Opinion
01-20-00792-CV
08-25-2022
LINDA CARRIERE, Appellant v. DANIEL O'BRIEN, Appellee
On Appeal from the 151st District Court Harris County, Texas Trial Court Case No. 2017-25369
Panel consists of Justices Landau, Hightower, and Rivas-Molloy.
MEMORANDUM OPINION
Rivas-Molloy Justice
Appellant Linda Carriere appeals the trial court's order granting summary judgment in favor of Appellee Daniel O'Brien on her causes of action for negligence, breach of fiduciary duty, and fraud. Appellee moved for summary judgment on the grounds that (1) Appellant's causes of action for negligence, breach of fiduciary duty, and fraud were barred by limitations, (2) Appellee did not owe Appellant a fiduciary duty, (3) Appellant had not produced any evidence Appellee had breached a fiduciary duty to her, (4) Appellant had not produced any evidence Appellee had engaged in negligent or fraudulent conduct, (5) Appellant had not produced any evidence of damages, and (6) Appellant had not produced any evidence of causation.
On appeal, Appellant argues the trial court erred by (1) dismissing her causes of action based on either a two-year or four-year statute of limitations because she pleaded a cause of action under the Texas Securities Act which is governed by either a three-year or five-year statute of limitations, (2) dismissing her causes of action based on limitations because the accrual date had been tolled under the discovery rule and the fraudulent concealment doctrine, (3) finding Appellee did not owe her a fiduciary duty, and (4) finding Appellee had not engaged in fraudulent conduct.
We reverse the trial court's grant of summary judgment on Appellant's cause of action under the Texas Securities Act and remand for further proceedings. We affirm the judgment in all other respects.
The facts in this background section are based on the summary judgment evidence filed in this case.
Appellant Linda Carriere ("Carriere") met Appellee Daniel O'Brien ("O'Brien") in March 2010. Carriere's tax preparer, Debra Williams ("Williams"), introduced them. Williams told Carriere that O'Brien, who was a financial advisor and a licensed insurance agent, "was very good at investing in stock." Carriere met with O'Brien in his office twice in March 2010 during which time O'Brien held himself out to be a sophisticated financial advisor who could help her accomplish her financial goals. After meeting with O'Brien twice in March 2010, Carriere "made the decision for Daniel O'Brien to become [her] financial advisor."
Carriere, who was approaching retirement age, told O'Brien that she wanted to diversify her investments and she thought investing in the stock market was one way to accomplish her goal. According to Carriere, O'Brien told her that he would open a stock trading account for her with TD Ameritrade and he suggested making an initial contribution of $5,000. O'Brien, however, asserts that he told "Carriere that if she wanted to buy any stocks or bonds, [he] could not do that for her, but that she could open an account at TD Ameritrade by herself." TD Ameritrade's records reflect that an IRA account was opened in Carriere's name in April 2010, with an initial contribution of $5,000. Carriere made at least two stock purchases before she withdrew the entire $5,410.77 balance on the account on May 26, 2011.
Carriere, with assistance from O'Brien, also applied for a $750,000 life insurance policy from Industrial Alliance Pacific Insurance and Financial Services ("IAP") on March 17, 2010. The policy, which generated investment income as well as providing insurance coverage, had an annual premium of $15,000. On April 23, 2010, Carriere paid IAP her initial $15,000 premium on the policy, as well as an additional $5,000 cash investment amount with a check made payable to IAP. Carriere gave the check to O'Brien. Carriere made two additional $15,000 premium payments on the policy. The policy lapsed in 2014 after Carriere stopped paying the premiums. Carriere claims the policy was more expensive than she could afford, and O'Brien never discussed the terms of the policy or the amount of the premium with her.
Carriere, with assistance from O'Brien, also applied for an annuity from Life Insurance Company of the Southwest ("LSW") on March 17, 2010. As part of her application, Carriere represented that she had "received a copy of [LSW's] disclosure material" and that she understood that LSW's projections for the annuity were "not guarantees, promises, or warranties." Carriere received and read a brochure from LSW which explained the nature of her investment in the annuity. Carriere made an initial investment of $198,853.06 using a check made payable to LSW, which Carriere gave to O'Brien. LSW's records reflect Carriere withdrew $169,268.37 from her account between May 2011 to May 2014, and that the cash value of the annuity was $42,398.28 as of April 28, 2014.
O'Brien also helped Carriere secure a life settlement policy from Life Partners, Inc. ("LPI"). Carriere applied for the policy on January 17, 2013. Along with her application, Carriere also signed several forms including one in which she represented:
The Dallas Court of Appeals explained LPI's life settlement policies as follows:
Life Partners is a financial services company engaged in buying life insurance policies and selling interests in those policies to investors. Such transactions are known as "viatical settlements" or "life settlements." Life Partners works to locate people who wish to sell their life insurance policies for an amount less than the face value. Viatical and life settlement investors acquire a fractional interest in the life insurance policies at a discount to the policy's face value, and the insured receives an immediate cash settlement. The most critical element determining whether an investor will make a profit on the life settlement transaction is the "discount" at which Life Partners acquires a life insurance policy from a viator. However, life settlement purchasers never know the exact amount of money Life Partners pays any viator for a life insurance policy.
After Life Partners purchases a life settlement account and locates an investor, funds are deposited into a trust account. Policy ownership is changed from the viator to Life Partners. Investors are never named the owner or beneficiary of the policy, but rather Life Partners holds the policies as "agents" for the investors. In some situations, investors may be required to make additional premium payments to maintain the insurance policy if the insured outlives the life expectancy calculated by Life Partners.Arnold v. Life Partners, Inc., 416 S.W.3d 577, 580 (Tex. App.-Dallas 2013), aff'd, 464 S.W.3d 660 (Tex. 2015).
I have carefully examined my financial resources, investment objectives, and tolerance for risk. After conducting this examination
and reviewing the terms of the Purchase Agreement, I have determined that this purchase is appropriate for me. I sufficiently understand the risk factors and objectives associated with the investment, either independently or as explained to me by one or more professional, trusted financial advisors not affiliated with or in any way compensated by Life Partners, Inc. or its affiliates.
Carriere also signed a form detailing at length the risks of her transaction with LPI.
Carriere contends that O'Brien acquired five life insurance policies with $125,000 from her LSW account using a power of attorney she does not recall signing. Carriere alleges she was not familiar with life settlement policies in 2013, and that she "called a few financial advisors and asked them about this." According to Carriere, they all advised against it. Still, Carriere signed the papers O'Brien presented to her. According to Carriere, she became suspicious when O'Brien told her not to date the forms and he did not sign the forms in her presence. Carriere contends that although O'Brien assured her that he would consult her before investing in any life settlement policies, she started receiving policies acquired using a power of attorney with her alleged signature. On December 30, 2014, Carriere contacted O'Brien and instructed him not to purchase any more policies. O'Brien, however, had already paid $20,160 a piece for five policies, leaving a little over $12,000 in the LSW account.
In January 2015, Carriere learned that LPI had filed for bankruptcy and "it was determined that fraud had taken place with the investment company." Carriere later learned that viaticals are self-directed IRAs and "were not supposed to be sold by financial investors." Carriere received a proof of claim bankruptcy form that she asked O'Brien to help her submit. Carriere claims that O'Brien failed to submit a timely proof of claim form and had she not followed up, she "would have lost [her] investment."
Procedural Background
On April 13, 2017, Carriere sued O'Brien for various causes of action arising from services he allegedly provided to her after she hired him as her investment advisor. The exact nature of Carriere's causes of action is a matter of dispute. O'Brien argues Carriere pleaded causes of action for negligence, fraud, and breach of fiduciary duty. Carriere, who does not deny pleading claims for negligence, fraud, and breach of fiduciary duty, argues that her allegations of wrongdoing are all cognizable under the Texas Securities Act.
