Opinion

B. Mahler Interests, L.P. v. DMAC Construction, Inc.

503 S.W.3d 43
2016 Tex. App. LEXIS 10180
2016 WL 4922775

Court: Court of Appeals of Texas
Filed: Sep 15, 2016
Status: Published
On the bench: Frost, Boyce, Wise
Cited by: 17 cases
Authority: More cited than 2.9%

holding that discovery rule did not operate to defer accrual of claims because they were actually discovered, at the latest, by January 2008 and thus discovery rule did not make timely appellant’s claims that were filed in October 2012

How later courts described this case

holding that discovery rule did not operate to defer accrual of claims because they were actually discovered, at the latest, by January 2008 and thus discovery rule did not make timely appellant’s claims that were filed in October 2012
“Because 17 fraudulent concealment is based on the doctrine of equitable estoppel, and because [Plaintiff’s] 18 equitable estoppel and fraudulent concealment defenses are based on the same alleged conduct by 19 [Defendant], we consider them together.”

Written by the judges who cited it.

The opinion

Affirmed and Majority and Concurring Opinions filed September 15, 2016.

In The

Fourteenth Court of Appeals

NO. 14-15-00061-CV

B. MAHLER INTERESTS, L.P., Appellant

DMAC CONSTRUCTION, INC., Appellee

On Appeal from the 152nd District Court

Harris County, Texas

Trial Court Cause No. 2012-64035

MAJORITY OPINION

B. Mahler Interests, L.P. appeals the grant of summary judgment in favor of

DMAC Construction, Inc. Mahler contends that the trial court erred in granting

summary judgment because (1) the trial court granted DMAC’s no-evidence

motion for summary judgment when the motion failed to specifically challenge any

elements of any cause of action Mahler asserted; (2) DMAC improperly asserted a

ground for summary judgment for the first time in its reply; (3) DMAC failed to

conclusively negate the discovery rule; and (4) Mahler raised a genuine issue of

material fact on each element of its fraudulent concealment argument. We affirm.

BACKGROUND

Mahler hired DMAC in 2005 to serve as general contractor for the

construction of Briscoe Manor, an event center and reception hall. DMAC began

construction in January 2006. The parties signed a Certification of Substantial

Completion on October 25, 2006. Briscoe Manor opened for business in late 2006,

but DMAC continued to complete “punch-list” items and change-order work

throughout the remainder of 2006 and much of 2007.

Mahler hired Professional Engineering Inspections, Inc. in August 2007 to

perform an inspection of the building and evaluate the property’s condition after

approximately one year of use. The extensive report (the “2007 report”) identified

a number of potential problem areas with the construction. Mahler passed the

report along to DMAC and requested that DMAC perform certain additional

repairs, but Mahler did not perform any additional independent inspection at that

time.

All remaining work was completed and final payment was made by January

2008. Mahler began noticing other problems with the property beginning in late

2010. Mahler believed certain issues with the property resulted from defective

construction, so it hired SMS Engineering in May 2012 to perform a second

professional inspection of the property (the “2012 report”). The 2012 report

identified three primary issues: (1) the porch roofs were not properly constructed;

(2) interior-grade doors were installed at exterior locations; and (3) commercial-

grade floors should have been used instead of the originally installed floors, which

were rated for residential use only.

Mahler sued DMAC on October 26, 2012. In its original petition, Mahler

alleged causes of action for breach of contract and breach of warranty based on the

three issues identified in the 2012 report: (1) defective porch roof construction; (2)

use of interior doors at exterior locations; and (3) installation of residential-grade

floors in a commercial facility. Mahler also asserted that the discovery rule and the

doctrines of equitable estoppel and fraudulent concealment operated to toll the

accrual of Mahler’s causes of action.

DMAC filed its “Amended Traditional and No-Evidence Motion for

Summary Judgment” on July 18, 2014. DMAC argued that Mahler’s claims were

time-barred and that none of the tolling exceptions applied. The trial court held a

hearing on August 8, 2014, at which time it orally denied the no-evidence portion

of the motion. The trial court withheld its ruling on the remainder of the motion

and granted Mahler time to provide additional briefing.

