Jim and Rebecca Brown v. Caldwell & Family Custom Homes, Inc.

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH

NO. 02-11-00490-CV

JIM AND REBECCA BROWN APPELLANTS

V.

CALDWELL & FAMILY CUSTOM APPELLEE
HOMES, INC.

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FROM THE 362ND DISTRICT COURT OF DENTON COUNTY

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MEMORANDUM OPINION1

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Appellants Jim Brown and Rebecca Brown brought claims against

appellee Caldwell & Family Custom Homes, Inc. for negligence, breach of

warranty, and violation of the Deceptive Trade Practices-Consumer Protection

Act (DTPA).2 The trial court granted summary judgment for appellee on

1
See Tex. R. App. P. 47.4.
2
See Tex. Bus. & Com. Code Ann. § 17.41 (West 2011).
limitations grounds on appellants’ negligence and DTPA claims. 3 In one issue,

appellants argue that the trial court erred by granting appellee’s motion for

summary judgment because the limitations period was tolled by application of the

discovery rule. We affirm.

Background Facts

Appellee has been building homes throughout Carrollton, North Dallas,

Plano, and Frisco since 1997. In 2005, appellants bought a home in Carrollton

that had been built by appellee in 1999 and had been lived in by previous

owners. Wade Otte delivered an inspection report to appellants prior to the

purchase. Otte’s report disclosed many concerns about the home, including a

negative drain angle on the front balcony and porch. Additionally, the previous

home owners informed appellants that one of the balconies had leaked and had

been repaired by appellee.

After appellant Jim Brown noticed in 2007 that water was intruding on the

ceiling at the front of the house, appellants hired a contractor to restructure the

balconies and invited Patrick Caldwell, appellee’s president, to the home to

speak to the contractor. Appellants’ contractor reported that the leaks had been

caused by faults in the original construction of the balconies. Appellants and

Caldwell then exchanged several letters in which appellants requested that

3
The court also granted summary judgment against appellants’ breach of
warranty claim because the “defect was not latent.”

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Caldwell reimburse them for the cost of the repairs. 4 They were unable to come

to an agreement.

Appellants sued appellee in July 2009. They asserted claims for negligent

construction of the balconies, for breach of the warranty of good and

workmanlike construction, and for violation of the DTPA. Appellee answered the

suit through a general denial and by asserting that appellants’ claims were barred

by a statute of limitations. Appellee filed a motion for summary judgment on that

ground, among others. Appellants responded by asserting that the balcony flaws

were latent defects and thus the discovery rule tolled the statute of limitations.

The trial court granted appellee’s motion for summary judgment. As to

appellants’ negligence and DTPA claims, the trial court expressly determined that

the claims were barred by limitations. This appeal followed.

Standard of Review

We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could, and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

4
Appellants’ homeowner’s insurance company declined to cover the cost of
the repairs.

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Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A defendant is entitled to

summary judgment on an affirmative defense if the defendant conclusively

proves all elements of the affirmative defense. Frost Nat’l Bank v. Fernandez,

315 S.W.3d 494, 508–09 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c).

Appellee’s Statute of Limitations Affirmative Defense

A defendant moving for summary judgment on the affirmative defense of

limitations must conclusively establish that defense by (1) showing when the

cause of action accrued, and (2) negating the discovery rule, if it applies and has

been pled, by proving as a matter of law that there is no genuine issue of

material fact about when the plaintiff discovered, or in the exercise of reasonable

diligence should have discovered, the nature of the injury. KPMG Peat Marwick

v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). As

appellants acknowledge, the statute of limitations on DTPA and negligence

claims is two years. See Tex. Bus. & Com. Code Ann. § 17.565 (West 2011);

Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a) (West Supp. 2012); KPMG Peat

Marwick, 988 S.W.2d at 749; Zavadil v. Safeco Ins. Co. of Ill., 309 S.W.3d 593,

594 (Tex. App.—Houston [14th Dist.] 2010, pet. denied); Pirtle v. Kahn, 177

S.W.3d 567, 571 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).

