly called civil conspiracy a "derivative tort," meaning it depends on some underlying tort or other illegal act. Chu, 249 S.W.3d at 444; Tilton, 925 S.W.2d at 681. Our use of the word "derivative" in this context means a civil conspiracy claim is connected to the underlying tort and survives or fails alongside it. NME Hosps., Inc. v. Rennels, 994 S.W.2d 142, 148 (Tex. 1999). This is because "[i]t is not the agreement itself, but an injury to the plaintiff resulting from [another] act done pursuant to the common purpose that gives rise to the cause of action." Carroll, 592 S.W.2d at 925. Civil conspiracy depends entirely on the injury caused by the underlying tort; the injury is the damage from the underlying wrong, not the conspiracy itself. Schlumberger Well Surveying Corp. v. Nortex Oil & Gas Corp.,435 S.W.2d 854, 856 (Tex. 1968). These cases clearly describe civil conspiracy as a theory of vicarious liability and establish that in Texas, civil conspiracy requires some underlying wrong.

In other cases, we have described civil conspiracy as a "recognized tort" or a "cause of action." See, e.g., Juhl v. Airington, 936 S.W.2d 640, 644 (Tex. 1996); Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983). A cause of action is simply "a factual situation that entitles one person to obtain a remedy." Cause of Action, BLACK'S LAW DICTIONARY (10th ed. 2014). Likewise, in modern usage a tort is simply a "civil wrong, other than breach of contract, for which a remedy may be obtained." Tort, BLACK'S LAW DICTIONARY (10th ed. 2014). When used as a theory of vicarious liability, civil conspiracy is part of the factual situation that permits a remedy against co-conspirators. Without it, there would be no grounds for recovery against co-conspirators who did not commit the underlying unlawful act. So it is not inconsistent to say civil conspiracy is a vicarious liability theory while also recognizing that it is a kind of cause of action. Indeed, it is not uncommon for courts to characterize vicarious liability itself as a cause of action when sorting through plaintiffs' various claims. E.g., Sky View at Las Palmas, LLC v. Mendez, 555 S.W.3d 101, 105 n.2 (Tex. 2018) (including vicarious liability in a list of the plaintiff's causes of action alongside malpractice, negligence, and breach of contract); N.P. v. Methodist Hosp., 190 S.W.3d 217, 225 (Tex. App.-Houston [1st Dist.] 2006, pet. denied) ("[Plaintiff] nonetheless has a viable cause of action for vicarious liability under principles of respondeat superior."). None would take this usage to mean vicarious liability is an independent cause of action. See Crooks v. Moses, 138 S.W.3d 629, 637 (Tex. App.-Dallas 2004, no pet.) (explaining that vicarious liability is not an independent cause of action). Likewise, characterizing civil conspiracy as a cause of action does not mean it is an independent tort.

Our discussion of the five elements of civil conspiracy enumerated in Massey v. Armco Steel Co., 652 S.W.2d at 934, might also point to civil conspiracy being an independent claim. There, we defined the elements of civil conspiracy as: "(1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result." Id. (citing 15A C.J.S. Conspiracy § 1(2) (1967)). These elements might be read to mean the litigated damages must only be proximately caused by the conspiracy itself, and we have sometimes described the damages element as "damages caused by the conspiracy." E.g., Operation Rescue-Nat'l v. Planned Parenthood of Hou. & Se. Tex., Inc., 975 S.W.2d 546, 554 (Tex. 1998). But no past decisions depend on that characterization of the damages element. Our conspiracy decisions both before and after Massey emphasize that the damages that matter come from the underlying wrongful act, not the conspiracy itself. Tilton, 925 S.W.2d at 680-81; Schlumberger, 435 S.W.2d at 856. This precedent does not contradict the Massey elements; it instead clarifies that the damages element refers not to the entire conspiracy itself but to some tortious act committed by a co-conspirator pursuant to the conspiracy. These cases thus do not contradict those that more clearly indicate that civil conspiracy is a theory of vicarious liability and not an independent tort.

B. Civil Conspiracy Limitations Tied to the Underlying Tort

Having determined that civil conspiracy is not an independent tort, it follows that the claim does not have its own statute of limitations. In fact, assigning civil conspiracy its own fixed limitations period conflicts with its nature as a derivative tort. Civil conspiracy requires an underlying tort that has caused damages. Tilton, 925 S.W.2d at 681. The cause of action for the underlying tort typically accrues as soon as the tort causes those damages. See Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997) ("[A] cause of action accrues when a wrongful act causes some legal injury . . . ."). A fixed limitations period of two years for civil conspiracy that differs from that of its underlying tort can produce bizarre consequences. For example, why should co-conspirators who participate in a scheme to defame a person but who do not commit any defamatory acts themselves be subject to suit for a longer period than the primary tortfeasor upon whom their liability is premised? See TEX. CIV. PRAC. & REM. CODE § 16.002(a) (applying a one-year limitations period for libel and slander).

Equating the limitations period for civil conspiracy with that of the underlying tort also accords with the Legislature's statute-of-limitations scheme. The Legislature has defined different statutes of limitations for various claims, such as "suit[s] for trespass or injury," "suit[s] on . . . fraud," "suit[s] for . . . libel" or "suit[s] for misappropriation of trade secrets." TEX. CIV. PRAC. & REM. CODE §§ 16.002.004, .010. The scheme thus assigns statutes of limitations based on the type of wrong, but it does not assign different limitations for parties who may be liable through different theories for the same wrong. Because civil conspiracy is a theory of vicarious liability, a lawsuit alleging a civil conspiracy that committed some intentional tort is still a "suit for" that tort.

We are not alone in our understanding of civil conspiracy as a theory of derivative liability that shares a limitations period with that of its underlying tort. The courts of last resort in Maryland, Nebraska, Virginia, and West Virginia agree. Dunlap v. Cottman Transmission Sys., 754 S.E.2d 313, 320-21 (Va. 2014); Prince George's Cty. v. Longtin, 19 A.3d 859, 877 (Md. 2011); Upah v. Ancona Bros. Co., 521 N.W.2d at 902; Dunn, 689 S.E.2d at 269. Several other states' intermediate courts have held the same.^[3]

Electro offers three reasons we should apply section 16.003's two-year limitations period to all civil conspiracies—as our own courts of appeals have uniformly done—rather than align ourselves with these other states. First, Electro submits that 16.003's two-year limitations period generally applies to torts not named by more specific statutes and therefore should apply to a civil conspiracy claim as an action in trespass. See Williams v. Khalaf, 802 S.W.2d 651, 654 (Tex. 1990) ("[Torts] not expressly covered by a limitation provision nor expressly held by this court to be governed by a different provision would presumptively be a `trespass' for limitations purposes."). The argument assumes that civil conspiracy is itself an independent tort, but it is not.

Next, Electro compares civil conspiracy to tortious interference with business relations to support a strict application of 16.003's limitations period here. In First National Bank of Eagle Pass v. Levine, we held section 16.003 governs tortious interference claims. 721 S.W.2d 287, 289 (Tex. 1986). And in Wal-Mart Stores, Inc. v. Sturges, we held that tortious interference with business relations requires proving that the defendant's conduct would be actionable under another recognized tort. 52 S.W.3d 711, 726 (Tex. 2001). Levine and Sturges combined suggest that 16.003's two-year limitation can govern claims that depend on other underlying tortious actions, like tortious interference and civil conspiracy. But we have held this is not the case. In Nath v. Texas Children's Hospital, we held that only a one-year statute of limitations applies to tortious interference claims where a one-year tortious act is the only grounds for the claim. 446 S.W.3d 355, 370 (Tex. 2014). So even if Electro's analogy between tortious interference and civil conspiracy were sound, it would not be grounds for holding section 16.003 applies to every civil conspiracy claim.

