Opinion ID: 2831451
Heading Depth: 1
Heading Rank: 2

Heading: Fraud and Limitations

Text: Hooks’ fraud claims relate to the Jefferson County Lease. This lease, which prohibited pooling, contained “offset obligations” providing that if a gas well were completed within 1,320 feet of Hooks’ lease line but was not unitized with Hooks’ acreage, then Samson would either drill an offset well, pay Hooks compensatory royalties, or release the offset acreage. In 2000, Samson drilled a well that bottomed about 1,186 feet from Hooks’ lease, within the 1,320-foot protected zone. But, instead of complying with the original offset obligations, Samson asked Hooks to amend the Jefferson County Lease in 2001 to pool into a unit associated with the new well. In connection with this request, Samson provided Hooks with a plat that incorrectly placed the well’s bottom hole outside of the protected zone. A plat with the same false information had already been filed with the Railroad Commission. Older Railroad Commission records, however, contained a directional survey and an attached plat3 that correctly placed the bottom hole within the 1,320-foot boundary.4 Other preliminary Railroad Commission filings demonstrated that Samson originally intended the well to bottom within 1,320 feet of Hooks’ lease. 3 The parties dispute whether, based on the record in this case, the plat was attached to the directional survey in the Railroad Commission filing. This does not affect our holding, and we assume without deciding that it was attached. 4 Although the plat correctly placed the bottom hole within the protected zone, some data on the plat does not completely correspond to data on a later correct plat. 4 Hooks brought his fraud claims in 2007, alleging that Samson deprived Hooks of compensatory royalties by misrepresenting the well’s bottom-hole location and fraudulently inducing Hooks to amend the lease and pool. A jury found that Samson committed fraud and statutory fraud, awarding more than $20 million in damages on these claims, and the trial court rendered judgment on the jury’s verdict. The court of appeals, however, reversed, holding that the four-year statute of limitations for fraud barred the claims. Id. at 428–29 (citing TEX . CIV . PRAC. & REM . CODE § 16.004(a)(4)). Hooks argues that the court of appeals erred because the statute of limitations did not begin to run until Hooks “knew or should have known of facts that in the exercise of reasonable diligence would have led to the discovery of the wrongful act.” Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 216 (Tex. 2011) (quoting Little v. Smith, 943 S.W.2d 414, 420 (Tex. 1997)). The jury found that, in the exercise of reasonable diligence, Hooks should have discovered Samson’s fraud by 2007. Samson responds that, as a matter of law, reasonable diligence would have discovered the true location of the well’s bottom hole in 2000 or 2001. Samson points to this Court’s decisions in BP America Production Co. v. Marshall, 342 S.W.3d 59 (Tex. 2011), and Shell Oil Co. v. Ross, 356 S.W.3d 924 (Tex. 2011), where reasonable diligence required sophisticated lessors to acquaint themselves with “readily accessible and publicly available information” from Railroad Commission records. Ross, 356 S.W.3d at 929; see Marshall, 342 S.W.3d at 68–69. According to Samson, the directional survey and its associated plat, as well as filings showing the original proposed location of the well’s bottom hole, should have been discovered by the exercise of reasonable diligence by 2001 at the latest, meaning that Hooks’ fraud claims are barred by limitations. 5 We have long held that “fraud prevents the running of the statute of limitations until it is discovered, or by the exercise of reasonable diligence might have been discovered.” Ruebeck v. Hunt, 176 S.W.2d 738, 739 (Tex. 1943).5 Generally, “[c]auses of action accrue and statutes of limitation begin to run when facts come into existence that authorize a claimant to seek a judicial remedy,” Emerald Oil, 348 S.W.3d at 202, but “a person cannot be permitted to avoid liability for his actions by deceitfully concealing wrongdoing until limitations has run,” S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996). Because “fraud vitiates whatever it touches,” Borderlon v. Peck, 661 S.W.2d 907, 909 (Tex. 1983), limitations does not start to run until the fraud is discovered or the exercise of reasonable diligence would discover it, Marshall, 342 S.W.3d at 69. The same rule applies to claims of fraudulent inducement. Fraudulent inducement is a subspecies of fraud; “with a fraudulent inducement claim, the elements of fraud must be established as they relate to an agreement between the parties.” Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001). Accordingly, the same principle applies: limitations does not start to run until the fraud with respect to the contract is discovered or the exercise of reasonable diligence would discover it. 5 See also Emerald Oil, 348 S.W .3d at 216; Marshall, 342 S.W .3d at 68; Computer Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W .2d 453, 455 (Tex. 1996); Woods v. William M. Mercer, Inc., 769 S.W .2d 515, 517 (Tex. 1988). 6 And just when would reasonable diligence discover the wrong?6 And who decides? Although “the date a cause of action accrues is normally a question of law,” Etan Indus., Inc. v.