In her petition, Carriere alleged that O'Brien "had a fiduciary duty as investor [sic] to" (1) "disclose relevant information about an investment," (2) "avoid conflict of interest or potential conflict of interest," (3) "acknowledge compensation and payment received from the company in which he had plaintiff investing," (4)"disclose whether he was licensed and the type of license he possessed," (5)"possess knowledge of federal and state laws regarding investment," (6) "look[] at plaintiff's goals, needs and other factors such as age to search for other investments, market to determine the best investment option for plaintiff," (7) "advise plaintiff of his compensation for providing services and what services he was going to provide," (8) "advise plaintiff of compensation he would receive from other companies for her participation or for her doing business with those companies," and (9) "not have a conflict of interest between plaintiff and the investors in which he made investment on plaintiff[']s behalf."
Carriere also alleged that O'Brien "was negligent and or fraudulent in his duties and responsibilities as an investment adviser" because he (1) "failed to advise plaintiff of the type and kind of investment she would be making or the company or companies in which she was making investments," (2) "failed to specifically define for plaintiff the risks she was undertaking in purchasing from LPI thereby totally breaching his duty," (3) "failed to provide to Plaintiff the contractual agreement between defendant and plaintiff that showed his responsibilities to Plaintiff as an investor thereby totally breaching his duty to advise plaintiff of the services he intended to provide and his fees for providing such services," (4) mislead her to believe that "her contractual agreement was not with the defendant but rather with LPI," (5) "failed to inform plaintiff of the financial difficulties that LPI was having which has now resulted in LPI having to file bankruptcy . . . thereby totally breaching his duty as an investor," (6) "failed to advise plaintiff that once he provided her information to LPI and sent her investment to LPI that he was no longer a part of the transaction thereby totally breaching his duty," (7) "mislead Plaintiff in to believing that he was an agent of LPI thereby breaching his duty as an investment adviser," (8) "failed to advise plaintiff that she would not be able to liquidate the investment plan that he had entered her into, for an indeterminate period of time, thereby breaching his duty as an investment adviser," (9) "failed to tell plaintiff of the fact the policy owner of the investment policy could alter the terms of the investment by their conduct; i.e. they could move without notifying defendant or the plaintiff thereby prohibiting plaintiff from making an informed decision about her investments choices," (10) "failed to keep plaintiff advised of maturity date of insurance policies, LSW in particular, or whether any of the maturity dates of policies has changed thereby totally breach[ing] his duty by failing to advise plaintiff of the risk of this particular investment," (11) "intentionally omitted telling plaintiff that she would be unable to get medical records of the person insured under the LPI plan thereby totally breaching his duty of advising plaintiff of the risks involved in entering into the LPI plan," (12) "failed to tell plaintiff of the additional serving cost to have a servicer to service the policies" and "the other fees that she would have to pay to the insurance companies or the other agencies in which he had included her, thereby totally breaching his duties of discussing with plaintiff the cost and establishing the risks involved in this agreement," (13) "failed to allow plaintiff to see the file containing the acquisitions of the policies thereby totally breaching his duty to provide plaintiff with records of exact service and disclosure statements," (14) "never met with plaintiff to discuss other possible investments, thereby totally breaching his duty of using a diversified portfolio to mitigate plaintiff[']s risks and to help her reach her goals," (15) "failed to do any trading with American Trade or any other stock company on my behalf thereby breaching his duty to work diligently in making investments for plaintiff," and (16) "did not act timely and diligently in getting any and all necessary documents to potential or possible investment clients to ensure that plaintiff investment would be properly executed." Carriere further alleged:
The defendant, DANIEL OBRIEN, acted to defraud and or with reckless disregard for the truth or the law in the conduct that forms the basis of this action as specifically set out above in paragraph VIII subparagraphs (1 through 16) and failed to properly advise plaintiff of all the necessary information to allow her to make a knowledgeable and informed decision about investing.
Carriere pleaded that she lost $50,000 on the IAP policy because O'Brien advised her "to take out a life insurance that was costly and [she] received no income from this insurance thereby causing her to lose income which could have been more wisely invested." She alleged this "include[d] the original investment of 20,000.00 plus two additional premium of 15,000 each for a total of $50,000.00 investment to I.A.P." She also alleged that she "suffered actual losses as a result of acting on the advice of defendant and investing with LSW in the amount of [$]153,853.06." She asserted she "suffered actual losses as a result of acting on the advice with defendant and investing $5000.00 with American Trade," and "[d]ue to defendant's negligence and misrepresentation of facts plaintiff has suffered the loss of her savings and has suffered the loss of potential income from interest she could have acquired by placing savings in a savings account or by investing with another investor." Carriere also pleaded for exemplary damages and alleged she was entitled to the reasonable and equitable attorney's fees under the Texas Securities Act. O'Brien filed an answer and raised several affirmance defenses, including the statute of limitations.