Finally, Electro argues that we should not overturn the court of appeals' decades-long, uniform application of the two-year limitations period to civil conspiracy. But a long history of mistaken application alone is insufficient to counsel against correcting the error. See, e.g., Hubenak v. San Jacinto Gas Transmission Co., 141 S.W.3d 172, 181 & n.44, 183 & n.69 (Tex. 2004) (disapproving at least sixteen court of appeals decisions spanning over seventy years); Callejo v. Brazos Elec. Power Coop., Inc., 755 S.W.2d 73, 75 (Tex. 1988) (disapproving at least twelve decisions spanning over thirty years). Nor is the Legislature's inaction in the face of these appellate decisions evidence that those decisions are in line with the statutory scheme. See Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 470-71 (Tex. 2009) (refusing to make inferences about the Legislature's statutory intent from the Legislature's inaction). Because we hold civil conspiracy is not an independent tort and its statute of limitations is that of the underlying tort, we disapprove the courts of appeals' decisions to the extent they contradict this opinion.^[4]

Agar's seventh amended petition alleges Electro engaged in a civil conspiracy to commit several underlying torts including, among others, conversion, misappropriation of trade secrets, and fraud. These underlying claims are governed by separate two-, three- and four-year statutes of limitations respectively. TEX. CIV. PRAC. & REM. CODE §§ 16.003(a), 16.004(a), 16.010(a). The civil conspiracy claims are likewise governed respectively by those statutes. Agar's civil conspiracy claims may only proceed if they are based on an underlying tort that is itself not barred by limitations. To determine on which bases Agar's claim may proceed, if any, we turn to accrual.

III. Accrual

The statute of limitations begins to run when a claim accrues. Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990). A cause of action accrues when facts come into existence that permit a plaintiff to recover. Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 593 (Tex. 2017). Generally, this is when a wrongful act causes an injury. Murray, 800 S.W.2d at 828.

As with the statute of limitations, we have not previously considered when a civil conspiracy claim accrues. But the above principles should apply to civil conspiracy claims as they do to other claims. Because a civil conspiracy requires an underlying tort, Tilton, 925 S.W.2d at 681, most civil conspiracy claims should accrue when the underlying tort causes harm to the plaintiff, that is, at the same time as the tort claim against the primary tortfeasor.^[5] But some disagreement exists about this.

The courts of other states have announced differing rules for accrual in the context of a conspiracy. See 16 AM. JUR. 2D Conspiracy § 65 (2018) (describing with citations at least four different rules for civil conspiracy accrual applied by various courts). For instance, the California Supreme Court has held the entirety of the conspiracy does not accrue until the last overt act of the conspiracy. Wyatt v. Union Mortgage Co., 157 Cal.Rptr. 392, 400 (Cal. 1979). In Arizona, by contrast, the statute of limitations commences when the tortious act is committed on which conspiracy liability is premised. Tovrea Land & Cattle Co. v. Linsenmeyer, 412 P.2d 47, 63 (Ariz. 1966).

A. Civil Conspiracy's Accrual in Texas

Texas appellate courts on balance appear to agree with Arizona, treating each underlying tort of the conspiracy as having its own limitations which runs from the time the act is committed. See, e.g., Harang v. Aetna Life Ins. Co., 400 S.W.2d 810, 813 (Tex. Civ. App.-Houston [1st Dist.] 1966, writ ref'd n.r.e.); Cathey v. First City Bank of Aransas Pass, 758 S.W.2d 818, 822 (Tex. App.-Corpus Christi 1988, writ denied). The application of this rule, however, is not always clear or consistent. See, e.g., Jeanes v. Hamby, 685 S.W.2d 695, 699 (Tex. App.-Dallas 1984, writ ref'd n.r.e.) (holding that limitations in a civil conspiracy claim for fraud ran from the conspiracy's last overt act rather than with the underlying fraud claim's accrual). We agree with the rule as stated in Tovrea and Harang: the claim accrues when each underlying tort of the conspiracy damages the plaintiff, and limitations run separately for each such tortious act. See Tovrea, 412 P.2d at 63; Harang, 400 S.W.2d at 813. Understanding that civil conspiracy is a theory of derivative liability, it follows that a civil conspiracy claim should share both accrual and the limitations period of the underlying wrong. This also accords with the general rule that a cause of action accrues when a wrongful act causes an injury. See Murray, 800 S.W.2d at 828.

Agar contends that statute of limitations in civil conspiracy runs from the commission of the last overt act alleged to have caused damage, which is the rule followed in California. Applying this rule, Agar argues its civil conspiracy claims accrued on July 3, 2009 because the trial court identified a sale of knock-offs between the conspirators on that date as the conspiracy's "last overt act." Electro contends the statute of limitations in civil conspiracy accrues with the injury, and here that injury occurred in April 2008, at the latest, when Agar discovered the theft of its technology and initially sued Shah and Nahak.

Agar argues Harang actually supports its suggested accrual rule, but we disagree. Harang, in fact, explicitly rejects the last-overt-act accrual rule. The plaintiff in that case sued on a 1958 conspiracy to commit defamation, and later added alleged co-conspirators to the case in 1964. Harang, 400 S.W.2d at 812. While agreeing that a two-year statute of limitations applied to his claim, the plaintiff argued limitations ran from the "last overt act" of the conspiracy, which he said was one of two meetings of the co-conspirators in 1964 and 1965. Id. at 812-14. The court of appeals disagreed, holding that limitations ran from when the injury occurred and so the conspiracy claim against the late-added co-conspirators was time-barred. Id. at 813. Under the Harang court's reasoning, for each tort committed under the conspiracy, "the statute of limitations begins to run when it occurs." See id. Because the defamation injury in Harang had occurred in 1958, the court held the civil conspiracy claim accrued and limitations began to run at that time and so the claim as to the co-conspirators added in 1964 was barred to the extent it relied a tort for which the limitations period had run. See id. at 812-13.

If conspirators conspire about different underlying torts over the course of a conspiracy, then claims based thereon accrue separately according to when each tort and injury occur. A conspiracy claim based on an earlier underlying tort does not re-accrue when the co-conspirators agree to commit a second tort or make another overt act. See Cathey, 758 S.W.2d at 822 ("[A]ny act committed [outside limitations] prior to the filing of this conspiracy action would be barred by limitations and may not be recovered upon at trial.").

Agar also relies on another decision it contends interpreted Harang to support its conspiracy-accrual rule. That case involved a civil conspiracy where an estranged husband conspired with a friend to hide a winning lottery ticket from his wife to keep lottery winnings out of the marital assets during divorce. Mayes v. Stewart, 11 S.W.3d 440, 446 (Tex. App.-Houston [14th Dist.] 2000, pet. denied). The wife sued both the friend and husband for fraud on both direct and conspiracy liability theories and won a judgment, which only the friend appealed. Id. at 447. Although the court in Mayes cited both Harang and Cathey, it rejected an argument that the conspiracy accrued with the underlying fraud and instead ties accrual to later overt acts of the conspiracy—using the last-overt-act rule that Harang rejected. Id. at 453. The court ultimately concluded, however, that the conspiracy-limitations issue was irrelevant because of the jury's fraud finding against the friend directly. Id.

The better rule for civil conspiracy accrual is for the statute of limitations to accrue as to each alleged underlying tort when that tort occurs. See Tovrea, 412 P.2d at 63; Harang,400 S.W.2d at 813. Because a civil conspiracy claim is derivative of an underlying tort, the claim accrues when the underlying tort accrues. We therefore reject Agar's argument that we should adopt the last-overt-act accrual rule.

Agar seeks recovery for the injury of the theft of its intellectual property which it discovered no later than April 2008 when it commenced litigation. The trial court found that for limitations purposes the last overt act of the conspiracy was the co-conspirators submission and receipt of the purchase order on July 3, 2009. But this finding suggests the wrong rule because Agar's civil conspiracy claim as to each underlying tort accrued at the same time as Agar's direct claims for those torts, all of which accrued by April 2008.

