Opinion
01-21-00224-CV
12-29-2022
JOHN SEGER, M.D., Appellant v. BRIAN BRANDA, BRANDA FINANCIAL SERVICES, AND NATIONAL LIFE INSURANCE COMPANY, Appellees
On Appeal from the 165th District Court Harris County, Texas Trial Court Case No. 2020-51686
Panel consists of Justices Kelly, Rivas-Molloy, and Guerra.
MEMORANDUM OPINION
Amparo Guerra Justice
Appellant, John Seger, M.D., appeals the trial court's orders dismissing his claims for fraud, negligent misrepresentation, and violations of the Texas Insurance Code brought against appellees, Brian Branda, Branda Financial Services (collectively, Branda), and National Life Insurance Company (National Life). In his sole issue, Dr. Seger contends the trial court erred in granting appellees' Rule 91a amended motion to dismiss because he has alleged facts that toll limitations on each of his claims. We affirm.
Background
On August 27, 2020, Dr. Seger filed suit against Branda and National Life alleging that Branda, acting as National Life's authorized agent, persuaded him to make substantial payments to National Life for life insurance coverage on the basis of false and misleading representations regarding the terms of the coverage. He alleged that, relying on appellees' representations regarding how his life insurance policy was to operate, he made premium payments totaling $931,799.56.
Dr. Seger alleged that one of appellees' key misrepresentations was that, once he paid the premiums, his life insurance policy would have accumulated sufficient value so that he would no longer be required to pay premiums. According to Dr. Seger, appellees "pitched the product" by explaining that National Life would use the accumulated cash value of the policy and National Life's earnings on that value to cover any ongoing premiums. Dr. Seger alleged that appellees did not disclose to him that, at some point in the future, the cash surrender value of the policy would no longer support the payment of ongoing required premiums and that, at that point, he would be required to pay National Life several million dollars more or his policy would terminate. He further alleged that appellees failed to disclose to him that termination of the policy would result in the forfeiture of his previous investment and impose on him a multi-million dollar non-cash gain for federal income tax purposes. Dr. Seger alleged that appellees "put him in a trap to his ultimate great damage" that presented "a Hobson's choice of either forfeiting his investment and paying an enormous income tax liability or paying National Life multi-millions of dollars more, for added life insurance coverage he did not need or want." According to Dr. Seger, if he had understood the trap appellees had set for him, he would never have paid the premiums or agreed to the coverage terms.
Dr. Seger asserted claims against appellees for common law fraud, negligent misrepresentation, and violations of the Deceptive Trade Practices Act (DTPA) and the Texas Insurance Code. Dr. Seger alleged that appellees' conduct included (1) misrepresenting the terms of the policy; (2) misrepresenting the benefits or advantages promised by the policy; (3) misrepresenting that the policy conferred or involved rights, remedies, or obligations which it does not have or involve; and (4) failing to disclose information concerning goods or services which was known at the time of the transaction with the intent to induce him into a transaction into which he would not have entered had the information been disclosed. He further alleged that, as a result of appellees' conduct, he was induced to pay $931,799.56 to National Life and accumulated purported loans that National Life has treated as covering ongoing premiums totaling $6,660,291.77. Dr. Seger alleged that if he did not immediately pay National Life the entire amount of $6,660,291.77 in cash, he would lose the almost $1 million in cash he had already paid as well as death benefits, and he would incur approximately $1 million in income tax liability. According to Dr. Seger, "the trap [appellees] set for him almost 30 years ago is now being sprung with many millions of dollars of damage to [him] as the result." Dr. Seger sought economic damages, equitable relief, and special damages.
On October 30, 2020, Branda answered, generally denying the allegations in Dr. Seger's original petition and asserting various affirmative defenses, including that Dr. Seger's claims were barred by the applicable statutes of limitations. Branda also filed a motion to dismiss under Texas Rule of Civil Procedure 91a, arguing that Dr. Seger's claims had no basis in law or fact. Branda argued that Dr. Seger's claims of fraud, negligent misrepresentation, and DTPA and Insurance Code violationswere barred by the applicable statutes of limitations because they were based on representations and omissions appellees allegedly made to him to induce him to pay insurance premiums to purchase a life insurance policy "in the early 1990s" and "almost thirty years ago."