O'Brien filed a traditional and no-evidence motion for summary judgment. In his hybrid motion, O'Brien argued he was entitled to summary judgment on the grounds that (1) Carriere's negligence claim was barred by the two-year statute of limitations, (2) Carriere's breach of fiduciary duty and fraud claims were barred by the four-year statutes of limitation, (3) O'Brien did not owe Carriere a fiduciary duty, (4) Carriere had produced no evidence O'Brien had breached a fiduciary duty to her or engaged in negligent or fraudulent conduct, (5) Carriere had produced no evidence of damages, and (6) Carriere had produced no evidence of causation with respect to the IAP insurance policy.
Carriere filed a response to the no-evidence motion for summary judgmentasserting that "this case clearly falls under the Texas Securities Act," which imposes civil liability on investment advisors and the sellers of securities. See Tex. Rev. Civ. Stat. art. 581-33(F)(2), (H), and 581-33-1(A)(2), (D). The statutes of limitations for claims under the Texas Securities Act are set forth in the statute. See Tex. Rev. Civ. Stat. art. 581-33(H), and 581-33-1(D). Carriere appears to argue that although she pleaded common law claims for negligence, fraud, and breach of fiduciary duty, the statute of limitations applicable to her claims is the one set forth in the Texas Securities Act because this case arises out of the sale of securities. She also contends that none of her causes of action accrued until 2015, when she learned that LPI had filed for bankruptcy. According to Carriere, she learned "what investments defendant had made and the true nature of these investments" from the bankruptcy filings and this is when she "began to try to discover the specific cause of the injury, the party responsible for it, the full extent of it, or if there were chances of avoiding it." She also alleged that the applicable statutes of limitation had been tolled based on the discovery rule and the doctrine of fraudulent concealment. Carriere argued that O'Brien owed her a fiduciary duty because he was acting as her investment advisor.
Carriere did not respond to O'Brien's traditional motion for summary judgment.
Article 581-33 of the Texas Revised Civil Statutes was repealed and replaced by Title 12 of the Texas Government Code, effective January 1, 2022. See Act approved June 7, 2019, 86th Leg., R.S., ch. 491, § 3.01, Tex. Sess. Law. Serv. 1316. (West). For purposes of this opinion, we will refer to Article 581-33 because it was the law in effect when the final judgment was rendered.
In her response, Carriere also argues there is evidence to support her breach of contract claim because:
Defendant in his action separated the insurance dealings from the viatical investment in such a way that the insurance situation appeared a contract. There was no way that plaintiff could see the insurance for what it was at the time because of her perception of what her and the defendant relationship was at the time. Plaintiff believed that she and defendant had a client/ financial investor relationship. Defendant was simply using the insurance deal as an effort to make plaintiff believe that this costly insurance, which she could not afford, was an example of the high dollar investments in which he involved his clients. At this point of the insurance purchase, he was acting more like an insurance agent. Therefore, Plaintiff states this claim supports breach of contract as to the insurance policy and supports recovery of both actual and exemplary damages.O'Brien disputes that Carriere pleaded a breach of contract claim. In his second motion for summary judgment, O'Brien states that at most, Carriere asserted only claims for fraud, negligence, and breach of fiduciary duty. Not surprisingly, O'Brien did not move for summary judgment on a breach of contract claim. Despite having argued to the trial court that she presented evidence to support a breach of contract claim, Carriere argues on appeal that "there never was a contract:"
The court applied the date of April 10, 2013 as the beginning of a contract and ruled that Appellant had violated both the two-year breach of contract statute and the 4-year breach of contract statute of limitation. The proper ruling in this case was not the breach of contract there was never a contract. The statutes that govern investment advisors as set out in the Texas Securities Act and the accompanying statutes of limitations are the proper statutes on which the courts should have ruled.
On April 27, 2020, the trial court granted O'Brien's motion for summary judgment stating that O'Brien was "entitled to summary judgment on all of [Carriere's] pled causes of action" and ordering Carriere take nothing on her "Life Insurance Company of the Southwest claim," "I.A.P. Industrial Alliance Pacific Insurance and Financial Services claim," "TD Ameritrade, misnamed American Trade, claim," and "Liberty Trust Company/Life Partners claim." The trial court struck through the portion of the proposed order stating, "Defendant, Daniel O'Brien, is awarded summary judgment that Plaintiff, Linda Carriere, is entitled to nothing regarding all of her other assorted claims and causes of action against Defendant, Daniel O'Brien, which makes this summary judgment final. . ." and stated:
The Court cannot sign an Order that references ". . . all of her other assorted claims and causes of action. . . ." This will be an interlocutory Order unless Defendant files a further motion for summary judgment clarifying what other claims and causes of action besides those specified as dismissed in this Order.
The Court finds that Plaintiff's Response to Defendant's Motion is wholly conclusory and vague. It seems to attempt to tie everything in the case to the bankruptcy filing by the company in which Plaintiff's money was allegedly invested. However, it fails to discuss how the later bankruptcy filing should have been anticipated by Defendant, and why the causes of action accrue in 2015 upon the bankruptcy filing rather than earlier. That is, the Court cannot tell from the Response (even indulging all reasonable inferences in Plaintiff's favor) what Defendant did wrong by allegedly causing Plaintiff to invest in the manner in which Plaintiff invested her money. It appears to suggest that Defendant should be strictly liable for a bad outcome. The Response therefore fails to raise a fact issue as to Defendant's liability under Plaintiff's causes of action and fails to raise a fact issue on Defendant's statute of limitations defenses.
On September 23, 2020, O'Brien filed his second traditional motion for summary judgment clarifying that:
the four theories for Plaintiff's claims on which O'Brien already moved for summary judgment comprise all of Plaintiffs claims. At best, Plaintiff has alleged three causes of action in this case: (1) negligence, (2) fraud, and (3) breach of fiduciary duty[.] Plaintiff has not alleged any other theories for her claims other than the four theories on which O'Brien moved in his Prior MSJ. Therefore, when the Court dismissed all four of these theories with prejudice, the practical effect was to
dismiss all of Plaintiff's claims with prejudice. Thus, as the Court has already ruled Plaintiff's claims have been dismissed with prejudice, and Plaintiff has no other claims remaining in the case.
Carriere filed a response asking the trial court to take judicial notice of her response to O'Brien's first motion for summary judgment. The trial court issued a "Final Order" granting O'Brien's second traditional motion for summary judgment and his no-evidence motion for summary judgment:
Pending before the Court is Defendant Daniel O'Brien's Second Traditional and No-Evidence Motion for Summary Judgment. Having reviewed the motion, the response, and the arguments of counsel, the Court finds that the motion has merit and GRANTS the motion. The Court orders that Plaintiff take nothing on her negligence, fraud, and breach of fiduciary duty causes of action.
This appeal followed.
Summary Judgment
Carriere argues that the trial court's order granting summary judgment in favor of O'Brien is erroneous because (1) she pleaded a cause of action under the Texas Securities Act which is governed by either a three-year or five-year statute of limitations, (2) the accrual date for her claims was tolled under the discovery rule and the fraudulent concealment doctrine, (3) O'Brien owed her a fiduciary duty, and (4) O'Brien engaged in fraudulent conduct. O'Brien responds that the trial court's order granting summary judgment in his favor on Carriere's claims for negligence, fraud, and breach of fiduciary duty must be affirmed because Carriere does not challenge on appeal all of the grounds on which the judgment was based. O'Brien argues that Carriere does not challenge his claim that he is entitled to no-evidence summary judgment because Carriere produces no evidence of damages or causation. O'Brien also argues Carriere never pleaded a cause of action under the Texas Securities Act.
O'Brien does not address Carriere's arguments about an alleged breach of contract claim.