The purpose of a statute of limitations is to “compel the exercise of a right

[of action] within a reasonable time so that the opposing party has a fair

opportunity to defend while witnesses are available and the evidence is fresh in

their minds.” Brinker Tex., L.P. v. Looney, 135 S.W.3d 280, 284 (Tex. App.—

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Fort Worth 2004, no pet.) (citing Cont’l S. Lines, Inc. v. Hilland, 528 S.W.2d 828,

831 (Tex. 1975)). A cause of action accrues, and the statute of limitations begins

to run, when facts come into existence that authorize a claimant to seek a judicial

remedy. Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 202 (Tex.

2011) (op. on reh’g) (citing Provident Life & Accident Ins. Co. v. Knott, 128

S.W.3d 211, 221 (Tex. 2003)). When a cause of action accrues is normally a

question of law. Id.

The discovery rule is a limited exception to the general principle that a

statute of limitations begins to run when an injury occurs, regardless of when the

plaintiff learns of the injury. Computer Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d

453, 455 (Tex. 1996) (op. on reh’g); Trinity River Auth. v. URS Consultants, Inc.-

Tex., 889 S.W.2d 259, 262 (Tex. 1994); Moreno v. Sterling Drug, Inc., 787

S.W.2d 348, 351 (Tex. 1990). The discovery rule applies only when the “nature

of the plaintiff’s injury is both inherently undiscoverable and objectively verifiable.”

Shell Oil Co. v. Ross, 356 S.W.3d 924, 930 (Tex. 2011). An injury is inherently

undiscoverable if by its nature, it is “unlikely to be discovered within the

prescribed limitations period despite due diligence.” Id.; see Wagner & Brown,

Ltd. v. Horwood, 58 S.W.3d 732, 734–35 (Tex. 2001); Rashti v. GS Roofing

Prods., Inc., No. 02-03-00250-CV, 2004 WL 1879641, at *1 (Tex. App.—Fort

Worth Aug. 23, 2004, no pet.) (mem. op.).

When the discovery rule applies, the period of limitations begins to run

when the plaintiff actually discovers, or with the exercise of reasonable diligence

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should have discovered, the nature of the injury. Moreno, 787 S.W.2d at 351;

Holland v. Lovelace, 352 S.W.3d 777, 790–91 (Tex. App.—Dallas 2011, pet.

denied). The plaintiff does not need to know the full extent of the injury before

the statute of limitations begins to run. Dean v. Frank W. Neal & Assocs., Inc.,

166 S.W.3d 352, 356 (Tex. App.—Fort Worth 2005, no pet.); see also PPG

Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 93–94

(Tex. 2004) (stating that limitations begins to run under the discovery rule even if

the plaintiff does not know the specific cause of the injury, the party responsible

for it, the full extent of it, or the chances of avoiding it); Bayou Bend Towers

Council of Co-Owners v. Manhattan Constr. Co., 866 S.W.2d 740, 743 (Tex.

App.—Houston [14th Dist.] 1993, writ denied) (“[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.”).

In Dean, the plaintiffs contracted with the defendants to build their home.

166 S.W.3d at 354. After moving into the house in 1996, the plaintiffs noticed

cracks around the house and contacted the defendants to discuss possible

remedies. Id. at 355. When the defendants refused to pay for repairs, the

plaintiffs sued for negligence, breach of warranty, and violation of the DTPA,

among other causes of action, in January 2002. Id. The trial court granted the

defendants’ motion for summary judgment on the ground that the plaintiffs’

claims were barred by the statute of limitations. Id. The plaintiffs contended that

they could not have discovered the full extent of the house’s foundation problems

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until they hired an engineer to examine the house in late 1998. Id. at 356. We

held that the discovery rule did not toll the statute until the plaintiffs learned of the

actual cause of the injury but that the limitations period instead began to run

when the plaintiffs saw cracking in the house and knew of some movement in the

foundation. Id. at 357.

Likewise, in Booker v. Real Homes, Inc., the plaintiffs hired the defendant

to construct their home. 103 S.W.3d 487, 490 (Tex. App.—San Antonio 2003,

pet. denied). Because of construction defects, the windows in the plaintiffs’

home began to leak. Id. One year after moving into the house, the plaintiffs

wrote a letter to the defendant complaining of several issues in the home,

including leaky windows. Id. The plaintiffs had also noticed a musty odor inside

the home. Id. The defendant made repairs to the home but the musty smell

returned. Id. Three years after moving into the home, the plaintiffs discovered

toxic mold in the walls caused by the window leaks. Id. The plaintiffs filed

negligence and DTPA claims more than two years after initially contacting the

defendant about the leaky windows. Id. The plaintiffs argued that the discovery

rule tolled the statute of limitations until they knew the exact cause of the leaks

and that their knowledge of the leaks themselves was insufficient to begin the

limitations period. Id. at 492. The San Antonio Court of Appeals disagreed,

concluding that that “all 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.” Id.; see also Rashti, 2004 WL

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1879641, at *1–2 (holding that the limitations period began to run when a

shopping center owner discovered leaks in her building and not when she

discovered the specific condition that caused the leaks).

Appellants argue that their balcony leak, which caused damage to the

inside of their home, was a latent defect, therefore tolling the limitations period

under the discovery rule. A latent defect is one that is not discoverable by a

reasonably prudent inspection. Gupta v. Ritter Homes, Inc., 646 S.W.2d 168,

169 (Tex. 1983); 7979 Airport Garage, L.L.C. v. Dollar Rent A Car Sys., Inc., 245

S.W.3d 488, 503 (Tex. App.—Houston [14th Dist.] 2007, pets. denied) (op. on

reh’g). Appellants claim that they did not discover any defects until the balconies

began leaking water inside their home in 2008 and, as such, the statute of

limitations should be tolled until that point. But Otte’s home inspection report,

which he delivered to appellants in the latter part of 2005, stated in part,

The inspection is of conditions which are present and visible at the
time of the inspection. . . .

This report is intended to provide you with information
concerning the condition of the property at the time of the inspection.
Please read the report carefully. . . .

....

A negative drain angle was noted at the front porch and the
balcony above (porch/balcony slopes toward the house). This is
improper and should be further investigated by a structural engineer
to determine what if any repairs should be [completed] and by a
qualified contractor to determine if any damage has occurred prior to
closing on this house. The engineer should also rule out damage to
the structure of the house.

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 ....

Rust was noted at the flashing to the west of the main upper
level balcony door. This appears to be one of the areas where water
is holding. This should be further investigated and repaired as
needed. [Emphasis added.]

Appellants argued in the trial court that appellee had “brought forth no

evidence to support its claim that [appellees were] aware of the leak any earlier

than 2008.” Appellant Jim Brown’s affidavit states that at the time he and his wife

bought the house, they were not aware of water penetration issues on the

balcony. Although the inspection report did not specifically convey to appellants

that the balconies leaked water into their home, it did put them on notice that the

balconies had a drainage problem, and it advised them to investigate the

problem and to determine if any damage had been caused by it. Cf. Irwin v.

Nortex Found. Designs, Inc., No. 02-08-00436-CV, 2009 WL 2462566, at *5

(Tex. App.—Fort Worth Aug. 13, 2009, no pet.) (mem. op.) (holding that an

engineering report demonstrated that the plaintiffs were on notice of their house’s

potential foundation problems and that the plaintiffs could have discovered the

problems by exercising reasonable diligence).