Branda also argued that the trial court should dismiss Dr. Seger's DTPA claims because the transaction about which Dr. Seger complained was exempted under Section 17.49(g) of the Act. See TEX. BUS. & COM. CODE § 17.49(g) ("Nothing in this subchapter shall apply to a cause of action arising from a transaction, a project, or a set of transactions relating to the same project, involving total consideration by the consumer of more than $500,000, other than a cause of action involving a consumer's residence.").
On November 10, 2020, Dr. Seger filed his first amended petition. In addition to reasserting the allegations above, Dr. Seger further alleged that he and Branda had a "personal relationship of trust and confidence, dating from their high school days," "Branda was associated in his business with Dr. Seger's father," "Dr. Seger's father was Branda's professional mentor," and "[t]heir joint firm bore both of their names." Dr. Seger alleged that "[u]nder these circumstances, the truth behind [appellees'] misrepresentations and material and misleading omissions was 'inherently undiscoverable' by [him] ...." Dr. Seger alleged that "not only did [appellees] commit their material misrepresentations and omissions at the genesis of [the] policy's issuance, [they] perpetuated those misrepresentations and continued to conceal the adverse serious damage the policy would inflict every year thereafter until 2019, when [appellees] finally disclosed to Dr. Seger that he was trapped by the Hobson's choice described above and it was too late for [him] to avoid the damage he was about to suffer." Dr. Seger did not include a DTPA cause of action in the first amended petition.
On November 18, 2020, Dr. Seger responded to Branda's motion to dismiss, asserting that (1) he removed his claim under the DTPA and (2) application of the discovery rule and the doctrines of fraudulent concealment and continuing torts tolled the applicable limitation periods.
On November 25, 2020, Branda amended his Rule 91a motion to dismiss, arguing that Dr. Seger's claims for fraud, negligent misrepresentation, and Insurance Code violations were time barred and that neither the discovery rule nor the doctrine of fraudulent concealment or continuing torts tolled the limitation periods on his claims. National Life joined in Branda's amended Rule 91a motion to dismiss.
Dr. Seger responded to the amended Rule 91a motion arguing that appellees distorted the allegations in his first amended petition and re-asserted that application of the discovery rule and the doctrines of fraudulent concealment and continuing torts tolled limitations on his claims.
In his reply brief, Branda argued that dismissal may be based upon the affirmative defense of limitations and that while the factual allegations in Dr. Seger's amended petition are taken as true, his legal conclusions and recitation of the legal elements of his causes of action are not. Dr. Seger re-asserted in his sur-reply that his factual allegations, taken as true, established the tolling defenses.
On January 6, 2021, the trial court held an oral hearing on appellees' amended motion to dismiss. At the conclusion of the hearing, the trial court took the motion under advisement.
On February 23, 2021, Dr. Seger filed his second amended petition and a supplemental response to appellees' amended motion to dismiss. Three days later, he filed his third amended petition and a second supplemental response to the motion to dismiss.
On May 3, 2021, the trial court signed orders granting Branda's amended motion to dismiss and National Life's joinder in the motion and dismissing Dr. Seger's claims against them with prejudice. This appeal ensued.
Standard of Review
Texas Rule of Civil Procedure 91a allows a party to move for early dismissal of a cause of action against it. See TEX. R. CIV. P. 91A; Ball v. City of Pearland, No. 01-20-00039-CV, 2021 WL 4202179, at *2 (Tex. App.-Houston [1st Dist.] Sept. 16, 2021, no pet.) (mem. op.). A trial court may dismiss a cause of action under rule 91a if "it has no basis in law or fact." Tex.R.Civ.P. 91a.1; Ball, 2021 WL 4202179, at *2. "A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought." Tex.R.Civ.P. 91a.1; see also Ball, 2021 WL 4202179, at *2. We review a trial court's decision on a Rule 91a motion to dismiss de novo. Bethel v. Quilling, Selander, Lownds, Winslett &Moser, P.C., 595 S.W.3d 651, 654 (Tex. 2020); Malik v. GEICO Advantage Ins. Co., No. 01-19-00489-Cv, 2021 WL 1414275, at *4 (Tex. App.-Houston [1st Dist.] Apr. 15, 2021, pet. denied) (mem. op.).
Rule 91a "permits motions to dismiss based on affirmative defenses." Bethel, 595 S.W.3d at 656; see also In re Springs Condos., L.L.C., No. 03-21-00493-CV, 2021 WL 5814292, at *3 (Tex. App.-Austin Dec. 8, 2021, orig. proceeding) (mem. op.) (noting trial court could grant Rule 91a motion to dismiss claims based on "limitations grounds"); In re Canfora, No. 01-21-00128-CV, 2021 WL 4095580, at *3, 8-9 (Tex. App.-Houston [1st Dist.] Sept. 9, 2021, orig. proceeding) (mem. op.) (granting conditional mandamus relief from denial of Rule 91a motion based on attorney immunity defense and judicial proceeding privilege). In ruling on a Rule 91a motion, the trial court "may not consider evidence" and "must decide the motion based solely on the pleading of the cause of action, together with any pleading exhibits" permitted by the Texas Rules of Civil Procedure. Tex.R.Civ.P. 91a.6; see also Bethel, 595 S.W.3d at 654. But "[i]n deciding a Rule 91a motion, a court may consider the defendants'] pleadings if doing so is necessary to make the legal determination of whether an affirmative defense is properly before the court." Bethel, 595 S.W.3d at 656. A trial court may grant a Rule 91a motion to dismiss based on an affirmative defense if it meets the rule's standard. Id. If an affirmative defense cannot "be conclusively established by the facts in [the] plaintiff's petition" and requires consideration of evidence, "such [a] defense[ ] [is] not a proper basis for a [Rule 91a] motion to dismiss." Id.; see also In re Springs Condos., 2021 WL 5814292, at *3.
Discussion
Dr. Seger contends that the trial court erred in dismissing his claims against appellees because, taking the factual allegations in his amended petitions as true, his claims are not baseless. He argues that although the allegations in his petition span a number of years, he has alleged facts that support the deferral or tolling of the limitation periods.
A. Live Pleading
As a preliminary matter, we note that Dr. Seger cites to allegations in both his first and third amended petitions in support of his argument that the trial court erred in dismissing his claims. According to Dr. Seger, while his first amended petition was the live pleading at the time of the January 6, 2021 hearing, his third amended petition was the live pleading at the time the trial court signed its orders on May 3, 2021.
A plaintiff's timely filed amended pleading supersedes all previous pleadings and becomes the controlling petition in the case regarding the theories of recovery. Elliott v. Methodist Hosp., 54 S.W.3d 789, 793-94 (Tex. App.-Houston [1st Dist.] 2001, pet. denied). Rule 91a.5, which governs the timing of the filing of an amendment in response to a Rule 91a motion, provides, in pertinent part:
(a) The court may not rule on a motion to dismiss if, at least 3 days before the date of the hearing, the respondent files a nonsuit of the challenged cause of action, or the movant files a withdrawal of the motion.
(b) If the respondent amends the challenged cause of action at least 3 days before the date of the hearing, the movant may, before the date of the hearing, file a withdrawal of the motion or an amended motion directed to the amended cause of action.
(c) Except by agreement of the parties, the court must rule on a motion unless it has been withdrawn or the cause of action has been nonsuited in accordance with (a) or (b). In ruling on the motion, the court must not consider a nonsuit or amendment not filed as permitted by paragraphs (a) or (b).TEX. R. CIV. P. 91A.5 (EMPHASIS ADDED).
Branda filed his Rule 91a motion to dismiss Dr. Seger's claims on October 30, 2020. In accordance with Rule 91a.5(b), Dr. Seger filed his first amended petition on November 10, 2020, which withdrew a previously asserted DPTA claim, and Branda filed an amended motion to dismiss directed to the amended petition on November 25, 2020. The parties thereafter filed responses, replies, and sur-replies.
On January 6, 2021, the trial court conducted a hearing on appellees' amended motion to dismiss. Pursuant to Rule 91a.5(c), the trial court was required to rule on the motion and, in so doing, could not "consider a nonsuit or amendment not filed as permitted by paragraphs (a) or (b)." Tex.R.Civ.P. 91a.5(c). Dr. Seger filed his second and third amended petitions on February 23 and 26, 2021, respectively- nearly seven weeks after the date of the hearing on the amended motion to dismiss. Because Dr. Seger did not file his third amended petition "at least 3 days before the date of the hearing" as permitted by Rule 91a.5, the trial court could not consider it in ruling on the motion. See TEX. R. CIV. P. 91A.5(C) (STATING TRIAL COURT "MUST NOT CONSIDER . . . [AN] AMENDMENT NOT FILED AS PERMITTED"); Nolden v. Crescent Health &Rehab. Ctr., No. 01-21-00132-CV, 2022 WL 3970064, at *5 (Tex. App.-Houston [1st Dist.] Sept. 1, 2022, no pet. h.) (mem. op.) (concluding that trial court was not permitted to consider plaintiff's untimely filed amended petition in ruling on Rule 91a motion to dismiss); Estate of Savana, 529 S.W.3d 587, 593 (Tex. App.- Houston [14th Dist.] 2017, no pet.) ("Rule 91a requires the trial court to rule on a motion to dismiss without considering an untimely . . . amendment." (emphasis omitted)); In re Guardianship of Peterson, No. 01-15-00567-CV, 2016 WL 4487511, at *6 (Tex. App.-Houston [1st Dist.] Aug. 25, 2016, no pet.) (mem. op.) ("In ruling on a Rule 91a motion, a trial court is specifically prohibited from considering an amendment that was not filed at least three days before the date of the hearing on the motion."). Thus, we must look to Dr. Seger's first amended petition to determine whether the allegations, taken as true, together with inferences reasonably drawn from them, support the trial court's conclusion that his claims were barred by the applicable statutes of limitations. See TEX. R. CIV. P. 91A.1, 91A.6; see also Bethel, 595 S.W.3d at 654.
B. Accrual of Dr. Seger's Claims
On appeal and in their amended motion to dismiss, Branda and National Life contend that Dr. Seger's causes of action accrued on the date he purchased his life insurance policy. They argue that although the petition does not specify the date on which the policy was purchased, Dr. Seger's allegations demonstrate that his causes of action accrued when he purchased his policy nearly thirty years ago and therefore are time barred. In response, Dr. Seger argues that his allegations are not limited to the initial issuance of the policy but instead extend to the ongoing transactions (e.g., premiums, accumulation or diminution of cash value, dividends or their suspension, increasing death benefits, loans, and added provisions) which resulted from its issuance. He further argues that any applicable limitations periods were nonetheless tolled by the discovery rule and the doctrines of fraudulent concealment and continuing torts.
Limitations do not begin to run until a cause of action accrues. Hous. Endowment Inc. v. Atlantic Richfield Co., 972 S.W.2d 156, 159 (Tex. App.- Houston [14th Dist.] 1998, no pet.). "Generally, a cause of action accrues when a wrongful act causes a legal injury." Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 623 (Tex. 2011) (citing Provident Life &Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003)). A cause of action may accrue even if the fact of the injury is not discovered until later and even if all resulting damages have not yet occurred. Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997). Determining the accrual date of a cause of action is a question of law. Etan Indus., Inc., 359 S.W.3d at 623 (citations omitted).
Dr. Seger's claims for Insurance Code violations and negligent misrepresentation are subject to two-year statutes of limitation. See Tex. Ins. Code § 541.162(A) ("A Person must bring an action under this chapter before the second anniversary of . . . (1) the date the unfair method of competition or unfair or deceptive act or practice occurred; or (2) the date the person discovered or, by the exercise of reasonable diligence, should have discovered that the unfair method of competition or unfair or deceptive act or practice occurred."); Rangel v. Progressive Cnty. Mut. Ins. Co., 333 S.W.3d 265, 268 (Tex. App.-El Paso 2010, pet. denied) (noting cause of action brought under Insurance Code is subject to two-year statute of limitations); Tex. Civ. Prac. &Rem. Code § 16.003(a) (establishing two-year statute of limitations for negligent misrepresentation claims); HECI Expl. Co. v. Neel, 982 S.W.2d 881, 885 (Tex. 1998) (noting two-year statute of limitations applies to claims for negligent misrepresentation). Dr. Seger's fraud claim is subject to a four-year statute of limitations. See TEX. CIV. PRAC. &REM. CODE § 16.004(A) ("A PERSON MUST BRING SUIT ON THE FOLLOWING ACTIONS NOT LATER THAN FOUR YEARS AFTER THE DAY THE CAUSE OF ACTION ACCRUES: . . . (4) FRAUD[.]"); Christerson v. Speer, No. 01-16-00469-CV, 2017 WL 1520449, at *4 (Tex. App.-Houston [1st Dist.] Apr. 27, 2017, pet. denied) (noting plaintiff's fraud claim was subject to four-year statute of limitations).
In his first amended petition, Dr. Seger alleged that appellees "persuaded him to make substantial payments to National Life for life insurance coverage on the basis of false and misleading representations regarding the terms of the coverage." According to Dr. Seger, appellees "pitched the product" by explaining that National Life would use the accumulated cash value of the policy and National Life's earnings on that value to cover any ongoing premiums. He alleged that appellees did not disclose to him that, at some point in the future, the cash surrender value of the policy would no longer support the payment of ongoing required premiums and that he would be required to pay National Life several million dollars more or his policy would terminate. He alleged that appellees also did not disclose to him that termination of the policy would result in his forfeiting his previous investment and impose on him a multi-million dollar non-cash gain for federal income tax purposes. He alleged that appellees "committed their material misrepresentations and omissions at the genesis of the policy's issuance" and "perpetrated their misrepresentations and material omissions on a continuing basis from inception in the early 1990's until 2019." He alleged that "[i]n short, the trap [appellees] set for him almost thirty years ago is now being sprung[.]"
Taking these allegations as true, we conclude that Dr. Seger's claims of Insurance Code violations, negligent misrepresentation, and fraud accrued at the time he purchased his life insurance policy "almost thirty years ago . . . in the early 1990's" when appellees made the alleged misrepresentations and omissions to induce him to purchase the policy. See Mauskar v. Hardgrove, No. 14-02-00756-CV, 2003 WL 21403464, at *3 (Tex. App.-Houston [14th Dist.] June 19, 2003, no pet.) (mem. op.) (holding insured's claims against insurers and insurance agents for fraud, negligent misrepresentation, and Insurance Code violations based on agents' alleged misrepresentations that policies would pay two to three times face value when insured reached age 65 and that insured would not be required to pay premiums beyond age 65 accrued at time insured purchased policies and were time barred); Rangel, 333 S.W.3d at 269 (holding plaintiffs' claim against insurer for negligent misrepresentation based on alleged representation regarding policy's coverage accrued on date insured purchased policy). Because Dr. Seger did not file his original petition until August 27, 2020-well after the two and four-year statutes of limitations on his claims had expired-his claims are time barred unless the limitations period was tolled. See TEX. INS. CODE § 541.162; TEX. CIV. &PRAC. REM. CODE §§ 16.003(A), 16.004(A).
C. Tolling Doctrines
Dr. Seger contends that the statutes of limitations applicable to his claims are tolled by the discovery rule, fraudulent concealment, and the continuing nature of appellees' torts. We consider each of these doctrines in turn.
1. Discovery Rule
In his brief on appeal, Dr. Seger asserts that he "has explicitly alleged all of the elements of the discovery rule, and in the Rule 91a context, those allegations are to be taken as true . . . and the discovery rule disqualifies [a]ppellees' limitations defense." In support of his argument, he points to the following allegations in his first amended petition:
The misrepresented and concealed facts were not apparent from the terms of the subject policy, and, on information and belief, were not made apparent from any written or other statements any of the Defendants conveyed to Dr. Seger. They are now objectively verifiable, and Dr. Seger has brought this action within two years from the date he discovered or, by the exercise of reasonable diligence, should have discovered that the unfair method of competition or unfair or deceptive act or practice occurred.
Appellees respond that Dr. Seger's bare allegation that the alleged misrepresentations and concealed facts were not apparent from the terms of the subject policy and, on information and belief, were not made apparent to him do not satisfy the "inherently undiscoverable" requirement. They further argue that the face of the petition demonstrates that Dr. Seger knew or should have known that the policy did not operate as he alleges appellees represented to him.
"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 of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 514 (Tex. 1998). If the discovery rule applies to a claim, "[t]he discovery rule delays accrual until the plaintiff 'knew or in the exercise of reasonable diligence should have known of the wrongful act and resulting injury.'" Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d 830, 834 (Tex. 2018) (quoting S. V. v. R.V., 933 S.W.2d 1, 4 (Tex.1996)). The discovery rule is "a very limited exception to statutes of limitations," and is available only "when the nature of the plaintiff's injury is both inherently undiscoverable and objectively verifiable." Wagner &Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex. 2001) (quotations omitted); see also Barker v. Eckman, 213 S.W.3d 306, 312 (Tex. 2006). "These two elements attempt to strike a balance between the policy underlying statutes of limitations (barring stale claims) and the objective of avoiding an unjust result (barring claims that could not be brought within the limitations period)." Archer v. Tregellas, 566 S.W.3d 281, 290 (Tex. 2018); see S.V., 933 S.W.2d at 25 (noting that application of discovery rule "should be few and narrowly drawn").
"An injury is not inherently undiscoverable when it is the type of injury that could be discovered through the exercise of reasonable diligence." BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 66 (Tex. 2011). The application of the discovery rule is determined on a categorical basis-we determine whether the claim is based on the type of injury that "generally is discoverable by the exercise of reasonable diligence," without regard to whether a particular plaintiff discovered "his or her particular injury within the applicable limitations period." Brown v. Arenson, 571 S.W.3d 324, 333 (Tex. App.-Houston [1st Dist.] 2018, no pet.).
Dr. Seger's allegations center on appellees' alleged misrepresentations and omissions concerning how his life insurance policy actually operated and the amount of premiums he would be required to pay. Dr. Seger's assertion that appellees' misrepresentations and concealed facts "were not apparent from the terms of the subject policy and, on information and belief, were not made apparent to him" do not satisfy the "inherently undiscoverable" requirement. Stated differently, this allegation does not demonstrate that the type of injury Dr. Seger allegedly sustained was inherently undiscoverable. See Via Net v. TIG Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006) ("This legal question is decided on a categorical rather than casespecific basis; the focus is on whether a type of injury rather than a particular injury was discoverable." (emphasis in original)); see also Brown, 571 S.W.3d at 333-34 (rejecting application of discovery rule based on plaintiff's lack of education because the claims did not fall into category to which discovery rule applied); S.V., 933 S.W.2d at 7 (stating injury is "inherently undiscoverable if it is by nature unlikely to be discovered within the prescribed limitations period despite due diligence").
Moreover, the petition alleges facts that demonstrate Dr. Seger knew or should have known that his premium payments under the policy were not as he alleged appellees represented to him. Dr. Seger alleged that appellees represented that "he was acquiring a life insurance policy with a $3 million death benefit that would cost him $58,020 for each year that he chose to keep the policy in force, but never total more than $870,000." He further alleged that appellees' misrepresentations and omissions induced him "to pay National Life $931,799.56 and [he] has racked up purported loans that National Life has treated as covering ongoing premiums[.]" Based on these allegations, Dr. Seger's annual premiums would have reached the $870,000 cap on the policy's fifteenth anniversary [$58,020 x 15 = $870,300]. Thus, as of the policy's sixteenth anniversary-more than a decade ago-when additional premium payments became due over and above the cap, Dr. Seger knew or should have known that additional premiums would be due to keep the policy in force. See Mauskar, 2003 WL 21403464, at *4 (concluding discovery rule did not apply despite insured's contention that "he did not understand either the terms of the policies or that the policies he purchased would not pay two to three times their face value"). The discovery rule does not toll the accrual of Dr. Seger's claims. See Schlumberger Tech., 544 S.W.3d at 834.
2. Fraudulent Concealment
Dr. Seger contends that the fraudulent concealment doctrine applies to toll the limitation periods applicable to his claims. He asserts that "his relationship of trust and confidence with Appellees relaxes any due diligence requirement" and that appellees' misleading partial disclosures also support tolling limitations.
Fraudulent concealment is an equitable defense to limitations that estops the defendant from relying on the statute of limitations. Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983). "The elements of fraudulent concealment are: (1) the existence of an 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." Sanders v. Hathaway, No. 01-18-00661-CV, 2019 WL 2932847, at *6 (Tex. App.-Houston [1st Dist.] July 9, 2019, no pet.) (mem. op.) (quoting Lilly v. Tex. Dep t of Crim. Justice, 472 S.W.3d 411, 420 (Tex. App.-Houston [14th Dist.] 2015, no pet.)); see HECI Expl., 982 S.W.2d at 886. Fraudulent concealment tolls the statute of limitations due to "the defendant's active suppression of the truth or failure to disclose when the defendant is under a duty to disclose." Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430, 439 (Tex. App.-Fort Worth 1997, pet. denied). "A duty to disclose may arise in four situations: (1) when there is a fiduciary relationship; (2) when one voluntarily discloses information, the whole truth must be disclosed; (3) when one makes a representation, new information must be disclosed when that new information makes the earlier representation misleading or untrue; and (4) when one makes a partial disclosure and conveys a false impression." Brown &Brown of Tex., Inc. v. Omni Metals, Inc., 317 S.W.3d 361, 384 (Tex. App.-Houston [1st Dist.] 2010, pet. denied). Whether the duty of disclosure exists is a question of law. Env't Proc., Inc. v. Guidry, 282 S.W.3d 602, 627 (Tex. App.-Houston [14th Dist.] 2009, pet. denied).
An informal fiduciary duty may arise from a moral, social, domestic, or purely personal relationship of trust and confidence, generally called a confidential relationship. Assoc. Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998). Courts do not create this duty lightly, however. Id. To impose an informal fiduciary duty when a business transaction is involved, "the special relationship of trust and confidence must exist prior to, and apart from, the agreement made the basis of the suit." Id. Mere subjective trust, even where the parties have a longstanding business relationship, is not sufficient to create an informal fiduciary duty. See Meyer v. Cathey, 167 S.W.3d 327, 331 (Tex. 2005).
Dr. Seger argues that he has alleged facts demonstrating that an informal fiduciary relationship existed that gave rise to a duty to disclose. In support of his argument, he points to his allegations that he and Branda "had a personal relationship of trust and confidence, dating from their high school days," "Branda was associated in his business with Dr. Seger's father," and "Dr. Seger's father was Branda's professional mentor . . . and their joint firm bore both of their names."
Dr. Seger did not allege, nor does he argue on appeal, that a formal fiduciary relationship exists between him and Branda.
Dr. Seger's allegations, taken as true, do not create a confidential relationship separate and apart from the insurance policy in question. The allegation that Dr. Seger and Branda "had a personal relationship of trust and confidence, dating from their high school days," is merely a recitation of the legal element giving rise to an informal fiduciary relationship. Further, the allegation that Dr. Seger's father was Branda's professional mentor and that their joint firm bore both of their names speaks to the relationship between Branda and Dr. Seger's father rather than Dr. Seger and Branda. These allegations do not set forth facts concerning a relationship that was created apart from the life insurance policy and do not give rise to an informal fiduciary relationship between Dr. Seger and Branda. See Meyer, 167 S.W.3d at 331 (concluding evidence that plaintiff trusted his business associate and that they were friends and frequent dining partners for four years did not transform business arrangement into fiduciary relationship); Crim Truck &Tractor Co. v Navistar Int'l. Transp. Corp., 823 S.W.2d 591, 595 (Tex. 1992) ("[T]he fact that the relationship has been a cordial one, of long duration, [is not] evidence of a confidential relationship."); Mauskar, 2003 WL 21403464, at *6 (declining to find confidential relationship where insured asserted he had known insurance agents for many years, had repeated business transactions with them, and had placed high degree of trust in them as his financial advisors).
Dr. Seger does not allege that he had a special relationship of trust and confidence directly with National Life.
Dr. Seger next argues that the second situation under which a duty to disclose may arise applies here-when one voluntarily discloses information, the whole truth must be disclosed. See Omni Metals, Inc., 317 S.W.3d at 384. He asserts that "the statements the Appellees made about the policy he was being induced to invest in made the omission of further disclosures necessary to avoid creating a false impression." Dr. Seger, however, does not identify the specific partial disclosure appellees allegedly made to him and instead points generally to his allegation that appellees "misrepresent[ed] the effects of the policy and omit[ted] to disclose the detrimental effects that would accrue increasingly over time." These allegations do not set forth facts upon which a duty to disclose may be based. Because the petition does not set forth factual allegations that create a duty of disclosure, the doctrine of fraudulent concealment does not apply to toll the statutes of limitation on Dr. Seger's claims. See id.
3. Continuing Torts Doctrine
Dr. Seger contends that appellees' continuing torts support tolling the statutes of limitations on his claims. He asserts that his allegation that appellees' wrongful conduct was of a continuing nature must be taken as true and prevents appellees' limitations defense from providing a ground for dismissal of his claims.
"'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.'" Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 592 (Tex. 2017) (quoting First Gen. Realty Corp. v. Md. Cas. Co., 981 S.W.2d 495, 501 (Tex. App.- Austin 1998, pet. denied)). A claim for a continuing tort does not accrue until the defendant's wrongful conduct ceases. Id. However, only repeated injury caused by repetitive tortious acts will be characterized as a continuing tort, not an ongoing or increasing injury arising from one wrongful act. Rogers v. Ardella Veigel Inter Vivos Trust No. 2, 162 S.W.3d 281, 290 (Tex. App.-Amarillo 2005, pet. denied) ("[C]are must be taken to distinguish between 1) repeated injury proximately caused by repetitive wrongful or tort[i]ous acts and 2) continuing injury arising from one wrongful act. While the former evinces a continuing tort, the latter does not."); Christerson, 2017 WL 1520449, at *7 (noting continuing injury arising from one wrongful act will not support tolling under continuing tort doctrine).
The Texas Supreme Court in Rincones observed that it had "neither endorsed nor addressed" the continuing tort doctrine but that several courts of appeals had applied it in cases of false imprisonment, negligent infliction of emotional distress, and continued use of injury-producing medicine. See Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 592-93 (Tex. 2017) (citing Adler v. Beverly Hills Hosp., 594 S.W.2d 153, 155 (Tex. App.-Dallas 1980, no writ); Twyman v. Twyman, 790 S.W.2d 819, 821 (Tex. App.-Austin 1990), rev'd on other grounds, 855 S.W.2d 619 (Tex. 1993); and Upjohn v. Freeman, 885 S.W.2d 538, 542 (Tex. App.-Dallas 1994, writ denied)).
We find this Court's decision in Christerson instructive. There, the defendants loaned $250,000 to the plaintiffs to finance the plaintiffs' purchase of the defendants' home. Id. at *1. Fourteen years later, the defendants notified the plaintiffs that they owed outstanding interest on the note and began foreclosure proceedings. Id. The plaintiffs sued the defendants for fraud and various other torts based on the loan. Id. Among other grounds, the defendants moved for summary judgment on the applicable statutes of limitations. Id. at *4. The trial court granted summary judgment in favor of defendants on all of the plaintiff's claims. See id. at *1.
On appeal, the plaintiffs argued that the accrual of their tort claims was delayed under a continuing tort theory. See id. at *4. We noted that unlike conduct constituting a continuing tort, the plaintiffs' monthly payments, as well as the defendants' later demand for the catch-up payment, all stemmed from conduct that occurred before and at the closing rather than over time. Id. at *7. We concluded that the continuing tort doctrine did not toll the accrual of plaintiffs' tort claims and that their claims were time barred. See id. Here, Dr. Seger's petition alleges that appellees "commit[ed] their material misrepresentations and omissions at the genesis of the policy's issuance." That Dr. Seger's alleged injuries and damages may have accumulated over time does not convert appellees' alleged wrongful conduct into a continuing tort that tolls limitations. See id.; Rogers, 162 S.W.3d at 290 (holding that bank's periodic collection of fees as purported trustee of nonexistent trust did not constitute continuing tort because all injury arose from bank's single act of usurping control over property); Dickson Constr., Inc. v. Fid. &Deposit Co. of Md., 960 S.W.2d 845, 852 (Tex. App.-Texarkana 1997, pet. denied) (holding fact that contractor's injuries and damages may have continued to grow over time after initial injury was incurred and that surety refused to alter its position did not make wrongful action continuing tort or toll running of statute of limitations); see also Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990) (noting action generally accrues at time when facts come into existence which authorize claimant to seek judicial remedy and fact that damage may continue to occur for extended period after accrual does not prevent limitations from starting to run). Dr. Seger's allegations do not allege a continuing tort that tolls limitations on his claims. See Christerson, 2017 WL 1520449, at *7.
In sum, we conclude that the allegations in Dr. Seger's first amended petition, taken as true, together with inferences reasonably drawn from them, support the trial court's conclusion that his claims are not tolled by the discovery rule, fraudulent concealment, or the continuing torts doctrine, but are barred by the applicable statutes of limitations. See TEX. R. CIV. P. 91A.1; see also Bethel, 595 S.W.3d at 655. The trial court did not err in granting appellees' amended Rule 91a motion to dismiss and dismissing Dr. Seger's claims with prejudice based on the affirmative defense of statute of limitations.
We overrule Dr. Seger's issue.
Conclusion
We affirm the trial court's judgment.