A. Standard of Review
We review a trial court's summary judgment ruling de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). After an adequate time for discovery, a party may move for a no-evidence motion for summary judgment on the ground that no evidence exists of one or more essential elements of the claim or defense on which the adverse party bears the burden of proof at trial. Tex.R.Civ.P. 166a(i); see LMB, Ltd. v. Moreno, 201 S.W.3d 686, 688 (Tex. 2006). Once the movant specifies the elements on which there is no evidence, the burden shifts to the nonmovant to raise a fact issue on the challenged elements. Tex.R.Civ.P. 166a(i); see Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006).
When the movant urges multiple grounds for summary judgment and the order does not specify on which ground the trial court relied, the appellant must negate all grounds on appeal. McCoy v. Rogers, 240 S.W.3d 267, 271 (Tex. App.--Houston [1st Dist.] 2007, pet. denied); Ellis v. Precision Engine Rebuilders, Inc., 68 S.W.3d 894, 898 (Tex. App.-Houston [1st Dist.] 2002, no pet.) (citing State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 381 (Tex. 1993)). "If summary judgment may have been rendered, properly or improperly, on a ground not challenged, the judgment must be affirmed." Ellis, 68 S.W.3d at 898 (citing Holloway v. Starnes, 840 S.W.2d 14, 23 (Tex. App.-Dallas 1992, writ denied)).
A motion for summary judgment must stand or fall on the grounds expressly presented in the motion. McConnell v. Southside Indep. School Dist., 858 S.W.2d 337, 341 (Tex. 1993). A trial court may not grant summary judgment on a ground not presented by the movant in writing. City of Hous. v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex. 1979).
B. Negligence, Fraud, and Breach of Fiduciary
O'Brien moved for summary judgment on Carriere's claims based on several grounds, including Carriere's failure to produce any evidence of damages. O'Brien also argued he was entitled to summary judgment because Carriere cannot prove that he caused her any damages associated with the I.A.P. policy because she did not pay the annual premium and allowed the policy to lapse.
Carriere did not file a reply brief and has not disputed O'Brien's assertions that she did not negate all grounds upon which the trial court could have granted summary judgment.
Damages and causation are essential elements for claims of negligence, fraud, and breach of fiduciary duty. See First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex. 2017) (breach of fiduciary duty); Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015) (fraud); Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex. 2001) (negligence). Carriere does not address damages or causation in her brief. Instead, she focuses primarily on the statute of limitations ground O'Brien asserted as a basis for summary judgment. Carriere does not address O'Brien's alternative grounds that he was entitled to summary judgment because Carriere had not provided any evidence of damages or causation and therefore, she had failed to raise a fact issue on these essential elements of her causes of action. See Mack Trucks, Inc., 206 S.W.3d at 582 (stating once movant specifies elements on which there is no evidence, burden shifts to nonmovant to raise fact issue on challenged elements).
Damages and causation are also essential elements of a breach of contract claim. Miner Dederick Const., LLP v. Gulf Chem. & Metallurgical Corp., 403 S.W.3d 451, 463 (Tex. App.-Houston [1st Dist.] 2013, pet. denied).
Although the trial court did not specify the basis upon which it was granting summary judgment in its second order, the trial court expressly found that Carriere had failed to raise a fact issue as to O'Brien's liability under her causes of action in its first order, which merged into the second order to form a final judgment. Bonsmara Nat. Beef Co., LLC v. Hart of Tex. Cattle Feeders, LLC, 603 S.W.3d 385, 390 (Tex. 2020) ("When a trial court renders a final judgment, the court's interlocutory orders merge into the judgment and may be challenged by appealing that judgment."). Because Carriere did not negate all grounds upon which summary judgment was granted with respect to her fraud, breach of fiduciary duty, and negligence claims, we must affirm the trial court's judgment with respect to those claims. See Ellis, 68 S.W.3d at 898 (stating appellant must negate all grounds upon which summary judgment could have been granted if movant urges multiple grounds for summary judgment and trial court's order does not specify on which ground trial court relied).
Texas Securities Act
Carriere argues the trial court erred by dismissing her claims based on a two-year or four-year statute of limitations because "[t]he appropriate statutes regarding limitations in this case would be regulated under the limitation statutes for various violations of the Texas Securities Act." O'Brien, who did not move for summary judgment based on the Texas Securities Act, argues for the first time on appeal that Carriere never pleaded a cause of action under that statute.
"'Texas follows a fair-notice standard for pleading', which 'measures whether the pleadings have provided the opposing party sufficient information to enable that party to prepare a defense or a response.'" Tex. Dep't of Transp. v. Lara, 625 S.W.3d 46, 61 (Tex. 2021) (quoting First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 224-25 (Tex. 2017)); see Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000); Roark v. Allen, 633 S.W.2d 804, 810 (Tex. 1982). "A plaintiff sufficiently pleads a cause of action when the elements of the claim and the relief sought may be discerned from the pleadings alone." Brumley v. McDuff, 616 S.W.3d 826, 831 (Tex. 2021). "A court should uphold the petition as to a cause of action that may be reasonably inferred from what is specifically stated, even if an element of the cause of action is not specifically alleged." Boyles v. Kerr, 855 S.W.2d 593, 601 (Tex. 1993); see also Tex. R. Civ. P. 45(b).
The Texas Securities Act ("TSA") establishes both primary and secondary liability for securities violations arising under Article 581-33, which is entitled "Civil Liability with Respect to Issuance or Sale of a Security." See Highland Capital Mgmt., L.P. v. Ryder Scott Co., 402 S.W.3d 719, 732 (Tex. App.-Houston [1st Dist.] 2012, no pet.). Primary liability arises under Article 581-33(A)(2) of the TSA when a person offers or sells a security "by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading." Id. at 732-33 (quoting Tex. Rev. Stat. art. 581-33(A)(2)). Secondary liability is derivative liability for another person's securities violation; it attaches to an aider, defined as one "who directly or indirectly with intent to deceive or defraud or with reckless disregard for the truth or the law materially aids a seller, buyer, or issuer of a security . . . under Section 33A, 33B, or 33C." See id. art. 581-33(F)(2). Aiders are jointly and severally liable with the primary violator "to the same extent as if [they] were" the primary violator. Id. Relevant here, Article 581-33(H)(2) states:
No person may sue under Section 33A(2), 33C, or 33F so far as it relates to 33A(2) or 33C:
(a) more than three years after discovery of the untruth or omission, or after discovery should have been made by the exercise of reasonable diligence; or
(b) more than five years after the sale. . . .TEX. REV. STAT. ART. 581-33(H)(2).
The other provisions of Article 581-33(H)(2) are inapplicable.
Similarly, Article 581-33-1, which is entitled "Civil Liability of Investment Advisers and Investment Adviser Representatives," outlines the civil liability that investment advisors have to their clients. See Tex. Rev. Civ. Stat. art. 581-33-1. Article 581-33-1(A)(2) states: "Except as provided by Subsection C of this section, an investment adviser or investment adviser representative who commits fraud or engages in a fraudulent practice in rendering services as an investment adviser is liable to the purchaser, who may sue at law or in equity, for damages." Tex. Rev. Civ. Stat. art. 581-33-1(A)(2). "A person may not sue under Subsection A(2) of this section more than five years after the violation occurs or more than three years after the person knew or should have known, by the exercise of reasonable diligence, of the occurrence of the violation." Tex. Rev. Civ. Stat. art. 581-33-1(D)(2).
Because O'Brien did not specially except to Carriere's petition, we must construe her petition liberally in her favor. See Horizon/CMS Healthcare Corp., 34 S.W.3d at 897 (stating courts should liberally construe petition in favor of pleader if no special exceptions are filed). Among other things, Carriere alleged in her petition:
The defendant, DANIEL OBRIEN, acted to defraud and or with reckless disregard for the truth or the law in the conduct that forms the basis of this action as specifically set out above in paragraph VIII subparagraphs (1 through 16) and failed to properly advise plaintiff of all the necessary information to allow her to make a knowledgeable and informed decision about investing.
This assertion tracks several of the civil liability requirements imposed by Section 33(F)(2) of the TSA. See Tex. Rev. Civ. Stat. art. 581-33(F)(2) ("A person who directly or indirectly with intent to deceive or defraud or with reckless disregard for the truth or the law materially aids a seller, buyer, or issuer of a security is liable under Section 33A, 33B, or 33C jointly and severally with the seller, buyer, or issuer, and to the same extent as if he were the seller, buyer, or issuer."). Carriere also requested attorney's fees pursuant to the TSA. To the extent there was any confusion over whether Carriere pleaded a TSA claim, Carriere argued in her response to O'Brien's first summary judgment motion that she had asserted a claim under the TSA with respect to the LPI. See Arnold v. Life Partners, Inc., 416 S.W.3d 577, 588 (Tex. App.-Dallas 2013) (holding "viatical settlements sold by Life Partners are investment contracts, as a matter of law, under the Texas Security Act and meet the definition of 'security'"), aff'd, 464 S.W.3d 660 (Tex. 2015). She also quoted from and cited to Article 581-33(F)(2), and quoted from Tex. Rev. Stat. art. 581- 33(A)(2) and Tex. Rev. Civ. Stat. art. 581-33-1(D)(2). Notably, O'Brien neither filed a reply addressing Carriere's TSA claim for the LPI nor addressed her TSA claim in his second motion for summary judgment. O'Brien denied Carriere adequately pleaded a TSA cause of action for the first time on appeal. Liberally construing Carriere's petition in her favor, the allegations in her petition were sufficient to put O'Brien on notice that she was asserting a TSA claim for the LPI. See Horizon/CMS Healthcare Corp., 34 S.W.3d at 897.
Notably, O'Brien neither filed a reply addressing Carriere's TSA claim for the LPI nor addressed her TSA claim in his second motion for summary judgment. O'Brien denied Carriere adequately pleaded a TSA cause of action for the first time on appeal.
In its interlocutory order, the trial court stated O'Brien was "entitled to summary judgment on all of [Carriere's] pled causes of action" and granted summary judgment in O'Brien's favor. The court further stated, "This will be an interlocutory Order unless Defendant files a further motion for summary judgment clarifying what other claims and causes of action besides those specified as dismissed in this Order." After O'Brien filed a second motion clarifying that the only pleaded causes of action were for negligence, fraud, and breach of fiduciary duty, the trial court issued a "final" order granting summary judgment in O'Brien's favor on his second motion and rendering a take nothing judgment against Carriere on these claims. The interlocutory order merged into the judgment. See Bonsmara Nat. Beef Co., 603 S.W.3d at 390. When the two orders are considered together, it is clear the trial court intended to dispose of all claims and parties in the case. As the Texas Supreme Court explained many years ago in Lehmann v. Har-Con Corporation, 39 S.W.3d 191, 200 (Tex. 2001):
A judgment that finally disposes of all remaining parties and claims, based on the record in the case, is final, regardless of its language. . . . The intent to finally dispose of the case must be unequivocally expressed in the words of the order itself. But if that intent is clear from the order, then the order is final and appealable, even though the record does not provide an adequate basis for rendition of judgment. So, for example, if a defendant moves for summary judgment on only one of four claims asserted by the plaintiff, but the trial court renders judgment that the plaintiff take nothing on all claims asserted, the judgment is final-erroneous, but final. A judgment that grants more relief than a party is entitled to is subject to reversal, but it is not, for that reason alone, interlocutory.Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200 (Tex. 2001) (citations omitted).
Because O'Brien did not move for summary judgment on Carriere's TSA claim for the LPI, the trial court erred by granting summary judgment in his favor on this basis. See McConnell, 858 S.W.2d at 341 (stating motion for summary judgment must stand or fall on grounds expressly presented in motion); see also Lehmann, 39 S.W.3d at 200 ("[I]f a defendant moves for summary judgment on only one of four claims asserted by the plaintiff, but the trial court renders judgment that the plaintiff take nothing on all claims asserted, the judgment is final-erroneous, but final.").
We express no opinion as to whether O'Brien would have been entitled to summary judgment on Carriere's TSA claims had he moved for summary judgment on this basis.
Conclusion
We reverse the trial court's grant of summary judgment on Carriere's TSA cause of action for the LPI and remand for further proceedings. We affirm the judgment in all other respects.