Agar relies on the July 2009 purchase orders as evidence of the last overt act of the conspiracy. But the discovery of additional damages does not alter the accrual of an earlier tort, nor is there evidence of an underlying tort distinct from those alleged earlier. The purchase orders may show continuing damage to Agar from earlier torts, but this does not reset the statute of limitations. Murray, 800 S.W.2d at 828. Because the July 2009 purchase order does not support a later accrual of any of Agar's alleged underlying torts and Agar has not offered any other accrual date, we hold Agar's civil conspiracy claims all accrued at the latest on April 3, 2008, when it first filed suit against Electro's alleged co-conspirators.

B. Discovery Rule

Agar also asserts the discovery rule, arguing its civil conspiracy claim against Electro did not accrue until March 2011, when it discovered the July 2009 sale. Agar complains that the purchase orders were not produced until March 30, 2011 although requested years earlier. Because Agar ties the accrual of its civil conspiracy claims to the July 2009 sale, it argues that the discovery rule should further toll limitations to March 2011.

The discovery rule is an exception to the general accrual rule that applies when the injury is by its nature inherently undiscoverable. Childs v. Haussecker, 974 S.W.2d 31, 36-37 (Tex. 1998). Where the discovery rule applies, the cause of action accrues when a reasonably diligent and careful plaintiff knows or should have known of the wrongful act and injury. Id. at 37.

Agar's contention again relies on the assumption that its civil conspiracy claim accrued with the July 2009 sale as the last overt act of the conspiracy. As we have already rejected that assumption, no basis exists for Agar's argument here. Agar's civil conspiracy claims did not accrue with the July 2009 sale regardless of when Agar discovered it.

C. Application of Accrual and Limitations to Agar's Civil Conspiracy Claims

Agar's live pleading, its seventh amended petition, alleges a civil conspiracy based on several underlying torts, including: "tortious interference with existing contracts; breach of fiduciary duty; fraud; fraud by nondisclosure; misappropriation of trade secrets; civil theft; conversion; unfair competition; trademark infringement and passing off." Agar alleges those torts as direct claims against Electro and the other defendants and as tortious actions taken pursuant to the conspiracy. Electro argues that the civil conspiracy claim only relates to misappropriation of trade secrets, but the record does not support Electro's belief. Because the various civil conspiracy claims accrued when their related underlying tortious injuries occurred, Agar's civil conspiracy claims with respect to all alleged underlying torts accrued by April 2008 at the latest. As Agar does not allege any underlying tort related to the July 3, 2009 sale different from those previously alleged, that date is irrelevant to Agar's conspiracy claims.

Agar did not add Electro to the lawsuit until November 2011. To see whether limitations has run on Agar's various civil conspiracy claims, we look to the limitations periods of the alleged underlying torts. Agar's civil conspiracy claims may not proceed to the extent they are based on torts barred by limitations. For example, misappropriation of trade secrets is subject to a three-year limitations period. TEX. CIV. PRAC. & REM. CODE § 16.010. As Agar added Electro to the lawsuit more than three years after April 2008, Agar may not pursue its civil conspiracy claim on the basis of an alleged misappropriation of trade secrets. But fraud and breach of fiduciary duty are subject to a four-year limitations period. TEX. CIV. PRAC. & REM CODE § 16.004. Agar's civil conspiracy claims against Electro based on those underlying torts may not be barred. Because the record does not establish that all of the alleged wrongs underlying Agar's civil conspiracy claims are barred by limitations, we conclude the trial court erred in its application of limitations to all of Agar's civil conspiracy claims. The court of appeals therefore erred in affirming that part of the trial court's summary judgment.

IV. Attorney's Fees

Agar also asks us to reverse the trial court's award of $64,307.44 in attorney's fees to Electro under the Texas Theft Liability Act. See TEX. CIV. PRAC. & REM. CODE § 134.001.005. Agar has alleged a civil theft claim directly against Electro. Under the Act, "each person who prevails in a suit. . . shall be awarded court costs and reasonable and necessary attorney's fees." TEX. CIV. PRAC. & REM. CODE § 134.005(b). The trial court granted Electro a no-evidence summary judgment on Agar's direct claim of theft under the Act.

In the final judgment, the trial court awarded attorney's fees "incurred as a result of defending the TTLA claim or the performance of discrete legal acts that were intertwined with defending the TTLA claim." An affidavit from Electro's attorney supported the fees award with an attached hourly record of the fees amassed during litigation and an estimation as to how much each task involved or was intertwined with Electro's defense to the civil theft claim. Agar does not challenge the trial court's segregation of the attorney's fees.

Agar contends, however, that a "person who prevails" under section 134.005(b) of the Act includes only plaintiffs, not defendants like Electro. We begin statutory interpretation with the statute's text. Jose Carreras, M.D., P.A. v. Marroquin, 339 S.W.3d 68, 71 (Tex. 2011). The inquiry ends there if "a statute's words are unambiguous and yield a single inescapable interpretation." Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651-52 (Tex. 2006). The statute defines "person" as "an individual, partnership, corporation, association, or other group, however organized." TEX. CIV. PRAC. & REM. CODE § 134.002(1). Agar contends that this definition serves to broaden the types of plaintiffs who may sue under the Act, but nothing in the statute supports that contention. The statute also refers to potential defendants as "persons." See id. §§ 134.003, .005(a) (assigning liability under the Act to a "person who commits theft" or a "person who has the duty [to control] a child [who commits theft]"). The statute's command that attorney's fees be awarded to "each person who prevails" unambiguously applies to all persons, be they a prevailing plaintiff or defendant. See id. § 134.005(b).

Agar also contends Electro has not "prevailed on the merits" of the civil theft claim because Electro only avoided liability through the statute of limitations. This argument ignores that Electro won a no-evidence summary judgment of Agar's direct civil theft claim. A defendant "prevails" when the plaintiff loses with prejudice, whether on the merits or for some other reason. Epps v. Fowler, 351 S.W.3d 862, 868 (Tex. 2011). Agar's civil theft claim against Electro has been resolved with prejudice. Electro is therefore a prevailing party with respect to that claim.

Agar next argues the affidavit supporting Electro's attorney's fees was legally defective and controverted by Agar. Agar contends the affidavit is insufficient as a matter of law because it lacks an assertion that its contents are true or made under penalty of perjury. See Humphreys v. Caldwell, 888 S.W2d 469, 470 (Tex. 1994) ("An affidavit which does not positively and unqualifiedly represent the facts as disclosed in the affidavit to be true and within the affiant's personal knowledge is legally insufficient."). We disagree. The challenged affidavit says it was taken upon the affiant's oath and the facts are based on his personal knowledge. An affidavit containing a statement that the affiant appeared before the notary, was duly sworn, and submitted the statement "on his oath" is legally sufficient. Ford Motor Co. v. Leggat, 904 S.W.2d 643, 645 (Tex. 1995).

Agar finally contends its attorney's affidavit created a fact issue on the reasonableness and necessity of the attorney's fees by reasoning that Electro won the case on limitations and therefore should have moved for summary judgment much earlier. But Electro did not win purely on limitations; only the civil conspiracy claims were subject to summary judgment on limitations. Electro won a no-evidence summary judgment against all of Agar's non-derivative tort claims, including the civil theft claim. No-evidence summary judgment is only available "[a]fter adequate time for discovery." TEX. R. CIV. P. 166a(i). The affidavit's rationale fails and offers no other support for its assertion that Electro's fees were not reasonably necessary. Accordingly, no genuine issue of material fact has been raised as to the reasonableness or necessity of Electro's attorney's fees. The trial court did not err in awarding attorney's fees to Electro under the Act.

* * * * *

In summary, we hold that civil conspiracy is a derivative claim that takes the limitations period of the underlying tort that is the object of the conspiracy. Limitations as to both typically run simultaneously because the conspiracy and underlying tort generally accrue at the same time. As pled, the underlying torts alleged in this case all accrued by April 2008. Because Electro was not joined as a party to the conspiracy until November 2011 and no underlying tort other than those previously pled was alleged in that joinder, limitations that would bar the underlying tort claims if alleged anew similarly bar the related claims of conspiracy. Thus, any conspiracy claim based on one of the underlying torts alleged in April 2008 that shares a limitation period that expired before November 2011 is barred. Finally, we hold that the Texas Theft Liability Act's provision for the award of attorney's fees to each prevailing person applies both to plaintiffs and defendants who prevail.

We affirm the court of appeal's judgment as to attorney's fees, reverse it as to those civil conspiracy claims whose underlying tort was not barred by limitations at the time of Electro's addition to the litigation, and remand the cause to the trial court for further proceedings consistent with this opinion.

Trial Court Order re SOL on Conspiracy 

FOOTNOTES:

[1] See, e.g., Tucker v. Bedgood, 2016 WL 7011584, at *3 (Tex. App.-Corpus Christi-Edinburg Dec. 1, 2016, no pet.) (mem. op.); Archer v. Allison, 2015 WL 7889910, at *3 (Tex. App.-Amarillo Dec. 3, 2015, pet. denied) (mem. op.); Bennett v. Reynolds, 2014 WL 4179452, at *10 (Tex. App.-Austin Aug. 22, 2014, pet. denied) (mem. op.); Dodson v. Ford, 2013 WL 5433915, at *4 (Tex. App.-Fort Worth Sept. 26, 2013, no pet.) (mem. op.); Sharpe v. Roman Catholic Diocese of Dall., 97 S.W.3d 791, 795 (Tex. App.-Dallas 2003, pet. denied); Mayes v. Stewart, 11 S.W.3d 440, 453 (Tex. App.-Houston [14th Dist.] 2000, pet. denied); Chandler v. Chandler, 991 S.W.2d 367, 394 (Tex. App.-El Paso 1999, pet. denied); Martz v. Weyerhaeuser Co., 965 S.W.2d 584, 587 (Tex. App.-Eastland 1998, no pet.); Fisher v. Yates, 953 S.W.2d 370, 381 (Tex. App.-Texarkana 1997), writ denied, 988 S.W.2d 730 (Tex. 1998) (per curiam); Allen v. City of Midlothian, 927 S.W.2d 316, 322 (Tex. App.-Waco 1996, no writ); Stroud v. VBFSB Holding Corp., 917 S.W.2d 75, 82 (Tex. App.-San Antonio 1996, writ denied); Stevenson v. Koutzarov,795 S.W.2d 313, 318 (Tex. App.-Houston [1st Dist.] 1990, writ denied).

[2] Electro argues that Carrol stands for the opposite because it says civil conspiracy is "distinguished from the concept of vicarious liability for concerted action. . . ." See Carrol, 592 S.W.2d at 925-26. This misses that concerted action is a separate theory of vicarious liability distinct from civil conspiracy. See Juhl v. Airington, 936 S.W.2d 640, 643-44 (Tex. 1996)(treating civil conspiracy and concerted action as similar but distinct theories). Carrol simply recognized that distinction.

[3] E.g., Filmservice Labs., Inc. v. Harvey Bernhard Enters., Inc., 256 Cal. Rptr. 735, 742 (Cal. Ct. App. 1989); Mauvais-Jarvis v. Wong, 987 N.E.2d 864, 894 (Ill. App. Ct. 2013); Meyer Land & Cattle Co. v. Lincoln Cty. Conservation Dist., 31 P.3d 970, 977 (Kan. Ct. App. 2001); Terlecki v. Stewart, 754 N.W.2d 899, 906 (Mich. Ct. App. 2008); Schlotthauer v. Sanders, 545 N.Y.S.2d 197, 199 (N.Y. App. Div. 1989); Segall v. Hurwitz, 339 N.W.2d 333, 338 (Wis. Ct. App. 1983).

[4] See cases cited supra, note 1.

[5] As the parties would tie the accrual date in this case to an allegedly damaging overt act or underlying tort, we need not consider whether a civil conspiracy claim might accrue at a later time if the last element of the claim alleged to come into existence is something other than an act injuring the plaintiff.

CASE CITE: Agar Corp., Inc. v. Electro Circuits Int’l, LLC, —S.W.3d—, No. 17-0630, 2019 WL 1495211 (Tex. Apr. 5, 2019).