After Mahler submitted additional briefing and summary judgment evidence,

the trial court signed an order granting DMAC’s “Amended Traditional and No-

Evidence Motion for Summary Judgment” on October 17, 2014. DMAC nonsuited

a counterclaim for breach of contract on April 27, 2015. The trial court signed a

clarifying order on May 5, 2015, stating that, as a result of the nonsuit, its October

17, 2014 grant of summary judgment was a final and appealable judgment. Mahler

timely appealed.

STANDARD OF REVIEW

We review summary judgments de novo. Valence Operating Co. v. Dorsett,

164 S.W.3d 656, 661 (Tex. 2005). When reviewing a summary judgment, we

examine the record in the light most favorable to the nonmovant, and we indulge

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

Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015).

A party moving for traditional summary judgment has the burden to prove

that there is no genuine issue of material fact and that it is entitled to judgment as a

matter of law. Tex. R. Civ. P. 166a(c); Cantey Hanger, LLP, 467 S.W.3d at 481.

A trial court properly grants a traditional motion for summary judgment in favor of

a defendant if the defendant conclusively establishes all elements of an affirmative

defense or conclusively negates at least one element of each of the plaintiff’s

claims. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). A

defendant seeking summary judgment on the affirmative defense of limitations

must conclusively prove when the cause of action accrued and must negate the

discovery rule by proving as a matter of law that there is no genuine issue of fact

about when the plaintiff discovered or should have discovered the nature of the

injury. KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746,

748 (Tex. 1999).

A party moving for no-evidence summary judgment must show that there is

no evidence of one or more essential elements of the claims or defenses on which

the nonmovant would have the burden of proof at trial. Tex. R. Civ. P. 166a(i).

The motion must state the elements as to which there is no evidence. Id. We

sustain a no-evidence summary judgment when (a) there is a complete absence of

evidence of a vital fact; (b) the court is barred by rules of law or of evidence from

giving weight to the only evidence offered to prove a vital fact; (c) the evidence

offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence

conclusively establishes the opposite of the vital fact. King Ranch, Inc. v.

Chapman, 118 S.W.3d 742, 751 (Tex. 2003).

ANALYSIS

In its first issue, Mahler contends that the trial court erred by granting

DMAC’s no-evidence motion for summary judgment because the motion failed to

specifically challenge any elements of any cause of action Mahler asserted. In its

second, third, and fourth issues, Mahler contends the trial court erred in granting

DMAC’s traditional motion for summary judgment because (1) DMAC improperly

asserted a ground for summary judgment for the first time in its reply; (2) DMAC

failed to conclusively negate the discovery rule; and (3) Mahler raised a genuine

issue of material fact on each element of fraudulent concealment.

Because each of Mahler’s underlying claims was premised on the three

issues identified in the 2012 report — defective porch roof construction, use of

interior doors at exterior locations, and installation of residential-grade floors in a

commercial facility — we analyze Mahler’s limitations issues in light of those

three distinct alleged injuries.

We conclude that the trial court properly granted DMAC’s traditional

motion for summary judgment as to all of Mahler’s claims. Therefore, we need

not determine whether the trial court erred by granting DMAC’s no-evidence

motion for summary judgment.

I. Limitations

Mahler pleaded claims for breach of contract and breach of warranty. These

claims are subject to a four-year statute of limitations. Exxon Corp. v. Emerald Oil

& Gas Co., 348 S.W.3d 194, 203 (Tex. 2011) (breach of contract); Hyundai Motor

Co. v. Rodriguez ex rel. Rodriguez, 995 S.W.2d 661, 668 (Tex. 1999) (breach of

warranty).

Generally, a cause of action accrues when facts come into existence that

authorize a claimant to seek a judicial remedy, when a wrongful act causes some

legal injury, or whenever one person may sue another. Am. Star Energy &

Minerals Corp. v. Stowers, 457 S.W.3d 427, 430 (Tex. 2015). A breach of

contract claim accrues when the contract is breached. Cosgrove v. Cade, 468

S.W.3d 32, 39 (Tex. 2015). A breach of warranty claim accrues when the goods

are delivered, “‘regardless of the aggrieved party’s lack of knowledge of the

breach.’” Safeway Stores, Inc. v. Certainteed Corp., 710 S.W.2d 544, 546 (Tex.

1986) (quoting Tex. Bus. & Com. Code Ann. § 2.725(b) (Vernon 1968)).

It is undisputed that the alleged breaches occurred at the latest by January

2008 when all construction was completed and final payment was made. Because

Mahler’s suit was not filed until October 2012 — more than four years after the

alleged breaches — Mahler’s claims are time-barred unless the statute of

limitations was otherwise tolled.

A. The Discovery Rule

Mahler contends it did not learn of the allegedly defective construction until

it received the 2012 report. DMAC responds that (1) the alleged construction

defects were discoverable more than four years before Mahler filed suit; and (2)

Mahler actually discovered the deficiencies more than four years before filing suit.

Because Mahler pleaded the discovery rule, DMAC bore the burden of proving

when Mahler discovered, or should have discovered, the nature of its injuries. See

KPMG Peat Marwick, 988 S.W.2d at 748.

The discovery rule defers accrual of a claim until the injured party learned

of, or in the exercise or reasonable diligence should have learned of, the wrongful

act causing the injury. Cosgrove, 468 S.W.3d at 36. The discovery rule is limited

to “circumstances where ‘the nature of the injury incurred is inherently

undiscoverable and the evidence of injury is objectively verifiable.’” Id. (quoting

Comput. Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 456 (Tex. 1996)). An

injury is not inherently undiscoverable when it could be discovered through the

exercise of reasonable diligence. BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59,

66 (Tex. 2011).

It is the discovery of the injury and its general cause, not discovery of the

exact cause in fact, that starts the running of the limitations period. 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). “Knowledge of injury

initiates the accrual of the cause of action and triggers the putative claimant’s duty

to exercise reasonable diligence to investigate the problem, even if the claimant

does not know the specific cause of the injury or the full extent of it.” Exxon

Corp., 348 S.W.3d at 209.

“The discovery rule may apply to a breach of contract claim, but ‘those

cases should be rare, as diligent contracting parties should generally discover any

breach during the relatively long four-year limitations period provided for such

claims.’” Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 543 (Tex.

App.—Houston [14th Dist.] 2013, no pet.) (quoting Via Net v. TIG Ins. Co., 211

S.W.3d 310, 315 (Tex. 2006)). Because contracting parties generally are not

fiduciaries, due diligence requires that each party protect its own interests. Via

Net, 211 S.W.3d at 314.

Of final note, Mahler pleaded its breach of warranty claim under both the

common law and the Texas Uniform Commercial Code. The discovery rule does

not apply to breach of warranty claims under the Texas UCC, subject to one

exception that is not germane to this case. See Tex. Bus. & Com. Code Ann. §

2.725(b) (Vernon 2009) (“A cause of action accrues when the breach occurs,

regardless of the aggrieved party’s lack of knowledge of the breach. A breach of

warranty occurs when tender of delivery is made, except that where a warranty

explicitly extends to future performance of the goods and discovery of the breach

must await the time of such performance the cause of action accrues when the

breach is or should have been discovered.”); Via Net, 211 S.W.3d at 313 (by

enacting section 2.725(b), the legislature has rejected application of the discovery

rule in contract cases involving the sale of goods); PPG Indus., Inc. v.

JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 92 (Tex. 2004) (“The

UCC generally requires suit on breach of warranty claims within four years of

delivery, regardless of when the buyer discovers defects in the goods. This

absolute limitation period was intended to provide a uniform date of accrual

beyond which sellers need not worry about stale warranty claims, or retain records

to defend against them.”).1

1. Porch roofs

Mahler’s original petition identified a number of alleged porch roof

deficiencies. Mahler contended that DMAC constructed the porch roofs with

inadequate materials and with structural defects including undersized beams,

excessive spacing between beams, and inadequate beam supports, such that the

porches sagged and were “inadequate to support [their] own weight.”

The 2007 report identified six “significant exceptions,” described as “some

of the more significant of the anomalies noted that have a bearing on [the

inspector’s] opinion of the quality of workmanship indicated in the building.” One

of the six “significant exceptions” stated:

The surface of the roof at the east porch off the reception building was

uneven, which corresponded to sags and unevenness at the ceiling

Mahler’s Texas UCC breach of warranty claims are premised on the same operative

facts as its common-law breach of warranty claims. Accordingly, even assuming the provisions

of the Texas UCC could be construed to permit application of the discovery rule, we would

nevertheless conclude (as we do below) that the discovery rule did not toll accrual of Mahler’s

claims beyond January 2008, and that Mahler’s Texas UCC breach of warranty claims therefore

were not timely.

below this area. There was significant sag observed over the barbeque

area outside the bar which was abnormal and may be due to structure

of insufficient stiffness to prevent the sag. It is recommended that

these irregularities be further investigated by the builder to determine

the extent of reinforcement necessary for the ceiling structure to

prevent further unevenness or deflections.

Sometime after receiving the report in August 2007, Mahler furnished DMAC with

a copy of the report and requested DMAC to inspect the porch roofs to determine

the cause of the unevenness noted in the report.

Jorden Mahler emailed DMAC in late October 2007 complaining that

DMAC had not yet addressed certain items identified in the 2007 report.2 Jorden

noted that “[t]he ceiling under the porches was put up using staples and is starting

to have a wave look and has come apart in some areas. Needs to be screwed in.”

DMAC performed repairs on the porch roofs in early December 2007.

Jorden wrote as follows in a December 11, 2007 email to DMAC:

The porch ceilings have started to have a wave-look to them and were

to be corrected. One of ya’lls daily worker guys just showed up last

week to start repairing this, but I don’t think he knows what he is

doing. It’s hard sending a guy out who doesn’t know how the porches

were constructed and expect him to fix the problem. He basically just

went around with a box of screws and shot them into the ceiling.

Maybe he hit a rafter, maybe he didn’t, who knows.

DMAC responded in late December 2007 that “[t]he hardiplank ceiling covering .

. . has been tightened up using counter-sunk screws and caulked.” DMAC offered

Jorden two cosmetic options to fix the “wave-look” of the underside of the porch

roofs: (1) finish filling the screw heads flush with caulk and then paint; or (2)

“feather float” with ceiling texture and paint, “which will help hide the joints.”

Jorden Mahler serves as the sole day-to-day manager of Briscoe Manor and is a limited

partner in B. Mahler Interests, L.P. Jorden’s father, Bill Mahler, is the general partner of B.

Mahler Interests, L.P. Together, Jorden and Bill make all decisions regarding Briscoe Manor.

Jorden opted for the “feather float” option. DMAC did not address any underlying

structural problem causing the “wave-look.”

In January 2008, Jorden sent DMAC an email stating, “I went through my

pics from the construction and found these 2 pics of the porches under the

construction.....looks like only a 2x4 (header) is what is attached at the building

side. I’m not an expert, but looks a little weak.” DMAC did not respond to the

email, and neither DMAC nor Mahler performed any other investigation

concerning the porch roofs until Mahler obtained the 2012 report.

The evidence reflects that Mahler was aware of potential problems with the

porch roofs by January 2008 at the latest. The August 2007 report indicated that

“[t]here was significant sag observed . . . which was abnormal and may be due to

structure of insufficient stiffness to prevent the sag.” Jorden testified that, even

before the 2007 report was prepared, he was aware of the sag and unevenness in

the porch roofs. Likewise, Jorden’s January 2008 email to DMAC noting that the

porch construction “look[ed] a little weak” is further evidence that Jorden (and

Mahler) was aware that a problem might exist sufficient to trigger a duty to

exercise reasonable diligence to investigate the problem, even if the problem’s full

extent was not then known. See Exxon Corp., 348 S.W.3d at 208-09. Mahler

provided the 2007 report to DMAC, but Mahler knew that DMAC performed no

corrective work regarding the structure of the porch roofs. Mahler chose not to

obtain an independent inspection at that time.

The summary judgment evidence establishes that there is no genuine issue of

fact as to when Mahler discovered, or through the use of reasonable diligence

should have discovered, the allegedly defective porch roofs. The statute of

limitations on the porch roof claims began to run in January 2008 at the latest,

when Mahler sent the final email to DMAC questioning the roofs’ structural

integrity. See, e.g., Booker v. Real Homes, Inc., 103 S.W.3d 487, 492-93 (Tex.

App.—San Antonio 2003, pet. denied) (statute of limitations began to run when

homeowners “were cognizant of problems with the windows leaking even if they

were not aware of the possible consequences or the exact cause-in-fact”); Bayou

Bend, 866 S.W.2d at 743-44 (limitations began to run when party discovered leaks

in windows, even if party did not discover cause of leaks until much later but could

have done so earlier through use of reasonable diligence).

2. Doors

Mahler alleged that DMAC installed interior-grade doors at certain exterior

locations. Mahler contended that the doors were represented and warranted by

DMAC to be exterior-grade doors.

Jorden testified that he started to notice problems with the doors “shortly

after construction” because the doors “weren’t shutting correctly, latches weren’t

lining up with each other, doors were cracking, [and] doors were peeling.” Jorden

further testified that he “consistently” noticed problems with the doors at issue

“[f]rom the beginning,” relating back to the original construction in 2006.

These problems prompted Jorden to contact the door manufacturer in April

2007 and request specification sheets for doors that previously had been ordered

for Briscoe Manor. The door manufacturer supplied the specifications and stated,

“You mentioned the veneer was separating from the wood. I must remind you that

any of the doors that are hung in an ‘exterior’ application carry no warranty. I was

very explicit on this with [the DMAC representative].” The specification sheets

noted that the doors carried a “Limited 5-year warranty for Interior use,” and

further stated, “WARRANTY EXCLUDED DUE TO EXTERIOR USE.”

Jorden also raised concerns about the doors to the inspector performing the

2007 inspection. The 2007 report notes that “there was concern that the wood exit

doors from the buildings were not intended for exterior use, and it was indicated

that poor performance of the doors has occurred since they were installed,

requiring periodic adjustment of the doors. . . . It was indicated that an exterior-

grade weather resistant finish had been applied at the doors, which appeared to be

performing satisfactorily at this time.”

Jorden also expressed his concerns about the doors to DMAC. In an email

sent to DMAC on December 11, 2007, Jorden asserted: “Before the issue of the

doors on the exterior being interior doors, I had a cashier’s check ready for

DM[AC].” In the same email, Jorden later stated:

The issue of the exterior doors being hung while they were made for

“Interior use” only still bothers me. This was a stupid decesion [sic]

whoevers [sic] it was. Why would anyone hang an interior door

outside in Houston Texas’ humidity.

DMAC responded in late December 2007:

You continually keep bringing up the exterior doors, time and time

again, thus labeling them “interior doors.” Do you or Bill [Mahler]

have P-lam or metal doors on any or all of your doors at your own

home? Of course not, they are wood! Solid wood doors that are

sealed and either painted or stained and varnished properly are used as

“Exterior Doors” as well as metal or glass doors. If those doors were

hollow core doors, that would be different. They are not! If you

remember, we bought heavy duty marine varnish to add over the

manufacture’s [sic] coat for longer protective measures.

This evidence establishes that Mahler was aware that the exterior doors were rated

as interior doors as early as 2006, and certainly no later than December 2007.

Mahler voiced concerns and complaints about this issue during the same time

period. See Hixon v. Tyco Int’l, Ltd., No. 01-04-01109-CV, 2006 WL 3095326, at

*8 (Tex. App.—Houston [1st Dist.] Oct. 31, 2006, no pet.) (mem. op.) (“‘Serious

problems’ and complaints about those problems generally end the application of

the discovery rule because complaints compel the conclusion that the complaining

party is aware of a defect.”) (citing Bayou Bend, 866 S.W.2d at 743). Because the

nature of the allegedly defective doors was actually known to Mahler by December

2007, the statutes of limitations on Mahler’s door claims began to run at that time.

3. Floors

Mahler’s original petition alleged that the floors DMAC installed in certain

areas of Briscoe Manor were represented and warranted to be commercial-grade

floors, but that DMAC actually installed residential-grade flooring. Mahler

contends that the flooring began to show signs of wear and tear in fall 2010, and

that the flooring deteriorated to the point that Mahler had it replaced in May 2011.

Mahler contends it was unaware of the residential-grade nature of the flooring until

the installer of the new flooring asked why Mahler previously had installed

residential flooring.

The summary judgment evidence established that Mahler was aware that the

flooring was a composite material. When Mahler was told by the subsequent

flooring installer that the initial floors were residential-grade, Jorden located a box

of surplus flooring material that DMAC had left at Briscoe Manor and contacted

the manufacturer identified on the box to confirm that the floors were, in fact,

residential-grade.

