LegacyRG, Incorporated v. Chris Harter
705 F. App'x 223
| 5th Cir. | 2017Background
- LegacyRG employed Harter as President/CEO from 2006 to 2011 under an employment agreement stating an initial salary of $275,000.
- Payroll records show Harter was paid $308,173.02 in 2009 and $365,384.56 in 2010, including multiple irregular payments (often $10,576.92).
- Legacy sued Harter (filed June 6, 2014) for breach of fiduciary duty, fraud, fraud by nondisclosure, and breach of contract (employment and separation agreements), alleging the extra payments were unauthorized embezzlement.
- Harter contended Morgan (Legacy’s founder/sole shareholder) authorized the additional payments; Harter and Morgan submitted conflicting affidavits about access to payroll/bank records and authorization.
- The district court granted summary judgment to Legacy and awarded attorney fees; Harter appealed. The Fifth Circuit affirmed denial of Harter’s summary judgment, reversed grant to Legacy, and remanded for trial due to genuine fact disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether discovery rule tolled accrual of claims so they were timely | Legacy: fiduciary relationship with Harter made the injury inherently undiscoverable, so accrual tolled until discovery | Harter: Legacy knew or should have known earlier (e.g., tax/TWC reports, access to records), so claims are time-barred | Discovery-rule application is a fact question; cannot resolve on summary judgment — genuine dispute whether Legacy reasonably could have discovered the payments before the limitations cutoff |
| Whether the disputed payments were authorized | Legacy: payments were unauthorized theft by a payroll-controlling fiduciary | Harter: Morgan approved additional compensation; payments were legitimate salary increases/bonuses | Credibility conflict between affidavits creates a genuine issue of material fact; summary judgment improper |
| Whether attorney fees awarded on breach-of-contract claims were proper | Legacy: prevailing on contract claims entitled it to fees | Harter: (implicit) if summary judgment reversed, fee award falls | Because summary judgment on contract claims reversed, fee award reversed too |
| Whether appellate court should direct broader discovery on remand | Harter: district court improperly curtailed discovery; asks for instructions allowing full discovery | Legacy: Harter waived Rule 56(d) relief by not seeking it below; district court acted within discretion | Denied — Harter waived Rule 56(d) relief and failed to show district-court abuse of discretion; no appellate instruction issued |
Key Cases Cited
- Via Net v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2006) (discovery rule standards)
- S.V. v. R.V., 933 S.W.2d 1 (Tex. 1996) (discovery rule and fiduciary context)
- Little v. Smith, 943 S.W.2d 414 (Tex. 1997) (limitations accrual when claimant knew or should have known)
- Shell Oil Co. v. Ross, 356 S.W.3d 924 (Tex. 2011) (discovery-rule principles)
- Heinsohn v. Carabin & Shaw, P.C., 832 F.3d 224 (5th Cir. 2016) (summary-judgment review of competing affidavits; courts must not weigh credibility)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard)