LIMITATIONS















P. MICHAEL JUNG

CHRISTINE D. ROSEVEARE

Strasburger & Price, L.L.P.

901 Main Street, Suite 4300

Dallas, Texas 75202















The authors acknowledge the contribution of Alan B. Daughtry, Esq., of Vinson & Elkins, L.L.P., Houston, who co-authored a prior edition of this outline.











25TH ANNUAL

ADVANCED CIVIL TRIAL COURSE

August 30, 2002 - Dallas, TX

October 11, 2002 - Houston, TX

November 1, 2002 - San Antonio, TX

CHAPTER 34

P. MICHAEL JUNG




Business Address: 4300 Bank of America Plaza telephone: 214-651-4724

901 Main Street telecopy: 214-659-4022

Dallas, Texas 75202 michael.jung@strasburger.com

Education: Harvard Law School

J.D. magna cum laude, 1979

Massachusetts Institute of Technology

S.B.s in Earth & Planetary Sciences and Mathematics, 1975

Ohio Wesleyan University (attended 1971-72)

Professional Strasburger & Price, L.L.P., Attorneys and Counselors

Experience: Appellate Practice Group Leader

Partner, 1986-; Associate, 1980-85

Over 300 appeals handled in whole or in part, including 143 orally argued

Law Clerk to Hon. Patrick E. Higginbotham, United States District Judge for the Northern District of Texas, 1979-80

C. S. Draper Laboratory, Inc.

Technical Staff, 1975-76 (analysis of Space Shuttle reentry guidance)

Certification: Civil Appellate Law (Texas Board of Legal Specialization), 1987-

Selected Supreme Court of Texas Task Force on the Jury Charge, 1991-94

Professional

Associations: Texas Association of Defense Counsel, 1983-

Vice-President, 1993-97

Amicus Curiae Committee, 1986-97

Chairman, 1991-97

President's Award, 1992, 1997

Dallas Bar Association, 1980-

Appellate Section, 1990-

Chairman, 1995

Bar Association of the Fifth Federal Circuit, 1984-

Seminar Appellate, civil procedure, evidence, and tort topics for:

Presentations: Baylor University Law School, 1988

Continuing Education Services, 1987-88

Dallas Bar Association, 1990

Dallas Bar Association Appellate Law Section, 1995, 2001

Federal Bar Association, 1987-93

SMU School of Law, 1995

State Bar of Texas, 1985, 1989, 1992, 1994, 1997-2002

Texas Association of Defense Counsel, 1988, 1992-96, 2000

Texas Motor Transport Association, 1987

University of Houston Law Foundation, 1994

University of Texas School of Law, 1994-96, 2000

CHRISTINE D. ROSEVEARE




Business Address: 901 Main Street, Ste. 4300

Dallas, Texas 75202

telephone: 214-651-4416

christy.roseveare@strasburger.com

Education: Washington and Lee School of Law

J.D. cum laude, 1998

Trinity University

B.A. in Political Science, magna cum laude, 1995

Professional Strasburger & Price, L.L.P., Attorneys and Counselors

Experience: Appellate Practice Group

Associate, 1999-

Law Clerk to Hon. H. Emory Widener, Jr., Judge, United States Court of Appeals for the Fourth Circuit, 1998-99

Law-Related Publications: Co-Author, "A Duty to Protect? The State Created Danger Doctrine," For the Defense, November 2001, at 25.



Co-Author, "Preparing a Governmental Client for Response to Mass Torts," in Defense Research Institute, Civil Rights and Governmental Tort Liability Defense Practice Seminar, January 2000, at 1.

Author, Note, "Capital Punishment and the Courts-Martial: Questions Surface Following Loving v. United States," 55 Washington and Lee Law Review 577 (1998).

TABLE OF CONTENTS

Page

I. INTRODUCTION. 1

II. ACCRUAL. 1

A. The Basic Test. 1

B. Accrual of Specific Causes of Action. 2

1. Claims Related to Occupational Disease. 2

2. Breach of Fiduciary Duty. 2

3. Fraud and Deceptive Trade Practices. 2

4. Claims Related to Insurance Coverage. 2

5. Professional Malpractice. 3

6. Indemnity and Contribution. 4

7. Medical Malpractice. 4

C. Continuing Torts. 5

D. Statutes of Repose. 5

III. DEFERRAL OF ACCRUAL UNDER THE DISCOVERY RULE. 6

A. The Injury Must Be Inherently Undiscoverable. 7

B. The Injury Must Be Objectively Verifiable. 9

C. Application of the Discovery Rule to Particular Claims. 10

1. Latent Occupational Disease. 10

2. Professional Malpractice. 11

3. Cases Involving Medical Treatment. 11

D. Subsequent Discovery of Additional Injuries. 11

IV. TOLLING OF LIMITATIONS THROUGH FRAUDULENT CONCEALMENT 12

A. Active Concealment. 12

B. Failure to Disclose Despite Duty to Disclose. 12

C. Cessation of the Duty to Disclose. 13

D. Actual or Constructive Discovery of the Injury. 13

V. TOLLING DUE TO MISNOMER AND MISIDENTIFICATION. 13

VI. STATUTORY TOLLING THEORIES. 15

A. Legal Disability. 15

B. Death of a Party. 15

C. Temporary Absence from the State. 15

D. The Savings Statute. 16

E. Written Acknowledgment of Claims. 16

F. Relation Back of Amended or Supplemental Pleadings. 17

G. Reopening of the Limitations Period for Counterclaims. 17

VII. THE OPEN COURTS DOCTRINE. 17

A. No Reasonable Opportunity to Sue Within the Limitations Period. 17

B. Due Diligence Following Discovery of Injury. 18

VIII. CHOICE OF LAW. 18

APPENDIX ­ LIMITATIONS PERIODS 19

LIMITATIONS

I. INTRODUCTION.

Statutes of limitations or repose afford plaintiffs a period of time that the Legislature deems reasonable in which to present claims. Ultimately, however, such statutes cut off the pursuit of 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). Statutes of limitation or repose compel a party to be active in asserting its rights and punish the failure to do so within a reasonable time. Sherman v. Sipper, 137 Tex. 85, 152 S.W.2d 319 (1941). Like any other affirmative defense, limitations is a plea in confession and avoidance, and may be waived if not properly pled. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 518 (Tex. 1988).

This paper will discuss generally the application of limitations to various claims, with emphasis on recent developments in the law. While the beginning question for any limitations analysis is the accrual of a cause of action for limitations purposes, the majority of recent cases (and this paper) focus on factors which defer or prolong the running of limitations. Because there is not much dispute as to the limitations periods which govern particular causes of action, these will not be discussed in the body of the paper, but will instead be listed in an appendix.

II. ACCRUAL.

A. The Basic Test.

Any limitations analysis must begin with the question of when applicable cause(s) of action accrue. A cause of action generally accrues, and the statute of limitations begins to run, when facts come into existence that authorize a claimant to seek a judicial remedy. Johnson & Higgins, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 514 (Tex. 1998). Typically, the limitations period begins to run when a wrongful act causes legal injury, regardless of when the plaintiff learns of the injury and even if not all resulting damages have occurred. Lubbock County v. Trammel's Lubbock Bail Bonds, 45 Tex. Sup. Ct. J. 873, 2002 Tex. LEXIS 91 (June 20, 2002); S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996); Savage v. Psychiatric Institute, Inc., 965 S.W.2d 745, 749 (Tex. App. ­ Fort Worth 1998, pet. denied).

The "legal injury" rule is often traced to Houston Water-Works Co. v. Kennedy, 70 Tex. 233, 8 S.W. 36 (1888). There the defendant cut an arch in the plaintiff's building while installing a water pipe. The arch, being concealed, was not discoverable until it eventually caused the building to settle and crack. The plaintiff brought suit three years after the negligence was committed but within two years of the manifestation of the damage. The Court concluded that the action was barred by limitations:

If . . . the act of which the injury was the natural sequence was a legal injury, ­ by which is meant an injury giving a cause of action by reason of its being an invasion of a plaintiff's right, ­ then, be the damage however slight, limitations will run from the time the wrongful act was committed, and will bar an action for any damages resulting from the act. . . . [A] mere want of knowledge by the owner of injury to his property does not prevent the running of the statute.

8 S.W. at 37-38. Thus, the cause of action accrues and limitations will run at the time of the injury, although application of the discovery rule and other tolling provisions, discussed infra, will sometimes defer the commencement of limitations until the wrongful act and injury are or should have been known. KPMG Peat Marwick v. Harrison County Financing Corp., 988 S.W.2d 746 (Tex. 1999).

B. Accrual of Specific Causes of Action.

1. Claims Related to Occupational Disease.

In Childs v. Haussecker, 974 S.W.2d 31 (Tex. 1998), the Supreme Court struggled with the notion of accrual in latent occupational disease cases. Because the lag time between exposure and the resulting manifestation of disease often stretches over several decades, the Court was concerned with formulating a functional accrual analysis while still preventing unnecessary speculative lawsuits for diseases that may never mature or materialize. Although the majority of the Childs opinion focused on the application of the discovery rule linking causation to the work environment, discussed infra at Section III.C.1, a significant portion of the opinion dealt with accrual. In order to deter premature suits, the Court held that a cause of action for injuries due to occupational exposure accrues when an occupational disease manifests itself. 974 S.W.2d at 42-43.

2. Breach of Fiduciary Duty.

Due to the special relationship between the parties, claims for breach of fiduciary duty are an exception to the "legal injury" rule. The accrual of a cause of action for breach of fiduciary duty typically awaits actual or constructive knowledge of the fiduciary's wrongful act. The statute of limitations does not begin to run until the claimant knew or should have known of facts that in the exercise of reasonable diligence would have led to the discovery of the wrongful act. Little v. Smith, 943 S.W.2d 414, 420 (Tex. 1997); Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377, 394 (1945).

In effect, the accrual rule for a breach of fiduciary duty claim de facto incorporates the discovery rule. This rationale was developed in Computer Associates International, Inc. v. Altai, Inc., 918 S.W.2d 453 (Tex. 1996):

But the fiduciary rationale is, in reality, a variation on the inherently discoverable element. Fiduciaries are presumed to possess superior knowledge, meaning the injured party, the client, is presumed to possess less information than the fiduciary. Consequently, in a fiduciary context, it may be said that the nature of the injury is presumed to be inherently undiscoverable . . . .

918 S.W.2d at 456. This deferral of accrual does not last forever; rather it changes with circumstances. As recognized in S.V. v. R.V.:

While a person to whom a fiduciary duty is owed is relieved of the responsibility of diligent inquiry into the fiduciary's conduct, so long as the relationship exists, when the fact of misconduct becomes apparent it can no longer be ignored, regardless of the nature of the relationship.

933 S.W.2d at 8.

3. Fraud and Deceptive Trade Practices.

Similar to breach of fiduciary duty, a cause of action for fraud accrues when the fraud was discovered, or in the exercise of reasonable diligence should have been discovered. Oliver v. Rogers, 976 S.W.2d 792, 805 (Tex. App. ­ Houston [14th Dist.] 1998, pet. denied). Likewise, an action for deceptive trade practice accrues when the claimant discovered, or should have discovered in the exercise of reasonable diligence, the wrongful or deceptive act. Sutton v. Mankoff, 915 S.W.2d 152 (Tex. App. ­ Fort Worth 1996, writ denied).

4. Claims Related to Insurance Coverage.

When an insurer wrongfully denies coverage, the denial is the injury-producing event which triggers accrual of a cause of action for limitations purposes. Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990). The insurer's denial of coverage likewise triggered the running of limitations for a claim that an insurance agent negligently failed to procure insurance for the insured. Johnson & Higgins, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 519 (Tex. 1998). (Also worthy of note, the Johnson & Higgins decision held that claims under Tex. Ins. Code art. 21.21 are covered under the same two-year statute of limitations for claims under the DTPA.)

In first-party insurance cases, subsequent claims involving continuous damage may be sufficient to revive the running of limitations even following an insurer's express denial. Pena v. State Farm Lloyds, 980 S.W.2d 949 (Tex. App. ­ Corpus Christi 1998, no pet.). In Pena, an insurer denied homeowners' claims for damage due to slab movement. Damage from slab movement persisted over time, and the homeowners submitted an additional claim. The insurer reinvestigated coverage, and again denied the claim. This time the homeowners filed suit. The insurer obtained summary judgment on limitations, but the court of appeals reversed, holding that, because the damages were caused by a continuing problem, the insurer's reinvestigation of the claim reset the limitations period. Referring to Stevens v. State Farm Fire & Casualty Co., 929 S.W.2d 665 (Tex. App. ­ Texarkana 1996, writ denied), the Pena court found that timely claims for additional payments began the running of the statute of limitations anew.

5. Professional Malpractice.

Accrual of a cause of action for professional malpractice requires (1) the commission of a tortious act and (2) the suffering of a legal injury. Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex. 1967); see also Randolph v. Resolution Trust Corp., 995 F.2d 611, 617 (5th Cir. 1993), cert. denied, 510 U.S. 1191 (1994).

When an attorney commits malpractice, the accrual is determined by the date when all appeals in the underlying claim are exhausted or the litigation is otherwise finally concluded. Apex Towing Co. v. Tolin, 41 S.W.3d 118, 119 (Tex. 2001); Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 157 (Tex. 1991). This is a bright-line rule which applies regardless of whether the plaintiff replaces the allegedly malpracticing lawyer during the pendency of the underlying claim. Apex Towing, 41 S.W.3d at 119. The reasoning is that application of the normal accrual provision could put the client/plaintiff in a difficult position. Faced with the running of the statute of limitations, the client may be forced to take inconsistent positions in the underlying case and the malpractice case. Id. at 121.

The Supreme Court has declined, however, to extend the accrual of DTPA claims brought against attorneys to the same point the accrual of common law claims were extended by Hughes. Underkofler v. Vanasek, 55 S.W.3d 343 (Tex. 2001). In refusing to do so, the Supreme Court noted that the DTPA specifically limits exceptions to limitations for DTPA claims to fraudulent concealment and the discovery rule. 53 S.W.3d at 346.

Likewise, the Supreme Court in Murphy v. Campbell, 964 S.W.2d 265 (Tex. 1997), did not extend the full range of protection for claimants of faulty tax advice to that provided to legal malpractice claimants in Hughes. While the discovery rule may ultimately apply to an accounting malpractice claim, accrual is not deferred while the underlying suit for which the malpractice claims arises is prosecuted. Murphy, 964 S.W.2d at 273. Citing Hughes, the plaintiffs in Murphy argued that the accrual should be deferred until the underlying tax litigation on which the malpractice claim was based was finally resolved. The Court disagreed. The underlying policy reasons which justify deferring accrual were not present in cases involving malpractice by accountants. In the Court's view, no conflict would arise in malpractice cases based upon tax advice:

No similar impediment prevented plain-tiffs in the present case from suing Touche Ross while the Tax Court litigation was pending. Filing a malpractice suit against Touche Ross would not have affected its testimony in the tax case. While it is unreasonable to expect an attorney to continue to represent a client who is simultaneously suing the attorney for mishandling the very same matter, it is not unreasonable to expect an expert to testify consistently regardless of whether his client is suing him. The relationship between attorney and client is simply different from that between party and witness or party and expert.

Id. at 272.

6. Indemnity and Contribution.

In Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 210-11 (Tex. 1999), the Supreme Court reaffirmed the long-standing rule that a cause of action based upon indemnity from liability matures, and therefore accrues, on the date that the indemnitee's liabilities become fixed and certain. Thus, limitations does not run until judgment is rendered in the underlying case.

A similar rule applies to contribution claims. See, e.g., City of San Antonio v. Talerico, 98 Tex. 151, 81 S.W. 518, 520 (1904); Conroe Truck & Tractor, Inc. v. Childs Truck Equipment, Inc., 723 S.W.2d 207, 208-09 (Tex. App. ­ Beaumont 1986, writ ref'd n.r.e.); Amoco Chemicals Corp. v. Malone Service Co., 712 S.W.2d 611, 614-15 (Tex. App. ­ Houston [1st Dist.] 1986, no writ). A contrary federal holding, Powell v. Charles Offutt Co., 576 F. Supp. 272, 274-78 (E.D. Tex. 1983), aff'd mem., 731 F.2d 886 (5th Cir. 1984), was later overruled by Koonce v. Quaker Safety Products & Manufacturing, 798 F.2d 700, 705-15 (5th Cir. 1986). (Note that whether the applicable contribution statute permits a contribution claim to be brought separately from the main action is a distinct substantive question. See P. Michael Jung, Contribution in Civil Cases § IV(D), in State Bar of Texas, 21st Annual Advanced Civil Trial Course (1997).)

The deadline imposed by the "responsible third party" statute, Tex. Civ. Prac. & Rem. Code § 33.004(d), is not a statute of limitations. That deadline governs a third-party contribution defendant's status as a responsible third party whose comparative responsibility is submitted in the § 33.003 jury question, but does not govern the viability of the contribution claim under § 33.015.

7. Medical Malpractice.

For claims based upon medical treatment, the Medical Liability Act, Tex. Rev. Civ. Stat. art. 4590i, provides an exclusive cause of action. Shepherd v. Ledford, 962 S.W.2d 28, 31 (Tex. 1998); Bala v. Maxwell, 909 S.W.2d 889, 891-93 (Tex. 1995). The Act includes a strict two-year statute of limitations, with specific dates for the accrual of a cause of action: (1) the occurrence of the breach or tort; (2) the date the health care treatment that is the subject of the claims is completed; or (3) the date the hospitalization for which the claim is made is completed. Tex. Rev. Civ. Stat. art. 4590i, § 10.01. The plaintiff may not simply choose the most favorable of the three possible statutory accrual dates. Rather, when the precise date of the alleged breach or tort is ascertainable from the facts of the case, the statute of limitations begins to run from that date. Bala, 909 S.W.2d at 891; see also Shah v. Moss, 67 S.W.3d 836 (Tex. 2001).

The statute provides for a somewhat relaxed accrual for claims involving a course of treatment. Where the injury results not from a specific instance of negligence, but rather from a negligent course of treatment, limitations accrues on the last day of treatment. Bala, 909 S.W.2d at 891. The rationale for allowing a plaintiff to measure limitations from the last day of treatment is to assist the plaintiff who was injured during a course of treatment but is unable to ascertain the precise date of the injury. Husain v. Khatib, 964 S.W.2d 918, 919 (Tex. 1998); Savage v. Psychiatric Institute, Inc., 965 S.W.2d 745 (Tex. App. ­ Fort Worth 1998, pet. denied).

However, a course of treatment does not exist merely because of the continuing existence of a doctor-patient relationship. Rowntree v. Hunsucker, 833 S.W.2d 103, 104 (Tex. 1992). Courts have been restrictive in finding the existence of a course of treatment. In particular, no course of treatment exists in cases where the plaintiff alleges a failure to diagnose. Bala v. Maxwell, 909 S.W.2d at 891. In Bala, the patient underwent a procedure in 1986 which revealed a lesion in the stomach, but no signs of malignancy. The procedure was repeated in 1987, and, at that time the possibility of a malignancy could not be ruled out. No course of treatment was instigated and in 1989 the same procedure revealed cancer. The plaintiff argued that the successive 1986, 1987, and 1989 procedures constituted a continuing course of treatment, and therefore limitations began to run on the last day of treatment when the cancer was discovered. The Supreme Court disagreed and held that the failure to begin a course of treatment is not a course of treatment for purposes of limitations. It reasoned that the misdiagnosis provided a concrete date in 1987 when the doctor failed to perform further tests despite the indication of a possible malignancy.

Even when a plaintiff arguably has a general course of treatment with a particular doctor, that course of treatment must causally relate to the medical condition for which suit is brought. Husain v. Khatib, 964 S.W.2d at 919; Rowntree v. Hunsucker, 833 S.W.2d at 104. A good example of this requirement is Gross v. Kahanek, 3 S.W.3d 518 (Tex. 1999). In that case, Dr. Gross treated Kyndil Kahanek's seizure's with drug therapy. He continued treating her and updating her prescriptions until August 1992, when he requested that the family physician monitor Kyndil. Kyndil's last prescription from Dr. Gross ran out in September 1992. On June 13, 1993, Kyndil died from drug poisoning from the seizure medication. The Court held that the course of treatment with Dr. Gross ended in September 1992 and barred the wrongful death claim filed on June 13, 1995. 3 S.W.3d at 521.

C. Continuing Torts.

While, under the basic accrual theory, a cause of action accrues when a wrongful act causes some legal injury, an exception to this general rule exists for continuing torts. First General Realty Corp. v. Maryland Casualty Co., 981 S.W.2d 495, 501 (Tex. App. ­ Austin 1998, pet. denied); Adler v. Beverly Hills Hospital, 594 S.W.2d 153, 154 (Tex. Civ. App. ­ Dallas 1980, no writ). A continuing tort involves wrongful conduct inflicted over a period of time that is repeated until desisted, and each day creates a separate cause of action. Two Pesos, Inc. v. Gulf Insurance Co., 901 S.W.2d 495, 500 (Tex. App. ­ Houston [14th Dist.] 1995, no writ); Arquette v. Hancock, 656 S.W.2d 627, 629 (Tex. App. ­ San Antonio 1983, writ ref'd n.r.e.). Limitations begins to accrue when the defendant's tortious conduct ceases. Tectonic Realty Investment Co. v. CNA Lloyd's of Texas Insurance Co., 812 S.W.2d 647, 654 (Tex. App. ­ Dallas 1991, writ denied).

At first blush, the continuing tort doctrine may seem to conflict with the general rule of accrual that limitations is not tolled pending the manifestation of subsequent injuries. See Childs v. Haussecker, 974 S.W.2d 31, 33 (Tex. 1998); Howard v. Fiesta Texas Show Park, Inc., 980 S.W.2d 716 (Tex. App. ­ San Antonio 1998, pet. denied). However, the two principles are not in conflict. Accrual is not tolled for subsequent injuries because a wrongful act and some identifiable legal injury have already occurred. That additional legal injuries may subsequently occur does not vitiate that the initial legal injury, no matter how small, was sufficient to trigger the accrual of a cause of action and start the running of limitations. In cases subject to the continuing tort doctrine, however, not only are subsequent injuries occurring, but additional wrongful acts triggering these subsequent legal injuries, and thus providing separate causes of action, are occurring as well.

D. Statutes of Repose.

Statutes of repose protect parties from the burden of indefinite potential liability and represent a response to the inadequacy of traditional statutes of limitation, whose time periods begin upon occurrence of the injury or upon discovery of the claim. Boeker v. Syptak, 916 S.W.2d 59, 62 (Tex. App. ­ Houston [14th Dist.] 1996, no writ). "Unlike traditional limitations provisions, which begin running upon accrual of a cause of action, a statute of repose runs from a specified date without regard to accrual of any cause of action." Trinity River Authority v. URS Consultants, Inc. ­ Texas, 889 S.W.2d 259, 261 (Tex. 1994). In fact, statutes of repose can cut off a cause of action before it accrues. 889 S.W.2d at 263.

The most familiar statute of repose involves the design and construction of improvements to real property. See Tex. Civ. Prac. & Rem. Code §§ 16.008-16.009. Under these two sections, causes of action arising out of improvements or equipment attached to real property are barred ten years after substantial completion of the project. The purpose is to protect certain actors (architects, engineers, and contractors) from the threat of claims arising many years after completion of a building or project. Trinity River Authority, 889 S.W.2d at 261.

A lesser known statute of repose exists for manufacturing equipment. Tex. Civ. Prac. & Rem. Code § 16.012 provides a fifteen year cut-off for products liability claims against the manufacturer of manufacturing equipment used in the fabrication or processing of personal property.

While not commonly referred to as such, the limitations period for breach of warranty claims under Tex. Bus. & Com. Code § 2.725 functions as a statute of repose. Under § 2.725, a cause of action for breach of warranty must be brought within four years of tender of delivery of the product, regardless of when legal injury occurs. Safeway Stores, Inc. v. Certainteed Corp., 710 S.W.2d 544, 547 (Tex. 1986).

III. DEFERRAL OF ACCRUAL UNDER THE DISCOVERY RULE.

When an injury is not easily capable of detection, accrual of a cause of action is sometimes deferred until discovery. Under the discovery rule, accrual is deferred until such time as the plaintiff knew, or in the exercise of reasonable diligence, should have known, of the facts giving rise to the cause of action. Computer Associates Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996).

When the discovery rule applies, it defers accrual of a cause of action until the plaintiff discovers or, through the exercise of reasonable care and diligence, should discover the "nature of the injury." Childs, 974 S.W.2d at 40. Discovering the "nature of the injury" requires knowledge of the wrongful act and the resulting injury. Id.; Farias v. Laredo National Bank, 985 S.W.2d 465, 473 (Tex. App. ­ San Antonio 1997, writ denied) (accrual deferred for limitations purposes only so long as necessary for plaintiff to discover injury). At this point, the limitations period begins, even if the plaintiff does not know the identity of the wrongdoer. Childs, 974 S.W.2d at 40. As put by one court of appeals:

Under Texas law, it is the discovery of the injury, and not the discovery of all the elements of the cause of action that starts the running of the clock for limitations purposes. . .. [A]ll that is required to commence the running of the limitations period is the discovery of an injury and its general cause, not the exact cause in fact and the specific parties responsible.

Bayou Bend Towers v. Monhattan Construction, 866 S.W.2d 740, 743 (Tex. App. ­ Houston [14th Dist.] 1993, writ denied).

This principle was discussed by the Supreme Court in KPMG Peat Marwick, 988 S.W.2d at 749. KPMG provided auditing services to a county housing company for a series of bonds that had been issued. One of KPMG's primary responsibilities was managing a trustee's compliance with the trust indenture for the bonds. Unknown to the county, KPMG was later independently retained by the trustee to help monitor the trust's capital reserves fund. When the trustee prematurely sold assets in the capital reserve fund for a loss, the county sued the trustee for mismanagement. The trustee ultimately prevailed in its defenses, but during the course of that lawsuit, the county learned of KPMG's dual representation and filed suit. As a defense to limitations, the county argued that accrual should be deferred because KPMG's wrongdoing was not known. The Court disagreed, noting that accrual does not hinge on the identity of the wrongdoer or the specific nature of each wrongful act that may have contributed to the injury.

Another example is provided by Seibert v. General Motors Corp., 853 S.W.2d 773 (Tex. App. ­ Houston [14th Dist.] 1993, no writ). In that case, the plaintiff had been injured in an automobile collision. Over two years after the accident, the plaintiff saw a news program which criticized the safety of his car's seatbelt. As a defense to limitations, the plaintiff argued that, until he saw the news program, he did not know that the seatbelt might have contributed to his injuries. The court disagreed, noting that accrual was triggered by discovery of the injury, not the tortfeasor, and the plaintiff certainly had had knowledge of the car accident.

Nor is accrual of a cause of action deferred until the plaintiff knows the full extent of his injuries. Howard v. Fiesta Texas Show Park, Inc., 980 S.W.2d 716 (Tex. App. ­ San Antonio 1998, pet. denied). Howard, who had pre-existing back problems, was injured during a roller coaster ride at the Fiesta Texas amusement park. During the ride, he experienced a sharp, prolonged pain in his back. He was later diagnosed with a herniated disc, but, because of his previous back problems, did not feel that he could successfully link the roller coaster ride as a contributing factor to his spinal degeneration. A year later, after experiencing nausea and other symptoms, he was diagnosed with a tear in the fluid filled membrane surrounding his brain and spinal cord, and he sued the amusement park. Because he had not known of this further, more significant injury, Howard argued that his cause of action had not fully accrued for limitations purposes. In upholding a summary judgment on limitations, the court held that, once any legal injury occurs, a plaintiff is not permitted to delay filing suit until the full extent of his injuries becomes known.

The Supreme Court has "described the discovery rule as 'a very limited exception to statutes of limitations,' and [has] condoned its use only when the nature of the plaintiff's injury is both inherently undiscoverable and objectively verifiable." Wagner & Brown, Ltd. v. Harwood, 58 S.W.3d 732, 734 (Tex. 2001) (quoting Altai, 918 S.W.2d at 455-56); see S.V. v. R.V., 933 S.W.2d at 6.

A. The Injury Must Be Inherently Undiscoverable.

For purposes of application of the discovery rule, an injury is inherently undiscoverable if it is the type of injury that is not generally discoverable by the exercise of reasonable diligence. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998); Altai, 918 S.W.2d at 455. In S.V. v. R.V., the Supreme Court discussed this requirement:

To be "inherently undiscoverable," an injury need not be absolutely impossible to discover, else suit would never be filed and the question whether to apply the discovery rule would never arise. Nor does "inherently undiscoverable" mean merely that a particular plaintiff did not discover his injury within the prescribed period of limitations; discovery of a particular injury is dependent not solely on the nature of the injury but on the circumstances in which it occurred and plaintiff's diligence as well. An injury is inherently undiscoverable if it is by nature unlikely to be discovered within the prescribed limitations period despite due diligence.

933 S.W.2d at 7.

The Court first discussed the "inherently undiscoverable" requirement in Computer Associates International, Inc. v. Altai, Inc. That case involved claims for misappropriation of trade secrets. When a former Computer Associates employee left the company, he took with him a codebook containing codes for a computer operating system. The employee was hired by Altai, and he copied aspects of the code into Altai's own operating system. Noting similarities of the products, Computer Associates sued in federal court four years later. Due to uncertainty in the application of Texas' discovery rule, the Fifth Circuit certified a question to the Supreme Court of Texas.

In response, the Court developed the two-pronged discovery rule test, but focused exclusively on the first part of that test. In discussing the discoverability of the injury, the Court focused on the type or category of the claim made. The Court noted that, in this day and age, trade secrets are a "jealously guarded commodity," and that companies do and are expected to take precautions to prevent misappropriation. 918 S.W.2d at 456-57. The Court then noted that such injuries are often discoverable: "While some trade secret misappropriations might not be quickly discovered, this isolated fact does not alter reality that, in most cases, trade secret misappropriation generally is capable of detection within the time allotted for the bringing of such suits." Id. at 457. By way of example, the Court noted that Computer Associates could have instituted safety precautions designed to detect or deter misappropriations, such as employing control logs. Id.

That the specific theft in Altai was not discovered was not of particular importance. Were that to be the test, "the rationale [would] mandate applying the discovery rule exception to every case, thus eviscerating the whole notion of an absolute time bar to litigation." Id. The key to the rule's application was whether the type of injury, generally, was one that would not ordinarily be discovered.

In HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998), the Supreme Court reemphasized the categorical approach to the discovery rule: "We explained in Altai that the applicability of the discovery rule is determined categorically. Although the particular injury in Altai may not have been discovered, it was the type of injury that generally is discoverable by the exercise of reasonable diligence." HECI, 982 S.W.2d at 886. In HECI, the royalty owner alleged a cause of action against the operator of her lease based on his failure to notify her that she was entitled to sue an operator on a neighboring lease for an injury to the common reservoir under the two properties. The Supreme Court stated that the royalty owner knew or should have known that the reservoir was a common reservoir, and that where wells are completed into a common reservoir, on neighboring properties, "there is the potential for . . . damage to the reservoir." Because the operator on the royalty owner's lease was a source of information about the existence of the common reservoir and operations in it, as were the records of the Railroad Commission, "a cause of action for [the operator's] failure to provide that same information is not inherently undiscoverable." Id. at 887.

Some subsequent cases applying the discovery rule have tended to focus on the specific facts of a particular claimant's injury, rather than considering whether the claim, in general, is an appropriate subject for application of the discovery rule. This non-categorical approach is incorrect. The threshold determination in any discovery rule analysis is whether the claim "inherently," or "by nature" is of the type that makes it "inherently" undiscoverable. S.V. v. R.V., 933 S.W.2d at 7. The relevant inquiry is not whether the specific facts of a particular claimant's cause of action were undiscoverable, but rather whether the claim is of a type that would not ordinarily be discoverable. Only if that question is answered affirmatively should the court then consider the specific facts of the case to determine whether the claimant knew or should of known of the injury through reasonable diligence. Instead, some courts have blurred the distinction between these two separate inquiries and simply analyzed whether the claimant could have discovered the injury. This mode of analysis was explicitly rejected by the Supreme Court in Altai:

In the past, this Court has noted the "shocking results" of barring a plaintiff's suit before the injury has even been discovered. This rationale offers no principled basis for distinguishing between cases in which the rule applies and those in which it does not. If carried to its logical conclusion, the rationale mandates applying the discovery rule exception to every case, thus eviscerating the whole notion of an absolute time bar to litigation.

918 S.W.2d at 457.

One case indicative of this improper analysis is Tanglewood Terrace, Ltd. v. City of Texarkana, 996 S.W.2d 330 (Tex. App. ­ Texarkana 1999, no pet.), which involved the City of Texarkana's overcharging of a residential apartment complex for water usage from 1976 to 1993. In connection with testing for potential water leaks, Tanglewood discovered in 1993 that it had been charged for an extra 100 water meters. It sued the City in 1994. Asserting the two-year statute of limitations, the City obtained a partial summary judgment for the overcharges from 1976 until 1992. Because Tanglewood could have learned of the overcharging by auditing the charges and meters, Tanglewood was not "unable to know" its injury and that the discovery rule did not apply to toll limitations. On appeal, the court sustained Tanglewood's invocation of discovery rule. Referring to S.V. v. R.V., the court held that the test was not whether discovery was impossible, but whether in the exercise of reasonable diligence Tanglewood should have known of its claim. The summary judgment on limitations was reversed.

The Tanglewood court fell into the trap identified by the Supreme Court in Altai and HECI: it jumped directly to the question of what a reasonably diligent investigation would have uncovered under the facts of the case, without first analyzing the claim categorically to determine whether the plaintiff's injury was by its nature undiscoverable. The proper inquiry was not what this plaintiff should have known under the circumstances, but what plaintiffs pursuing these types of claims would typically know in the exercise of reasonable diligence. That inquiry was a matter for legal reasoning, not for summary judgment evidence.

B. The Injury Must Be Objectively Verifiable.

The second prong of the two-part test is whether the injury is objectively verifiable. Prior to S.V. v. R.V., the Court's discovery rule cases had long struggled with the requirement for physical evidence as verification for an injury. Compare Gaddis v. Smith, 417 S.W.2d 577, 578 (Tex. 1967) (presence of sponge in plaintiff's body and how it got there were undisputable), with Robinson v. Weaver, 550 S.W.2d 18, 21-22 (Tex. 1977) (negligent diagnosis subject to proof only by expert hindsight, and therefore discovery rule does not apply). As explained by the Supreme Court in Robinson:

Plaintiff, to prove his cause of action, faces the burden of proving both a mistake in professional judgment and that such mistake was negligent. Expert testimony would be required. Physical evidence generally is not available when the primary issue relevant to liability concerns correctness of past judgment. Unlike Gaddis v. Smith, there exists in the present case no evidence which in-and-of-itself establishes the negligence of some person. What physical evidence was to the cause of action alleged in Gaddis v. Smith, expert testimony is to the cause of action in the present case. Even the fact of injury is a matter of expert testimony.

550 S.W.2d at 21.

Noting this historical requirement, the Court in S.V. v. R.V. formally recognized "objective verifiability" as a necessary element for application of the discovery rule. An injury is objectively verifiable if the presence of injury and the producing wrongful act cannot be disputed, and the facts upon which liability is asserted are demonstrated by direct, physical evidence. S.V. v. R.V., 933 S.W.2d at 6-7. While expert testimony alone, which amounts to a "swearing match between experts over opinion," does not suffice, "recognized expert opinion on a particular subject [could] be so near consensus that, in conjunction with objective evidence," it could provide the verification required. S.V. v. R.V., 933 S.W.2d at 5.

An interesting analysis of the objective verifiability prong is contained in Hay v. Shell Oil Co., 986 S.W.2d 772 (Tex. App. ­ Corpus Christi 1999, pet. denied), which involved a dispute over royalty interests for pooled land. In 1977, Shell pooled 160 acres of land owned by the Hays into a 704 acre unit, comprising land owned by other royalty owners. After obtaining the rights to production from Shell, in 1989 a subsequent operator reduced the pooled unit to just the 160 acres owned by the Hays. Noting the reduction in the pooled unit, the Hays later accused Shell of pooling their property with non-productive property, effectively reducing their royalty payments. Because the Hays' legal injury occurred in 1977, when Shell formed the original pooled unit, their claims against Shell were barred by limitations unless the discovery rule applied. The question was whether there existed objectively verifiable evidence that the Hays' land had been pooled with non-productive land. In 1977, productivity of deep formations, such as the formation on the Hays unit, could only be verified by drilling and completing wells, and wildcatting typically had only a "one in ten" chance of success at the time. Based on drilling in the unit, there was no physical evidence that the land was non-productive. The parties instead tendered only conflicting expert affidavits which reflected that petroleum engineering was an inexact science. Noting that the conflicting expert affidavits represented just the type of "swearing match" that the Supreme Court had sought to preclude in S.V. v. R.V., the court of appeals found that the Hays' injuries were not "objectively verifiable" and affirmed the summary judgment on limitations.

C. Application of the Discovery Rule to Particular Claims.

1. Latent Occupational Disease.

Courts have found that the discovery rule bears particular application to claims for occupational disease. Childs v. Haussecker, 974 S.W.2d 31, 33 (Tex. 1998); Safford v. Cigna Insurance Co., 983 S.W.2d 317 (Tex. App. ­ Fort Worth 1998, pet. denied). In Childs, the Court noted several reasons why cases involving latent occupational injuries or diseases sometimes merit application of the discovery rule. Latent diseases are often inherently undiscoverable within the applicable limitations period. 974 S.W.2d at 36-37. Unlike most personal injury cases, a person suffering from a latent disease or injury typically does not immediately know about the injury or its cause ­ often because the disease or injury does not manifest itself for long periods following exposure to the injury-causing substance. 974 S.W.2d at 38. The Court further noted that, even when symptoms do arise, the injury and its etiology are hard to diagnose because of the many other potential causes. Id. The latent nature of a claimant's injuries caused the Court some concern:

While a diligent plaintiff who allegedly suffers from a latent injury or disease should be able to claim the benefit of the discovery rule, these causes raise questions about the correct formulation and application of that rule in latent occupational disease cases. The insidious nature of these diseases calls for the discovery rule to be defined and applied in a way that requires occupationally-exposed individuals to pursue their claims diligently, without forcing those who suffer no present impairment to file claims prematurely.

974 S.W.2d at 39.

In order accommodate these concerns, the court held that accrual is deferred until "a plaintiff's symptoms manifest themselves to a degree or for a duration that would put a reasonable person on notice that he or she suffers from some injury and he or she knows, or in the exercise of reasonable diligence should have known, that the injury is likely work-related." Id. at 40. Thus, in cases involving occupational diseases, accrual is deferred under the discovery rule until the plaintiff knows, or should be able to know, that the injury is causally related to work. Under the Court's formulation of this rule a final diagnosis is not required:

A plaintiff whose condition has not yet been affirmatively diagnosed by a physician can have or, in the exercise of reasonable diligence could have, access to information that requires or would require a reasonable person to conclude he likely suffers from a work-related illness.

Id. at 42. Thus, a cause of action "should not be deemed to accrue absent some objective verification of a causal connection between injury and toxic exposure, provided that verification is not occasioned by a lack of due diligence." Id.

2. Professional Malpractice.

In Willis v. Maverick, 760 S.W.2d 642, 646 (Tex. 1988), the Supreme Court adopted the discovery rule in legal malpractice cases. In so doing, the Court held that "the statute of limitations for legal malpractice actions does not begin to run until the claimant discovers or should have discovered through the exercise of reasonable care and diligence the facts establishing the elements of his cause of action." See also Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997) ("the discovery rule may apply to delay accrual of a cause of action complaining of such legal advice because of the difficulty a lay person has in knowing of the fault of the advice").

Noting similar difficulties in discovery the legal wrong, the Supreme Court expanded its application of the discovery rule to accountants in Murphy v. Campbell, 964 S.W.2d at 271, holding:

The same rule should apply whether the advisor is a lawyer or an accountant. It is most unlikely that a client would know that tax advice was faulty at the time he received it. Indeed, the very reason to seek expert advice is that tax matters are often not within the average person's common knowledge. We thus conclude that accounting malpractice involving tax advice is inherently undiscoverable.

Id. at 271.







3. Cases Involving Medical Treatment.

Although it violates the open courts provision in some instances (discussed infra at Section VI), Tex. Rev. Civ. Stat. art. 4590i, the statute which governs medical malpractice claims, has a strict two-year limitations period and does not recognize the discovery rule. Martin v. Catterson, 981 S.W.2d 222 (Tex. App. ­ Houston [1st Dist.] 1998), pet. denied, 2 S.W.2d 249 (Tex. 1999).

D. Subsequent Discovery of Additional Injuries.

In many cases, the plaintiff may be aware of some wrong during the limitations period, but is incapable of knowing the full extent of the injuries prior to the running of the limitations period. In such situations, the discovery rule does not ordinarily apply to toll limitations, even as to the undiscovered latent injuries. This principle is most readily discernable in automobile collision cases. See, e.g., Honea v. Morgan Drive Away, Inc., 997 S.W.2d 705 (Tex. App. ­ Eastland 1999, no pet.); Stewart v. Stanley Bryan Oldsmobile-Buick-Pontiac-GMC, Inc., 883 S.W.2d 273 (Tex. App. ­ Corpus Christi 1994, writ denied). In Stewart, plaintiff argued that limitations should not apply to injuries which were discovered subsequent to the accident. The court held that the discovery rule was inapplicable because:

The collision was sudden and dramatic; [the plaintiff] knew the instant it occurred. [The plaintiff] knew that she had been injured in the collision immediately, although she did not determine the full extent of her injuries until much later. The injury causing event was no hidden from her. [The plaintiff's] cause of action accrued at the time of the collision, regardless of when she discovered the nature and extent of her injuries.

883 S.W.2d at 275.

This long-established doctrine is known as the "single-action rule," and rests upon the principle that only one cause of action exists for each breach of a legal duty. A separate cause of action does not arise each time a separate type of damages manifests itself. Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex. 1967).

The perceived injustice and inefficiency of triggering limitations on a plaintiff's claim for a minor injury when more serious injury does not manifest itself until much later received attention from the Supreme Court in Pustejovsky v. Rapid-American Corp., 35 S.W.3d 643 (Tex. 2000). There, the Court adopted the "multiple injury" rule for asbestos-related diseases only. Under this rule, separate limitations cycles apply to non-malignant injuries resulting from exposure to asbestos and to the development of cancer as a result of such exposure. The Pustejovsky rule thus forms an exception to the discovery rule principle that actual or constructive discovery of the nature of a legal injury triggers limitations as to all resulting legal injuries.

IV. TOLLING OF LIMITATIONS THROUGH FRAUDULENT CONCEALMENT.

The running of limitations may also be deferred under a theory of fraudulent concealment, which is a form of equitable estoppel. The doctrine prevents the defendant from relying on limitations as a defense. Computer Associates International, Inc. v. Altai, Inc., 918 S.W.2d 453, 455-56 (Tex. 1996); Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983). Unlike the discovery rule, which actually delays the accrual of a cause of action, fraudulent concealment tolls, or suspends, the running of the limitations period. S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996). Whether the doctrine applies to a particular case is question of law. Patrick v. Howard, 904 S.W.2d 941, 945 (Tex. App. ­ Austin 1995, no writ).







A. Active Concealment.

In order to rely on fraudulent concealment, a plaintiff must show: (1) the existence of the underlying tort; (2) the defendant's knowledge of the tort; (3) the defendant's use of deception to conceal the tort; and (4) the plaintiff's reasonable reliance on the deception. Sunwest Bank v. Basil Smith Engineering Co., 939 S.W.2d 671, 675 (Tex. App. ­ El Paso 1996, writ denied). "The essence of fraudulent concealment is first, actual knowledge that a wrong has occurred, and second, a fixed purpose to conceal the facts necessary for the plaintiff to know that he has a cause of action that has accrued." Arabian Shield Development Co. v. Hunt, 808 S.W.2d 577, 584 (Tex. App. ­ Dallas 1991, writ denied). Affirmative concealment is required; absent a duty of disclosure, mere silence on the part of the defendant does not constitute fraudulent concealment.

B. Failure to Disclose Despite Duty to Disclose.

The fraudulent concealment doctrine may also apply when the defendant is under an affirmative duty of disclosure, but fails to disclose the relevant facts to the plaintiff. S.V. v. R.V., 933 S.W.2d at 4. Because there is no general duty to disclose one's wrongdoing, the cases to which the doctrine applies are rare, such as those involving doctor-patient or other fiduciary relationships. Savage v. Psychiatric Institute, Inc., 965 S.W.2d 745, 753 (Tex. App. ­ Fort Worth 1998, pet. denied).

To establish a fraudulent concealment defense based upon a duty to disclose, as opposed to active concealment, the plaintiff must provide evidence of specific facts demonstrating: (1) the defendant's actual knowledge of a wrong; (2) the duty to disclose the wrong; and (3) a fixed purpose to conceal the wrong. Mellon Serv. Co. v. Touche Ross & Co., 17 S.W.3d 432, 436 (Tex. App. ­ Houston [1st Dist.] 2000, no pet.). Casey v. Methodist Hospital, 907 S.W.2d 898, 901 (Tex. App. ­ Houston [1st Dist.] 1995, no writ).



Unless the defendant knows of the material facts giving rise to a cause of action, the mere failure to disclose is insufficient. See Wilson v. Rudd, 814 S.W.2d 818, 823 (Tex. App. ­ Houston [14th Dist.] 1991, writ denied) (no fact issue on fraudulent concealment when plaintiff merely alleged that doctor did not tell him of negligence and there was no evidence that doctor believed that he was negligent); Sanchez v. Memorial Medical Center Hospital, 769 S.W.2d 656, 659 (Tex. App. ­ Corpus Christi 1989, no writ) (fraudulent concealment affidavit, which stated only that hospital knew of wrong but never told family, too conclusory regarding hospital's knowledge); Winkle v. Tullos, 917 S.W.2d 304, 312 (Tex. App. ­ Houston [14th Dist.] 1995, writ denied) (no evidence of fraudulent concealment where plaintiff said only that doctor did not tell him of negligence). The mere failure to admit a contested wrong, without affirmative evidence indicating awareness of the wrong, does not justify the estoppel effect being employed against the potential defendant.

Instead, the law requires extremely specific facts showing awareness of tortious conduct in order to prevail on fraudulent concealment. Desiga v. Scheffey, 874 S.W.2d 244, 253 (Tex. App. ­ Houston [14th Dist.] 1994, writ denied). A good example of this principle is Hay v. Shell Oil Co., 986 S.W.2d 772 (Tex. App. ­ Corpus Christi 1999, pet. denied). In Hay, the plaintiffs alleged that Shell had fraudulently concealed from them its pooling of their property with non-productive property. At best, the summary judgment record contained conflicting expert affidavits expressing opinions as to whether Shell might have known or should have known about the productivity of the land when it was pooled in 1977. The record contained absolutely no evidence as to what Shell actually knew. The court reversed the summary judgment, holding that "[o]ne cannot fraudulently conceal facts of which one has no actual knowledge." 986 S.W.2d at 778 (citing DiGrazia v. Old, 900 S.W.2d 499, 502 (Tex. App. ­ Texarkana 1995, no writ)).





C. Cessation of the Duty to Disclose.

The estoppel effect of fraudulent concealment does not toll limitations indefinitely until the defendant discloses the wrongdoing. The tolling of limitations instead ceases when the duty to disclose, upon which the doctrine is based, also ceases. By way of example, Texas courts have held that although a doctor-patient relationship may give rise to a claim of fraudulent concealment based upon a duty to disclose, the duty ends once the relationship ceases. Savage v. Psychiatric Institute, Inc., 965 S.W.2d 745, 754 (Tex. App. ­ Fort Worth 1998, pet. denied) (claim of fraudulent concealment could not toll limitations after patient was discharged); Thames v. Dennison, 821 S.W.2d 380, 384 (Tex. App. ­ Austin 1991, writ denied) (claim of fraudulent concealment could not toll limitations after patient stopped seeing doctor).

D. Actual or Constructive Discovery of the Injury.

Limitations is tolled due to fraudulent concealment only until the party learns of "facts, conditions, or circumstances which would cause a reasonably prudent person to make inquiry, which, if pursued, would lead to discovery of the concealed cause of action." Borderlon v. Peck, 661 S.W.2d 907, 909 (Tex. 1983); see also Earle v. Ratliff, 998 S.W.2d 882, 888 (Tex. 1999).

V. TOLLING DUE TO MISNOMER AND MISIDENTIFICATION.

Aside from a possible malpractice claim, what happens when one sues the wrong party? In some cases, the result may be different depending on whether the mistake is one of misnomer or misidentification.

Under a doctrine sometimes referred to as the Hilland exception, limitations is tolled in instances where the correct party is sued, but under an incorrect name. Continental Southern Lines, Inc. v. Hilland, 528 S.W.2d 828 (Tex. 1975); see also Enserch Corp. v. Parker, 794 S.W.2d 2, 4-5 (Tex. 1990). In such situations, limitations is equitably tolled because the potential defendant has notice of the claim, and is not prejudiced by being sued after expiration of the limitations period. Esquivel v. Murray Guard, Inc., 992 S.W.2d 536, 541 (Tex. App. ­ Houston [14th Dist.] 1999, pet. denied).

Under this misnomer doctrine, a subsequent petition naming the correct party will relate back to the filing of the timely original petition. Enserch Corp., 794 S.W.2d at 5. Of course, in order for the plaintiff to take advantage of this doctrine, the proper party must be added prior to judgment. Bailey v. Vanscot Concrete Co., 894 S.W.2d 757 (Tex. 1995), rev'd in part on other grounds, Chilkewitz v. Hyson, 22 S.W.2d 825, 830 (Tex. 2000). In Bailey, the plaintiff sued the wrong corporate entity, never adding the proper party to the lawsuit. The court refused to consider the equitable misnomer doctrine, noting that no limitations issue was presented in the case. All parties agreed that the party sued was the incorrect party; no other defendant had been substituted for which limitations might have been applicable. The court "declined to correct Bailey's error by retroactively substituting the correct party on his behalf." Bailey, 894 S.W.2d at 761.

In contrast to a misnomer, a misidentification occurs when a litigant sues an existing legal entity which is the wrong party. Enserch v. Parker, 794 S.W.2d 2, 5 (Tex. 1990). In misidentification cases, there generally are two viable companies which are both operating businesses at the same time of the alleged incident. Id. In most situations, a misidentification does not toll the running of limitations. However, if the misidentified party is related to the intended defendant such that the correct party is cognizant of the suit, the defendant has not been disadvantaged by the delay in bringing suit, and limitations will be tolled so that the proper party may be added. Id.; Toro v. First City Bank ­ Westheimer Plaza, N.A., 821 S.W.2d 633, 636 (Tex. App. ­ Houston [1st Dist.] 1991, no pet.). Even if the named party and the correct party are not related, limitations may be tolled if the correct party timely learns of the suit. Hernandez v. Furr's Supermarkets, Inc., 924 S.W.2d 193, 198 (Tex. App. ­ El Paso 1996, writ denied). Thus, the critical issue is "whether the party claimed to be responsible was in fact put on notice as to the claim being made against it in the pending suit." Barnett v. Houston Natural Gas Co., 617 S.W.2d 305, 306-07 (Tex. App. ­ El Paso 1981, writ ref'd n.r.e.).

Although focusing on estoppel, Palais Royal, Inc. v. Gunnels, 976 S.W.2d 837 (Tex. App. ­ Houston [1st Dist.] 1998, pet. dism'd by agr.), illustrates an appropriate tolling of limitations for a misidentification. Gunnels, a construction manager, injured himself in a fall from a ladder at a Palais Royal retail store. In order to save money, Palais Royal had acted as its own construction manager. Confused by the corporate structure, Gunnels sued Specialty Retailers, Inc. d/b/a Palais Royal, Inc., for his injuries. Gunnels asked via interrogatories whether Specialty Retailers had been correctly named as a party. Palais Royal waited until two years after the accident and amended its interrogatory answer, stating for the first time that it had been misidentified. While there was a Specialty Retailers, Inc., entity, it was the parent corporation of Palais Royal, and Palais Royal was not its assumed name. On appeal, Palais Royal argued that this misidentification did not toll limitations. Noting the deceptive interrogatory answers, the court held that Palais Royal was not prejudiced by the misidentification, and that its conduct estopped it from raising limitations.

While not a tolling provision, Tex. R. Civ. P. 28 may effectively operate as one, because it allows a plaintiff to bring suit against an individual and thereby toll limitations against a business organization so long as there is evidence that the business organization is doing business as the individual. Chilkewitz v. Hyson, 22 S.W.3d 825 (Tex. 1999). The same is true for individuals doing business as business organizations. The correct legal name of the actual defendant must be added before judgment. Id. As Rule 28 is not a tolling provision, however, it does not run afoul of Section 10.01 of Article 4590i, and consequently, operates normally in medical malpractice cases because "[t]he proper party is sued when that party is sued in its assumed or common name." 22 S.W.3d at 830.

VI. STATUTORY TOLLING THEORIES.

A. Legal Disability.

In cases where the plaintiff is under a legal disability, limitations is tolled for the period of the disability. Tex. Civ. Prac. & Rem. Code § 16.001. Only two types of legal disabilities are recognized in Texas: minority (under 18 years of age) and unsound mind. Imprisonment is no longer considered a legal disability under Texas law. White v. Cole, 880 S.W.2d 292, 295 (Tex. App. ­ Beaumont 1994, writ denied).

The application of § 16.001 is restricted to causes of action which accrue while the plaintiff is under a legal disability. The statute expressly excludes tolling for disabilities which arise after the cause of action has accrued. Tex. Rev. Civ. Prac. & Rem. Code § 16.001(d). Moreover, the statute prohibits the tacking of successive disabilities. For example, the tolling provision would not extend the limitations period beyond majority for a plaintiff who was a minor when a cause of action accrued but later became mentally disabled.

Cases premised on derivative claims, such as loss of parental consortium, are dependent on the viability of the underlying cause of action; thus, legal disability will not save a child's cause of action if the parent's personal injury claim is barred by limitations. Nash v. Selinko, 14 S.W.3d 315, 317 (Tex. App. ­ Houston [14th Dist.] 1999, pet. denied); Howard v. Fiesta Texas Show Park, 980 S.W.2d 716, 719 (Tex. App. ­ San Antonio 1998, no pet.); but see Browning-Ferris Industries, Inc. v. Lieck, 845 S.W.2d 926, 949 (Tex. App. ­ Corpus Christi 1992), rev'd on other grounds, 881 S.W.2d 288 (Tex. 1993). (Query, however, whether the Corpus Christi court doesn't have it right: the parental consortium claim is derivative, but accrues in the child's favor at the moment the parent is injured and arguably is not affected by subsequent circumstances which defease the parent's cause of action. Thus, as a statutory matter, limitations are tolled during the child's minority, and as a constitutional matter, this common-law cause of action cannot be cut off during the child's minority.)

Moreover, legal disability ends at death, so if a child's claim has been tolled for some period prior to that time, limitations runs from the death of the child. Gross v. Kahanek, 3 S.W.3d 518, 521 (Tex. 1999).

B. Death of a Party.

Under Tex. Civ. Prac. & Rem. Code § 16.062, the running of limitations is tolled for twelve months following the death of a party who may have a cause of action or against whom a cause of action may be pled. If the party's estate is probated, limitations is tolled only until an executor or administrator qualifies, but not in excess of twelve months.

The statute only suspends the running of limitations; it should not be confused with the survival statute, codified at Tex. Civ. Prac. & Rem. Code § 71.021. If the decedent's claims were already barred at death, they, and any derivative claims owned by the estate, do not survive. Russell v. Ingersoll-Rand Co. 841 S.W.2d 343, 344, 348-49 (Tex. 1992); Upton County, Texas v. Brown, 960 S.W.2d 808 (Tex. App. ­ Dallas 1997, no writ).

Moreover, the tolling provision is not applicable to claims for medical malpractice cases under the Medical Liability Act. Campos v. Ysleta General Hospital, Inc., 879 S.W.2d 67 (Tex. App. ­ El Paso 1994, writ denied); Rascoe v. Anabtawi, 730 S.W.2d 460, 461 (Tex. App. ­ Beaumont 1987, no writ).

C. Temporary Absence from the State.

Tex. Civ. Prac. & Rem. Code § 16.063 suspends limitations due to a person's absence from the state, for the entire period of the absence. The statute was originally designed to protect domestic creditors from individuals who enter Texas, contract debt, depart from the state and subsequently default on their obligations. Howard v. Fiesta Texas Show Park, Inc., 980 S.W.2d 716 (Tex. App. ­ San Antonio 1998, pet. denied); Wyatt v. Lowrance, 900 S.W.2d 360 (Tex. App. ­ Houston [14th Dist.] 1995, writ denied). Except where a nonresident enters into a contract in Texas, the tolling provision for temporary absences does not apply to nonresidents. Howard, 980 S.W.2d at 722; Guardia v. Kontos, 961 S.W.2d 580 (Tex. App. ­ San Antonio 1997, no writ).

D. The Savings Statute.

Under Texas law, the pendency of a prior suit may in certain limited cases toll the running of the statute of limitations. In general, the Texas savings statute, codified at Tex. Civ. Prac. & Rem. Code § 16.064, tolls limitations due to a previously filed claim when that claim is dismissed for want of jurisdiction and the plaintiff refiles in Texas within 60 days of the dismissal. Section 16.064(a) specifically provides:

The period between the date of filing of action in a trial court and the date of the second filing of the same action in a different court suspends the running of the applicable statute of limitations for the period if:

(1) because of lack of jurisdiction in the trial court where the action was first filed, the action is dismissed or the judgment is set aside or annulled in a direct proceeding; and

(2) not later than the 60th day after the date the dismissal or other disposition becomes final, the action is commenced in a court of proper jurisdiction.

Consistent with its express language, Texas courts have held that the statute applies only if the original action is dismissed for lack of jurisdiction. Accordingly, the savings statute does not apply to actions initially filed in one proper jurisdiction simply because they are later filed in another. Reeves v. Texas Department of Criminal Justice, 07-97-0027-CV, 1999 Tex. App. LEXIS 2924 (Tex. App. ­ Amarillo 1999, pet. denied). Where the court's dismissal order does not dismiss the first action for lack of jurisdiction, the savings statute has no application. See Oram v. General American Oil Co., 503 S.W.2d 607, 609-10 (Tex. Civ. App. ­ Eastland 1973, writ ref'd n.r.e.), cert. denied, 421 U.S. 981 (1975); Watson v. General Motors Corp., 479 S.W.2d 104, 106 (Tex. Civ. App. ­ Houston [1st Dist.] 1972, writ ref'd n.r.e.).

In particular, the savings statute does not toll limitations based on voluntary dismissals. See Buerger v. Southwestern Bell Telephone Co., 982 F. Supp. 1253, 1256 (E.D. Tex. 1997); Dalo v. Laughlin, 636 S.W.2d 585, 589-590 (Tex. App. ­ San Antonio 1982, no writ). Nor does the savings statute apply to a dismissal based on forum non conveniens, Hotvedt v. Schlumberger, Ltd. (N.V.), 942 F.2d 294 (5th Cir. 1991), or a plea in abatement, Oram, 503 S.W.2d at 610. Essentially, if the court had jurisdiction over the suit at the time of the dismissal, the savings statute will not operate to toll limitations. Id.

E. Written Acknowledgment of Claims.

Although couched as an evidentiary restriction, Tex. Civ. Prac. & Rem. Code § 16.065 provides a means to toll the running of limitations on a debt where the obligee, in writing, acknowledges the debt and makes an express promise to pay. Bright & Co. v. Holbein Family Mineral Trust, 995 S.W.2d 742, 746 (Tex. App. ­ San Antonio 1999, pet. denied). The act of acknowledgment effectively estops the debtor from raising limitations because the promise to pay may have been meant to forestall the creditor's filing suit on the breach.









F. Relation Back of Amended or Supplemental Pleadings.

Under Tex. Civ. Prac. & Rem. Code § 16.068, a claim or cause of action may avoid limitations by relating back to a previously filed pleading, provided that: (1) the previous pleading was not barred by limitations; and (2) the amendment or supplementation is not based on a new, distinct or different transaction or occurrence. In effect, the filing of a pleading tolls limitations as to other related claims or causes of actions which may be subsequently filed. Almazan v. United Services Automobile Association, 840 S.W.2d 776 (Tex. App. ­ San Antonio 1992, writ denied). If limitations would have barred the cause of action when the original pleading was filed, the amended cause of action may not "relate back" to the original pleading, even if it contained other causes of action which survived limitations. Id. In addition, except for cases of misnomer or misidentification, the relation-back doctrine does not apply to newly added parties defendant. Pierson v. SMS Financial II, L.L.C., 959 S.W.2d 343 (Tex. App. ­ Amarillo 1998, no pet.).

G. Reopening of the Limitations Period for Counterclaims.

Tex. Civ. Prac. & Rem. Code § 16.069 represents the most overlooked tolling provision for limitations. In effect, § 16.069 revives a barred cause of action when an opposing party raises a claim to which the barred claim is related. MBank Fort Worth, N.A. v. Trans Meridian, Inc., 820 F.2d 716 (5th Cir. 1987). For example, where a bank sues over a default occurring in the twentieth year of a promissory note, an obligor may file a counterclaim for usury or fraud related to the formation of the contract over nineteen years earlier. However, the window of opportunity is small; all such "revived" claims must be filed within thirty days after the filing of the related cause of action.







VII. THE OPEN COURTS DOCTRINE.

Article 1, § 13, of the Texas Constitution, commonly known as the open courts provision, guarantees that all persons bringing well-recognized common law causes of action will not unreasonably be denied access to the courts. Trinity River Authority v. URS Consultants, Inc., 889 S.W.2d 259, 261 (Tex. 1994). To establish applicability of the open courts provision, a litigant must show that he has a cognizable common law cause of action, and that restriction of the claim is unreasonable or arbitrary when balanced against the state's purpose in barring the suit. Diaz v. Westphal, 941 S.W.2d 96, 100 (Tex. 1997).

Application of limitations violates the open courts provision when it cuts off a cause of action before the litigant knew or should have known the nature of the injury or the facts giving rise to the cause of action. Hellman v. Mateo, 772 S.W.2d 64, 66 (Tex. 1989).

A. No Reasonable Opportunity to Sue Within the Limitations Period.

In order to take advantage of the open courts provision, the plaintiff must not have had an opportunity to discover the wrong and bring suit within the limitations period. Voegtlin v. Perryman, 977 S.W.2d 806, 812 (Tex. App. ­ Fort Worth 1998, no pet.). Of course, application of this requirement becomes problematic only when the plaintiff discovers the wrong prior to the running of the normal limitations period. The question then becomes whether enough time remained for the plaintiff reasonably to investigate, prepare, and file suit after discovery of the injury. Neagle v. Nelson, 685 S.W.2d 11, 14 (Tex. 1985); Gagnier v. Wichelhaus, 17 S.W.3d 739 (Tex. App. ­ Houston [1st Dist.] 2000, pet. denied). Various courts have held that discovery within "several months" of the expiration of the applicable limitations period constitutes a reasonable time, so as to preclude application of the open courts doctrine. LaGesse v. PrimaCare, Inc., 899 S.W.2d 43, 46-47 (Tex. App. ­ Eastland 1995, writ denied) (discovery "several months" before expiration was sufficient time to bring suit).

B. Due Diligence Following Discovery of Injury.

Even if the plaintiff did not have a reasonable opportunity to sue within the applicable limitations period, the open courts provision does not toll limitations so as to provide a full limitations period in which to sue. Rather, being a constitutional exception to the general rule of limitations, the open courts doctrine provides only a "reasonable period" after discovery in which to sue. Voegtlin v. Perryman, 977 S.W.2d 806, 812 (Tex. App. ­ Fort Worth 1998, no pet.). Thus, the plaintiff must exercise due diligence in bringing suit. Id.

While a "reasonable period" is by no means the provision of any concrete period, some courts have generally applied a strict one-year cut-off after discovery. See Fiore v. HCA Health Services, Inc., 915 S.W.2d 233, 238 (Tex. App. ­ Fort Worth 1996, writ denied) (delay in suit for one year not reasonable period as a matter of law); LaGesse v. PrimaCare, Inc., 899 S.W.2d 43 (Tex. App. ­ Eastland 1995, writ denied) (one year delay unreasonable as a matter of law); see also Hall v. Dow Corning Corp., 114 F.3d 73 (5th Cir. 1997) (fifteen-month delay unreasonable); Work v. Duval, 809 S.W.2d 351, 354 (Tex. App. ­ Houston [14th Dist.] 1991, no writ) (twenty-one-month delay unreasonable).

One clear exception to this general rule is Weiner v. Wasson, 900 S.W.2d 316, 319 (Tex. 1995). There, after finding that the strict two-year limitations provision of the Medical Liability Act violated the open courts provision as to a minor's common law claims for malpractice, the Court held that the full two-year limitations period would be available following the plaintiff's majority.

VIII. CHOICE OF LAW.

Typically, ordinary limitations periods are considered procedural rather than substantive law. Accordingly, in Texas, Texas' limitations generally apply. California v. Copus, 309 S.W.2d 227, 230 (Tex. 1958), cert. denied, 356 U.S. 967 (1958). An exception exists, however, where an out-of-state statute both creates the right of action and prescribes a limitations period; in such case, the limitations period is part of the substantive right and the statute controls. 309 S.W.2d at 230-31; Intevep, S.A. Research & Tech. Support Est. v. Sena, 41 S.W.3d 391, 394 (Tex. App. ­ Dallas 2001, no pet.).

That general rule, however, has been modified by statute in some situations. For example, under Tex. Civ. Prac. & Rem. Code § 71.031(a)(3) ­ the borrowing statute ­ a plaintiff who is a resident of a foreign state may file suit in Texas for damages for death or personal injury caused by some act that took place outside of Texas only if they comply not only with Texas' limitations but with the limitations of the foreign statue where the act took place as well. The Supreme Court of Texas has ruled that § 71.031(a)(3) complies with both the Texas and Federal Constitutions. Owens Corning v. Carter, 997 S.W.2d 560, 571-76 (Tex.), cert. denied, 528 U.S. 1005 (1999).

APPENDIX ­ LIMITATIONS PERIODS


Claims Subject to a One-Year Limitations Period


Malicious Prosecution Tex. Civ. Prac. & Rem. Code § 16.002(a).

Libel Tex. Civ. Prac. & Rem. Code § 16.002(a).

Slander Tex. Civ. Prac. & Rem. Code § 16.002(a).



Claims Subject to a Two-Year Limitations Period




Trespass Tex. Civ. Prac. & Rem. Code § 16.003(a); Waddy v. City of Houston, 834 S.W.2d 97 (Tex. App. ­ Houston [1st Dist.] 1992, writ denied).

Conversion Tex. Civ. Prac. & Rem. Code § 16.003(b); Styers v. Harris County, 838 S.W.2d 955 (Tex. App. ­ Houston [14th Dist.] 1992, writ ref'd).

Personal Injury Tex. Civ. Prac. & Rem. Code § 16.003(a).

Wrongful Death Tex. Civ. Prac. & Rem. Code § 16.003(b); Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 350 (Tex. 1990).

Negligent Misrepresentation Texas American Corp. v. Woodbridge Joint Venture, 809 S.W.2d 299, 302 (Tex. App. ­ Fort Worth 1991, writ denied).

Medical Malpractice Tex. Rev. Civ. Stat. art. 4590i, § 10.01.

Deceptive Trade Practices Tex. Bus. & Com. Code § 17.565; KPMG Peat Marwick v. Harrison Cty. Housing Fin. Corp., 988 S.W.2d 746, 749 (Tex. 1999).

Legal Malpractice Tex. Civ. Prac. & Rem. Code § 16.003(a); Apex Towing v. Tolin, 41 S.W.3d 118, 120 (Tex. 2001).

Accounting Malpractice Murphy v. Campbell, 964 S.W.2d 265 (Tex. 1997).

Civil Rights Violations Piotrowski v. City of Houston, 237 F.3d 567 (5th Cir. 2001); Li v. University of Texas Health Science Center, 984 S.W.2d 647 (Tex. App. ­ Houston [14th Dist.] 1998, pet. denied).

Tortious Interference First National Bank v. Levine, 721 S.W.2d 287, 289 (Tex. 1986).

Breach of Duty of Good Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 827 (Tex.

Faith and Fair Dealing 1990).

False Imprisonment White v. Cole, 880 S.W.2d 292 (Tex. App. ­ Beaumont 1994, writ denied).

Civil Conspiracy Mays v. Stewart, 11 S.W.3d 440, 453 (Tex. App. ­ Houston [14th Dist.] 2000, pet. denied).

Intentional Infliction of

Emotional Distress Bhalli v. Methodist Hospital, 896 S.W.2d 207, 211 (Tex. App. ­ Houston [1st Dist.] 1995, writ denied).

Insurance Code Claims Johnson & Higgins, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998).



Claims Subject to a Three-Year Limitations Period



Misappropriation of Trade

Secrets Tex. Civ. Prac. & Rem. Code § 16.010(a).



Claims Subject to a Four-Year Limitations Period



Fraud (non-personal injury) Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex. 1990).

Action on Debt Tex. Civ. Prac. & Rem. Code § 16.004.

Breach of Contract for Sale

of Real Property Tex. Civ. Prac. & Rem. Code § 16.004.

Breach of Contract Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997).

Breach of Fiduciary Duty Tex. Civ. Prac. & Rem. Code § 16.004(a)(5); Rampart Capital Corp. v. Egmont Corp., 18 S.W.3d 318, 321 (Tex. App. ­ Beaumont 2000, no pet.)

Indemnity Ocean Transport, Inc. v. Greycas, Inc., 878 S.W.2d 256 (Tex. App. ­ Corpus Christi 1994, writ denied).



Claims Subject to a Five-Year Limitations Period




Personal Injury Based

on Sexual Assault Tex. Civ. Prac. & Rem. Code § 16.0045.