Hallie Brock (Deceased), Carolyn Brock, Niki Powell, Linda Thompson (Deceased), Michael Beaver, Marisa Reeves, Dina Artebury, Kay Moore, Judy Birdwell, Linda Coats, William Thompson, Jilian Henson v. Gene Tipton
14-0594
Tex. App.Aug 6, 2015Background
- Petitioners (grantees) seek reformation of a 1999 deed, first asserting the claim in 2009; they contend a mutual mistake removed mineral rights from them.
- Respondent Tipton obtained and recorded the deed at issue; Petitioners concede some signatories did not read the deed they signed.
- The crux is whether the discovery rule (and its Altai gatekeeper standard for "inherently undiscoverable" mistakes) delays the statute-of-limitations for deed reformation.
- The Texas Court of Appeals held the deed was unambiguous, the alleged mistake was not "inherently undiscoverable," and Petitioners failed as a matter of law to show due diligence.
- The Texas Supreme Court denied review, accepting the Court of Appeals’ application of Altai; Petitioners moved for rehearing, arguing among other things that Cosgrove controls and blaming the title company.
- Respondent argues Petitioners failed to exercise due diligence (including failing to consult attorneys identified in the contract), the title company did not prepare the forged deed, and no evidence links Respondent to any forgery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of discovery rule to deed reformation | Discovery rule applies to delay limitations because the error was not obvious and related to ambiguous "predecessors" language | Discovery rule requires Altai's "inherently undiscoverable" gatekeeper; the mistake here was discoverable and plaintiffs lacked due diligence | Court of Appeals: discovery rule did not save claim; mistake not inherently undiscoverable and plaintiffs failed due diligence; Supreme Court denied review |
| Whether deed is ambiguous ("so-plain omission" vs. ambiguity) | Petitioners now argue deed reference to "predecessors" creates ambiguity excusing earlier discovery | Deed is unambiguous; petitioners previously argued the defect was plain and failed to read deed, so ambiguity theory is inconsistent and unsupported | Court of Appeals: deed not ambiguous; Petitioners' late ambiguity theory rejected |
| Responsibility of title company / third parties for mistake or forgery | Petitioners blame title company or its agents and argue title company breached fiduciary duty or prepared the forged deed | Respondent points out title company denied preparing the forged deed and no evidence links Respondent; claims against title company not pleaded here | Court of Appeals: no basis to impute responsibility to Respondent; title company not a party and forgery allegations don't show Respondent's involvement |
| Due diligence required from grantors who signed but did not read deed | Petitioners claim they were not required to hire counsel or read deed to discover mistake | Respondent emphasizes contract warnings to consult attorneys and identifies sellers' attorneys; failure to use counsel and to read deed demonstrates lack of due diligence | Court of Appeals: lack of due diligence is fatal under Altai standard; petitioners cannot invoke discovery rule |
Key Cases Cited
- Computer Associates International, Inc. v. Altai, Inc., 918 S.W.2d 453 (Tex. 1994) (announces discovery-rule gatekeeper requiring mistakes be "inherently undiscoverable" to defer limitations)
- Cade v. Cosgrove, 430 S.W.3d 488 (Tex. App.—Fort Worth 2014) (applies discovery-rule principles to deed reformation and emphasizes "so-plain" omissions)
- Lesley v. Veterans Land Bd. of Tex., 352 S.W.3d 479 (Tex. 2011) (discusses limits of the discovery rule in property contexts)