In the trial court, appellants argued that the damage to the inside of their

home was caused, in part, by the fact that a “rubber pan was not attached to the

[balcony’s] flashing[,] allowing the water to run under the flashing and into the

residence.” Thus, on appeal, appellants appear to contend that the inspection

report, which described rusted flashing and a negative drain angle but not the

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absence of a rubber pan, was insufficient to show that with reasonable diligence,

they should have discovered the leak. But in appellants’ summary judgment

evidence, they conceded that the water damage in their home was at least

partially caused by the negative drain angle that the inspection report warned

them about, even if it was also caused by other factors. Specifically, in January

2009, in a letter to Caldwell, appellant Jim Brown stated that contractors he had

hired had opined about “many issues with the original construction that [had]

caused the leaking of the balcony,” including “Slope: The large balcony sloped 1

½ [inches] in towards the house. This caused water to sit on the balcony and run

to the back of it.” [Emphasis added.] Regarding the rubber pan, Brown’s letter to

Caldwell stated, “The rubber pan was not attached in [any way] to the metal

flashing . . . , so as water would run back towards the house it would go right

under the metal flashing.” [Emphasis added.]

We conclude that the combination of Otte’s inspection report, which

disclosed the negative drain angle and advised appellants to determine whether

that condition had caused damage, and of appellants’ concession that the

negative drain angle partly caused the damage of which they complain, comprise

conclusive evidence that with the exercise of reasonable diligence, appellants

should have discovered the nature of the injury at the time that they received the

report in 2005. See Moreno, 787 S.W.2d at 351; Dean, 166 S.W.3d at 357.5

5
Because we hold that the summary judgment evidence conclusively
establishes that appellants should have discovered the nature of their injury by

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Appellants’ later discovery of the issue with the flashing and the rubber pan is

immaterial to whether, as a result of the report about the negative drain angle,

they should have discovered the nature of their injury in 2005. See Bayou Bend,

866 S.W.2d at 743 (holding that the plaintiff must only discover an injury and

general cause but not the exact cause in fact to commence the running of the

limitations period).

Therefore, we hold that even if the discovery rule applied to the facts of

this case, the two-year statute of limitations for appellants’ negligence and DTPA

claims began to run, at the latest, in 2005, when they received the inspection

report and, with reasonable diligence, should have discovered the nature of their

injury. See Moreno, 787 S.W.2d at 351; Dean, 166 S.W.3d at 357. Because

appellants did not file those claims until 2009, we hold that they are barred by

limitations and that the trial court did not err by granting appellee’s motion for

summary judgment.

Furthermore, the trial court granted summary judgment on appellants’

breach of warranty claim on the ground that the defect was not latent. 6 See

exercising reasonable diligence after receiving the inspection report, we conclude
that the statement in Jim Brown’s affidavit that he did not actually know of water
penetration issues until 2007 is immaterial. See Moreno, 787 S.W.2d at 351
(“When applied, the [discovery] rule operates to toll the running of the period of
limitations until the time that the plaintiff discovers, or through the exercise of
reasonable care and diligence should discover, the nature of his injury.”).
6
Although appellants’ brief does not contain argument particularly related
to their breach of warranty claim, we have broadly construed the brief as
challenging the summary judgment on all three claims.

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Gupta, 646 S.W.2d at 169 (stating that the implied warranty that a building

constructed for residential use has been constructed in a workmanlike manner

covers “latent defects not discoverable by a reasonably prudent inspection of the

building at the time of sale”). For the reasons stated above, the summary

judgment evidence conclusively establishes that the alleged defect in appellee’s

construction of appellants’ home was not latent (because it was discoverable

through a reasonably prudent inspection), so we hold that the trial court correctly

granted summary judgment on the breach of warranty claim as well. See id.

For all of these reasons, we overrule appellants’ sole issue.

Conclusion

Having overruled appellants’ issue, we affirm the trial court’s judgment.

TERRIE LIVINGSTON
CHIEF JUSTICE

PANEL: LIVINGSTON, C.J.; MCCOY and MEIER, JJ.

DELIVERED: October 4, 2012

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