Based on this evidence, we conclude that the injury was not inherently

undiscoverable regardless of when Mahler actually discovered it. See, e.g., Royce

Homes, L.P. v. Dyck, No. 09-06-034-CV, 2006 WL 3094323, at *2-5 (Tex. App.—

Beaumont Nov. 2, 2006, no pet.) (mem. op.) (evidence was insufficient to support

jury’s finding that injury was inherently undiscoverable where builder and

homeowners agreed that tinted double-paned windows would be installed but

builder actually installed untinted single-paned windows, even though homeowners

alleged they did not learn of breach until subsequent contractor informed them of

nature of windows). This is not one of the “rare” cases where a contracting party

exercising reasonable diligence could not discover the breach during the “relatively

long four-year limitations period.” See Via Net, 211 S.W.3d at 315.

Due diligence required Mahler to protect its own interests. See id. at 314.

“Due diligence may include asking a contract partner for information needed to

verify contractual performance. If a contracting party responds to such a request

with false information, accrual may be delayed for fraudulent concealment. But

failing to even ask for such information is not due diligence.” Id. (citations

omitted); see also Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 229 (Tex.

App.—Houston [14th Dist.] 2008, no pet.) (same). Jorden testified that DMAC

never represented that the floors were commercial-grade once installed; instead,

Mahler’s claims appear to be based on an unwritten understanding between the

parties that the flooring installed would be commercial-grade.

Mahler took no action to confirm that the flooring was of the nature

allegedly agreed between the parties until 2011, approximately five years after the

flooring was installed. When Mahler did seek to verify DMAC’s contractual

performance, the only action required was to call the flooring manufacturer

identified on the flooring package that DMAC left at Briscoe Manor.

We conclude that the nature of the flooring was not inherently

undiscoverable, and that, even if it were, Mahler did not exercise reasonable

diligence in protecting its interests and ensuring contractual performance.

Accordingly, the discovery rule did not apply to toll the accrual of Mahler’s

flooring claims.

4. Conclusion

Assuming without deciding that the discovery rule applies to claims such as

these, it would not operate to defer accrual of these claims because they were

actually discovered, at the latest, by January 2008. Accordingly, the discovery rule

did not make timely Mahler’s claims filed in October 2012.3 Mahler’s third issue

is overruled. We next address Mahler’s contention that the doctrines of fraudulent

concealment and equitable estoppel tolled the running of limitations.

B. Fraudulent Concealment

Fraudulent concealment is based upon the doctrine of equitable estoppel.4

Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983). Fraudulent concealment

estops a defendant to rely on the statute of limitations as an affirmative defense

when the defendant owes a duty to disclose but fraudulently conceals the existence

of a cause of action. Id.

A party asserting fraudulent concealment as an affirmative defense to the

statute of limitations has the burden to raise it in response to the summary

judgment motion and to come forward with summary judgment evidence raising a

fact issue on each element of the fraudulent concealment defense. KPMG Peat

Marwick, 988 S.W.2d at 749. The party asserting fraudulent concealment must

Because we conclude that the discovery rule did not apply to toll the accrual of

Mahler’s claims, we need not address DMAC’s contention that section 13.7 of the AIA

construction contract between the parties — titled “commencement of statutory limitation

period” — expressly negated application of the discovery rule.

The doctrine of equitable estoppel requires: (1) a false representation or concealment of

material facts; (2) made with knowledge, actual or constructive, of those facts; (3) with the

intention that it should be acted on; (4) to a party without knowledge or means of obtaining

knowledge of the facts; (5) who detrimentally relies on the representations. Johnson & Higgins

of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 515-16 (Tex. 1998). Because fraudulent

concealment is based on the doctrine of equitable estoppel, and because Mahler’s equitable

estoppel and fraudulent concealment defenses are based on the same alleged conduct by DMAC,

we consider them together.

establish that the defendant (1) actually knew a wrong occurred; (2) had a fixed

purpose to conceal the wrong; and (3) did conceal the wrong. Shell Oil Co. v.

Ross, 356 S.W.3d 924, 927 (Tex. 2011). “Fraudulent concealment only tolls the

running of limitations until the fraud is discovered or could have been discovered

with reasonable diligence.” Marshall, 342 S.W.3d at 67.

If the fraudulent concealment is based on a fraudulent representation by the

defendant, the plaintiff must demonstrate that reliance on that representation was

reasonable. Id. at 68. Reliance on a fraudulent representation “is not reasonable

when information revealing the truth could have been discovered within the

limitations period.” Id.

1. Porch roofs

Mahler contends in its second issue that “DMAC failed to Assert Fraudulent

Concealment relating to the Porches As ‘Grounds’ in its Motion.” Mahler is

mistaken about which party bears the burden of proof regarding fraudulent

concealment. As discussed above, the party asserting fraudulent concealment as an

affirmative defense to the statute of limitations must raise it in response to the

summary judgment motion and come forward with evidence raising a fact issue on

each element of fraudulent concealment. KPMG Peat Marwick, 988 S.W.2d at

749.

Mahler bore the burden to present proof raising an issue of fact on fraudulent

concealment; the burden was not on DMAC to negate fraudulent concealment in

its motion for summary judgment. See id.; see also Houston Endowment Inc. v.

Atl. Richfield Co., 972 S.W.2d 156, 163 (Tex. App.—Houston [14th Dist.] 1998,

no pet.) (“On summary judgment, the non-movant has the burden to come forward

with proof raising an issue of fact on fraudulent concealment.”). Mahler’s second

issue is overruled.

In its fourth issue, Mahler contends that a fact question exists concerning

Mahler’s fraudulent concealment defense. We begin by addressing the fraudulent

concealment defense as it pertains to the porch roofs and then consider its

applicability to the floors and doors.5

We already have determined that Mahler was aware of problems with the

porch roofs by January 2008 at the latest. Mahler contends that limitations were

tolled on its porch roof claims because it relied on DMAC’s statement that the

porch roofs had been fixed.

Mahler was aware that DMAC sent “one of its daily workers” to inspect the

porch roofs and make repairs, which consisted of adding more screws to the

underside of the porch roofs. Because the porch roofs still had a “wave-look,”

DMAC applied a “feather float” with ceiling texture to even out the ceilings and

“help hide the joints.” Mahler was aware that DMAC performed no corrective

work regarding the underlying structure of the porch roofs.

DMAC contends that we need not consider Mahler’s fraudulent concealment defense

concerning its porch roof claims because Mahler failed to plead in its original petition that

DMAC fraudulently concealed any defects with the porch roofs. Mahler did not assert that

fraudulent concealment applied to its porch roof claims until its response to DMAC’s amended

motion for summary judgment. DMAC objected to and secured a favorable ruling excluding an

amended petition Mahler filed the day before the hearing on the motion for summary judgment

that asserted fraudulent concealment as to the porch roof claims; DMAC did not object to Mahler

raising the issue in its summary judgment response. See Mitchell v. Methodist Hosp., 376

S.W.3d 833, 836 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) (“The Mitchells, however,

did not plead fraudulent concealment as a matter in avoidance of Methodist’s limitations defense,

and Methodist objected to the Mitchells raising fraudulent concealment in their summary

judgment response. Because it is a matter in avoidance of the defense of limitations that was not

pleaded, we do not consider the Mitchells’ fraudulent concealment argument.”). DMAC tried

the issue by consent when it addressed the issue in its reply. See Haase v. Abraham, Watkins,

Nichols, Sorrels, Agosto and Friend, LLP, 404 S.W.3d 75, 86 (Tex. App.—Houston [14th Dist.]

2013, no pet.) (“An unpleaded plea in avoidance may still serve to preclude summary judgment

if it is raised in a summary judgment response and if the opposing party fails to object to it in a

reply or before the rendition of judgment.”).

After DMAC performed the “repairs” and allegedly stated that the problem

was fixed, Jorden sent an email to DMAC in January 2008 questioning the

structural integrity of the porch roofs and stating that it “looks like only a 2x4

(header) is what is attached at the building side. I’m not an expert, but looks a

little weak.” DMAC did not respond to Jorden’s email.

In light of Mahler’s knowledge concerning the actions DMAC took to

inspect and repair the porch roofs, Mahler’s reliance on DMAC’s statement that

the issue had been resolved was not reasonable. See Shell Oil Co., 356 S.W.3d at

927-28 (rejecting argument “that reasonable reliance on fraudulent representations

negates any duty to investigate unless and until further information comes to light

which re-triggers that duty”). This is especially true in light of Mahler’s structural

concerns expressed after the porch roofs allegedly were repaired, when Mahler

knew that DMAC performed no structural repairs.

Additionally, Mahler has failed to present evidence raising a fact issue that

DMAC knew of the alleged wrong or acted with a fixed purpose to conceal the

alleged wrong. Brent v. Daneshjou, No. 03-04-00225-CV, 2005 WL 2978329

(Tex. App.—Austin Nov. 4, 2005, no pet.) (mem. op.), considered a similar

situation:

Similarities to Ryland [Group, Inc. v. Hood, 924 S.W.2d 120 (Tex.

1996)] and Bayou Bend [Towers Council of Co-Owners v. Manhattan

Constr. Co., 866 S.W.2d 740 (Tex. App.—Houston [14th Dist.] 1993,

writ denied)] lead us to conclude that the record in this case does not

contain the evidence necessary to show a fact issue regarding willful

misconduct or fraudulent concealment of flaws in the original

construction. Construing the evidence most favorably to Brent, the

record shows that Daneshjou built the house in ways that made it

susceptible to admitting and retaining water, leading to rot and mold.

But there is no evidence of improper intent. Evidence shows that

Daneshjou cut corners to save money, but it does not show that he did

so knowing that those measures rendered the house deficient or

dangerous or risked doing so. Nor is there evidence that, in building

or repairing the house, he acted with the intent to conceal these

wrongs. As in Booker [v. Real Homes, Inc., 103 S.W.3d 487, 492-93

(Tex. App.—San Antonio 2003, pet. denied)], there is evidence that

Daneshjou represented that the problems were fixed. See Booker, 103

S.W.3d at 494 (builder represented that leaks were repaired and that

musty smell came from outside). But, unlike in Booker, there is no

evidence here of intentional malfeasance and misinformation; in

Booker, the builder told another contractor not to finish the repairs,

but represented to the plaintiffs that the repairs were complete and

accepted a payment for all the repairs-including work not performed.

See id. There is no evidence that Daneshjou committed willful

misconduct while building the house, nor is there evidence that he

guided construction and repairs intending to conceal any

misconstruction or intentionally misled Brent through information or

misinformation intending to conceal any misconstruction.

Id. at *6.

As in Brent, the evidence before us suggests that DMAC’s porch roof

construction may have been defective, but does not show that DMAC knew the

construction was defective. See id.; see also Shell Oil Co., 356 S.W.3d at 927

(fraudulent concealment doctrine requires proof that the defendant actually knew a

wrong occurred). Nor does the evidence show an intent or “fixed purpose” by

DMAC to conceal the wrongs when it made its repairs. See Shell Oil Co., 356

S.W.3d at 927; Brent, 2005 WL 2978329, at *6 (“Nor is there evidence that, in

building or repairing the house, he acted with the intent to conceal these wrongs.”).

While DMAC may have told Mahler that it had fixed the problem, there is no

evidence that it knew the representation to be false. See Brent, 2005 WL 2978329,

at *6. Accordingly, Mahler failed to present evidence establishing its fraudulent

concealment defense to limitations. See id.; Bayou Bend, 866 S.W.2d at 746-47

(concluding “Bayou Bend did not establish that appellees acted with a fixed

purpose to conceal Bayou Bend’s cause of action,” even though Bayou Bend

alleged that appellees were aware of construction defects “from the very

beginning”).

2. Doors and floors

Jorden testified that nobody at DMAC ever lied to him about the doors or

floors. Jorden further testified that nobody at DMAC ever said the floors were

commercial-grade floors, or that the doors were warranted for use in an exterior

application.

With respect to the doors, Mahler now contends that, “[c]ontrary to Mr.

Mahler’s mistaken deposition testimony, DMAC representatives indeed

represented to Mahler and convinced Mahler that the doors installed were

appropriate and of good quality.” But Mahler was aware as early as 2006 that

interior-grade doors had been used, and was certainly aware of the issue by

December 2007 when he emailed DMAC stating that “[t]he issue of the exterior

doors being hung while they were made for ‘Interior use’ only still bothers me.

This was a stupid decesion [sic] whoevers [sic] it was. Why would anyone hang

an interior door outside in Houston Texas’ humidity.” Because Mahler was aware

that the doors were interior doors, its claim can be only that DMAC fraudulently

concealed from Mahler that the interior doors would not perform as indicated in an

exterior location.

Mahler has failed to demonstrate that DMAC knew the doors were not

appropriate and of good quality. The summary judgment evidence demonstrates

the opposite — DMAC’s email shows that it believed the doors in question would

function well as exterior doors with proper protective measures: