Court Opinion

ID: 8205856
Source: CourtListenerOpinion
Date Created: 2022-09-13 00:00:23.011601+00
Date Added: 2024-06-11T16:41:11.326567
License: Public Domain

Case: 21-20663     Document: 00516468800         Page: 1     Date Filed: 09/12/2022

              United States Court of Appeals
                   for the Fifth Circuit                              United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                     September 12, 2022
                                  No. 21-20663                          Lyle W. Cayce
                                Summary Calendar                             Clerk

   Kenneth W. Dougherty, Jr.,

                                                           Plaintiff—Appellant,

                                       versus

   Steve Hart Restoration & Race Preparation, Limited,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:19-CV-1924

   Before Davis, Smith, and Dennis, Circuit Judges.
   Per Curiam:*
          In this diversity action, Plaintiff-Appellant, Kenneth W. Dougherty,
   Jr., alleges that he hired Defendant-Appellee, Steve Hart Restoration & Race
   Preparation, Limited (“Hart”), to restore to original condition a 1959
   Maserati Tipo 61/60 Birdcage race car (“Birdcage”). Dougherty asserts that

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
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                                    No. 21-20663

   Hart instead produced a replica, a much less valuable version of the Birdcage
   vehicle. Hart, on the other hand, responds that he was hired to rebuild or
   replicate the Birdcage from the parts that Dougherty provided and that was
   precisely what he did.
          After Hart announced publicly that the Birdcage he assembled was not
   qualified to be considered a restored vehicle, Dougherty sued Hart for
   business disparagement, fraud, and violations of the Texas Deceptive Trade
   Practices Act (“TDTPA”). The district court first dismissed the business
   disparagement claim, and defendant later filed a motion for summary
   judgment seeking dismissal of the fraud and TDTPA claims as time barred
   under relevant Texas statutes of limitation. The district court granted the
   motion and dismissed the case. We AFFIRM.
                                         I.
          Dougherty owns a Texas company that buys, restores, and sells classic
   cars. Hart is a business located in Norfolk, England, UK, that specializes in
   restoring sports racing cars. The business is owned by Steve Hart.
          In 2006, Dougherty purchased the parts from the wrecked Birdcage.
   For an estimated cost of $100,000, Hart agreed to assemble the racecar from
   the parts Dougherty had purchased. Dougherty asserted that he intended to
   put the original vehicle identification number on the chassis and that he
   planned to sell the vehicle after the work was complete. Hart completed the
   assembly of the Birdcage in 2010 and shipped the vehicle to Dougherty in
   Texas. Dougherty agreed that he inspected the Birdcage when it arrived and
   that he was happy with it.
          In the classic car industry, to restore a car means that the car has been
   returned to original condition. To replicate a car means that the car may not
   have all original parts and cannot be certified as a restored version of the
   original vehicle. Restored cars have a much higher market value (sometimes

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   as much as ten times higher) than a replica car. Hart denies that Dougherty
   hired him to restore the vehicle to the original condition and asserts that he
   agreed to rebuild or replicate the Birdcage from the portions of the wreckage
   Dougherty provided.
          In the summer of 2011, Dougherty brought the Birdcage to an auction
   in California. He thereafter discovered that Hart had posted the following on
   the internet:
          We were given a chassis, an engine, a few bits of gearbox case
          & asked to make a car from it, which we did. When we first
          began working to make the remaining parts and assembling it,
          we were not told about it was to be ‘given’ a chassis number. It
          was only towards the end that we were asked to put a number
          on it. As far as I’m concerned, I do not believe the car to have
          any ‘claim’ to the original number of 2459. Whenever anyone
          who has contacted me about it, I have always told them this.
          The chassis has ‘REPLICA’ stamped into it, not by us, but
          from whoever the chassis came from/builder. I have not
          informed anyone of this before. I do, however, wish to remain
          completely honest about this & I am happy to answer any
          questions that someone may have. I do not have a problem with
          ‘new’ cars, providing everyone knows what they’re getting
          into & where they stand. I am sorry [t]hat this has created such
          a fuss.
          Dougherty forwarded this statement to Hart and strongly registered
   his disagreement with the statement and urged Hart to post a more correct
   description of the vehicle. Hart did not back off from his earlier statement
   but did agree that he would not disparage the car and would describe Hart’s
   work on the car as “the process of the restoration.”
          Dougherty tried to market the Birdcage again in 2016 and directed a
   third party to pose as a buyer and ask Hart about the designation of the
   Birdcage. Dougherty asserts that Hart told the buyer that the vehicle he had

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   assembled for Dougherty was not the original chassis number 2459 Birdcage
   as Dougherty claimed and was a replica -- not a restored vehicle. This lawsuit
   followed in December 2017.
                                           II.
             Very early in the litigation, the district court dismissed Dougherty’s
   business disparagement claim and that ruling is not challenged in this appeal.
   Hart then filed a motion for summary judgment seeking dismissal of the fraud
   and TDTPA claims on ground that these actions were not timely filed within
   the time permitted by relevant Texas statutes of limitations. The timeliness
   issue in the district court narrowed to a question of when the time clock began
   to run.
             Dougherty contended that it began to run in 2016 when Hart made an
   unequivocal statement that the Birdcage he produced was a replica and not a
   restored vehicle. Hart contended that the clock began to run at the latest in
   2011 when Dougherty read Hart’s internet posting in which Hart made it
   clear that the Birdcage he produced was not entitled to exhibit the original
   chassis number. Dougherty strongly protested this statement because he
   knew prospective buyers would understand that this meant Hart did not
   consider the Birdcage a restored vehicle.
             The district court parsed the summary judgment evidence and
   concluded that Hart was correct and the clock began to run in 2011. The
   court concluded that from Hart’s 2011 posting, Dougherty knew or should
   have known of Hart’s alleged misrepresentation that the vehicle he
   assembled did not qualify to display the original chassis number of the
   Birdcage, signaling to prospective buyers that the Birdcage should not sell for
   the enhanced value of a restored vehicle.

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                                                 III.
           “We review a summary judgment de novo, applying the same standard
   as the district court.” 1 Summary judgment should be granted “if the movant
   shows that there is no genuine dispute as to any material fact and the movant
   is entitled to judgment as a matter of law.” 2 Under Texas law, a claim for
   fraud is subject to a four-year statute of limitations. 3 The claim accrues when
   “the plaintiff knew or in the exercise of reasonable diligence should have
   known of the wrongful act and resulting injury.” 4 A claim under the TDTPA
   is subject to a two-year statute of limitations, and “[t]he claim accrues when
   ‘the consumer discovered or in the exercise of reasonable diligence should
   have discovered the occurrence of the false, misleading or deceptive act or
   practice.” 5
           We have carefully reviewed the summary judgment evidence and
   agree with the district court’s evaluation of that evidence that in 2011,
   Dougherty knew or should have known the basis of his fraud and TDTPA
   claims. As the district court succinctly summarized:
           Dougherty expressed his concern that Hart’s description could
           ‘completely destroy the value’ of the car. Dougherty told Hart
           in August 2011 that he ‘totally disagree[d]’ with Hart’s
           description of the car. Dougherty knew or should have known
           of the basis of his fraud and Deceptive Trade Practices Act

           1
             United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 326 (5th
   Cir. 2011).
           2
               Fed. R. Civ. P. 56(a).
           3
               Tex. Civ. Prac. & Rem. Code §16.004(a).
           4
               See S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996).
           5
            KPMG Peat Marwick v. Harrison County Housing Finance Corp., 988
   S.W.2d 746, 749 (Tex. 1999) (citing Tex. Bus. & Com. Code §17.565).

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          claims in 2011, when he confronted Hart about his posted
          statements describing the Birdcage.”
          Given the facts Dougherty learned from the 2011 posting, he was not
   entitled to wait for a more explicit statement to be on notice of his claim –
   that Hart’s description of the Birdcage reduced its value.          With this
   knowledge, Dougherty was required to exercise due diligence to protect his
   interests.
          We also agree with the district court that the record does not reveal
   factual disputes material to the fraudulent concealment defense.
          It follows that the district court correctly dismissed Dougherty’s fraud
   claim under the applicable four-year statute of limitations, 6 and his TDTPA
   claim under the applicable two-year statute of limitations. 7
          For these reasons and the more detailed reasons advanced by the
   district court in its careful November 12, 2021, Memorandum Opinion and
   Order, we AFFIRM the district court’s judgment.

          6
              Tex. Civ. Prac. & Rem. Code §16.004(a).
          7
              Tex. Bus. & Com. Code §17.565.

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