Court Opinion

ID: 178971
Source: CourtListenerOpinion
Date Created: 2010-11-09 00:25:35+00
Date Added: 2024-06-11T17:25:46.665721
License: Public Domain

Case: 10-10337 Document: 00511288126 Page: 1 Date Filed: 11/08/2010

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                          November 8, 2010
                                     No. 10-10337
                                   Summary Calendar                         Lyle W. Cayce
                                                                                 Clerk

LYNN WELK; LARRY WELK,

                                                   Plaintiffs–Appellants,
v.

DARREN SIMPKINS, Individually; KELLY SIMPKINS, Individually;
DARREN SIMPKINS CUTTING HORSES, INC.,

                                                   Defendants–Appellees.

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:09-CV-456

Before WIENER, PRADO, and OWEN, Circuit Judges.
PER CURIAM:*
       Lynn Welk and Larry Welk (the Welks) appeal a district court’s decision
to grant summary judgment in favor of Darren Simpkins, Kelly Simpkins, and
Darren Simpkins Cutting Horses, Inc. (the Simpkinses) after the district court
determined that the Welks’ suit was time-barred. Observing no reversible error,
we AFFIRM.

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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                                  No. 10-10337

                                         I
        Darren Simpkins was a horse trainer in Texas who, between 2002 and
2007, trained over two dozen of the Welks’ horses. This case involves one of
those horses—a cutting horse named Juan Bad Cat. The Welks, who lived in
California, delivered Juan Bad Cat to Darren Simpkins for care and training in
2004, and Lynn Welk instructed both Darren and Kelly Simpkins that any
medical procedures on the horse needed to be cleared with her or with the Welks’
veterinarian in California, Dr. Van Snow.
        On June 10, 2005, Dr. Jeff Foland, a veterinarian in Texas, examined Juan
Bad Cat and detected some lameness in the horse. Dr. Foland, after obtaining
authorization from Darren Simpkins, injected the horse’s right stifle with a
steroid. Dr. Foland gave the horse a second injection on July 2, 2005. Neither
Dr. Snow nor Lynn Welk authorized either of those injections. On July 8, 2005,
Dr. Foland, in consultation with Dr. Snow, performed an arthroscopic procedure
on the horse’s right stifle that uncovered permanent damage in the stifle. This
damage made it impossible for Juan Bad Cat to ever compete as a cutting horse,
thus diminishing the horse’s future value as a sire.
        On or about July 13, 2005, Lynn Welk learned of the June 10 and July 2
injections that Dr. Foland gave to Juan Bad Cat. That same day, after learning
of the injections, Ms. Welk discussed the horse’s situation with both Dr. Snow
and Dr. Foland. Dr. Snow denied giving Dr. Foland authorization to inject the
horse, while Dr. Foland claimed to have received such authorization from Dr.
Snow.
        Over the next several months, the Juan Bad Cat incident was a frequent
topic of conversation between the Welks and the Simpkinses. For example, Kelly
Simpkins     repeatedly   confirmed   that   she   had   delivered   Lynn   Welk’s
instructions—that all treatment of the horse needed to be cleared with Dr. Snow
or Ms. Welk—to Dr. Foland. And, in a conversation in December of 2005, Larry

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                                         No. 10-10337

Welk asked Darren Simpkins directly whether Mr. Simpkins had authorized Dr.
Foland to inject Juan Bad Cat. Mr. Simpkins denied having done so.
       On June 6, 2007, the Welks initiated a civil action in Texas state court
against Dr. Foland. On August 14, 2007, an attorney for the Welks met and
interviewed Darren and Kelly Simpkins. During that interview, the Simpkinses
admitted to authorizing Dr. Foland’s injections of Juan Bad Cat. The Welks
subsequently sought leave to add the Simpkinses as defendants in the state
court action against Dr. Foland, but the state court denied their request.
       The Welks instituted the instant suit on August 5, 2009, in the United
States District Court for the Northern District of Texas. The Welks’ complaint
raised four causes of action: breach of contract, negligence, fraud, and breach of
fiduciary duty. The Simpkinses moved for summary judgment, contending that
the applicable statutes of limitations barred the Welks’ claims. The district
court agreed and granted the Simpkinses’ motion. This appeal followed.
                                               II
       We review the district court’s grant of summary judgment de novo,
applying the same standards as the district court.1                 Summary judgment is
appropriate when “the pleadings, the discovery and disclosure materials on file,
and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.” 2 “A genuine
issue of material fact exists if the evidence is such that a reasonable jury could
return a verdict for the non-moving party.”3 “When assessing whether a dispute
to any material fact exists, we consider all of the evidence in the record but

       1
           DePree v. Saunders, 588 F.3d 282, 286 (5th Cir. 2009).

       2
           FED . R. CIV . P. 56(c)(2).
       3
        Paz v. Brush Engineered Materials, Inc., 555 F.3d 383, 391 (5th Cir. 2009) (internal
quotation marks and citations omitted).

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                                          No. 10-10337

refrain from making credibility determinations or weighing the evidence.” 4 “In
reviewing the entire record, we consider all evidence in a light most favorable to
the non-moving party and draw all reasonable inferences in favor of the non-
moving party.” 5
                                                III
       The statute of limitations for a negligence cause of action under Texas law
is two years.6 The Welks’ other claims—breach of contract, fraud, and breach of
fiduciary duty—are subject to a four-year limitations period.7 As noted above,
the district court determined that these limitations periods barred the Welks’
claims against the Simpkinses. In doing so, the district court rejected the Welks’
claim that the fraudulent concealment defense tolled the limitations periods.8
       On appeal, the Welks raise three claims relating to the district court’s
treatment of their fraudulent concealment defense. First, they contend that
genuine issues of fact exist with respect to whether the fraudulent concealment
defense tolled the limitations periods on their claims because Darren and Kelly
Simpkins affirmatively misrepresented to the Welks that the Simpkinses had
not authorized Dr. Foland’s injections of Juan Bad Cat. Second, the Welks argue
that the district court improperly made credibility determinations and fact-
findings when it determined that the fraudulent concealment defense did not toll

       4
        Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th
Cir. 2008).
       5
       Frakes v. Crete Carrier Corp., 579 F.3d 426, 429-30 (5th Cir. 2009) (internal quotation
marks and citation omitted).
       6
           TEX . CIV . PRAC . & REM . CODE ANN . § 16.003.
       7
           Id. §§ 16.004, 16.051.
       8
         See Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430, 439 (Tex. App.—Fort Worth
1997, pet. denied) (“[T]he doctrine of fraudulent concealment tolls or suspends the running of
limitations after it has begun because the defendant concealed from the plaintiff facts
necessary for the plaintiff to know that he had a cause of action.”).

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                                     No. 10-10337

the limitations periods in this case. Third, they assert that an informal fiduciary
relationship existed between the Welks and Darren and Kelly Simpkins, and
that the existence of this relationship meant that Darren and Kelly Simpkins
had an affirmative duty to disclose their misconduct to the Welks. The Welks
do not appear to dispute that, absent the applicability of the fraudulent
concealment defense, their claims against the Simpkinses are time-barred. We
address these claims in order.
                                           A
      A plaintiff raising fraudulent concealment as a defense to the statute of
limitations must establish four elements: “(1) the existence of the underlying
tort; (2) the defendant’s knowledge of the tort; (3) the defendant’s use of
deception to conceal the tort; and (4) the plaintiff’s reasonable reliance on the
deception.”9 The Welks argue that Darren and Kelly Simpkins represented that
they had not told Dr. Foland to inject Juan Bad Cat and that this
misrepresentation justifies tolling the statute of limitations on the Welks’ claims
until August 14, 2007—the date on which Darren and Kelly Simpkins admitted
to authorizing the injections. Reviewing the record de novo, we conclude that
the Welks have failed to establish a genuine issue of fact with respect to the
fourth element of the fraudulent concealment defense—that they reasonably
relied on any deception by Darren and Kelly Simpkins.
      “The estoppel effect [of fraudulent concealment] is not permanent, but
merely tolls limitations until the plaintiff learns of the facts that give rise to its
cause of action or should learn of the facts in the exercise of reasonable
diligence.”10 “Knowledge of facts, conditions, or circumstances which would
cause a reasonable person to make inquiry leading to the discovery of the

      9
          Id.
      10
         Bayou Bend Towers Council of Co-Owners v. Manhattan Constr. Co., 866 S.W.2d 740,
746 (Tex. App.—Houston [14th Dist.] 1993, writ denied).

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concealed cause of action is in the law equivalent to knowledge of the cause of
action for limitation purposes.”11 Here, the Welks were aware no later than July
of 2005 that Dr. Foland had injected Juan Bad Cat without the authorization of
either Dr. Snow or Lynn Welk. We believe that this knowledge, when coupled
with the instructions that Lynn Welk delivered to the Simpkinses with respect
to the treatment of this particular horse, would cause a reasonable person to
conduct an inquiry into whether the Simpkinses had authorized Dr. Foland to
inject the horse. Indeed, Lynn Welk herself testified in her deposition that these
facts caused her to consider the possibility that Darren Simpkins authorized the
injections, and that it was this suspicion that led to Larry Welk, in December of
2005, asking Darren Simpkins whether he had authorized Dr. Foland to inject
the horse.
      It is true, of course, that Darren Simpkins, when asked, denied his role in
the injections, but we do not believe that this denial in any way alters the
inapplicability of the fraudulent concealment defense to this case. Texas courts
do recognize that “affirmative misrepresentations can support a fraudulent
concealment defense,”12 but a misrepresentation only tolls the statute of
limitations until “the plaintiff knew enough that a reasonable person in the
plaintiff’s place would disbelieve the defendant’s denial of improper conduct.” 13
As we have recognized in another context, a denial of wrongdoing generally “is
no more an act of concealment than is silence.”14                A denial can constitute
concealment, but only when “the parties are in a fiduciary relationship” or “the

      11
           Id. at 747.
      12
       Santanna Natural Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885, 891 (Tex.
App.—Austin 1997, pet. denied).
      13
           Mitchell Energy Corp., 958 S.W.2d at 442.
      14
           Texas v. Allan Constr. Co., 851 F.2d 1526, 1532 (5th Cir. 1988).

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                                        No. 10-10337

circumstances indicate that it was reasonable for the plaintiff to rely on
defendant’s denial.”15 Here, the parties were not in a fiduciary relationship,16
and our review of the record has not uncovered any circumstances that would
make it reasonable for the Welks to rely on Darren Simpkins’ single denial of
wrongdoing as a reason to cease their inquiry into the Simpkinses’ role in the
injections given to Juan Bad Cat. We believe that further inquiry, undertaken
diligently, would have led to the discovery that the Simpkinses authorized Dr.
Foland to inject the horse.
                                               B
      The Welks also argue that the district court improperly made credibility
determinations and drew inferences from the evidence in favor of the Simpkinses
when it granted summary judgment to the Simpkinses. Specifically, the Welks
point to portions of the district court’s order that suggest that the district court
discredited the Welks’ version of events—that Darren Simpkins, in December of
2005, specifically denied ever having authorized Dr. Foland to inject Juan Bad
Cat but then admitted as much to the Welks’ attorney on August 14, 2007. The
Welks also assert that the district court inappropriately speculated that Darren
Simpkins admitted to authorizing the injections of Juan Bad Cat in phone calls
with Lynn Welk during June of 2005.
      Of course, it is inappropriate for a court, at the summary judgment stage,
to make a credibility determination between parties’ differing versions of
events.17 Here, however, the credibility determinations that the Welks claim the
district court erroneously made do not appear to have served as the basis for the
district court’s decision. The district court determined that the Welks could not

      15
           Id. at 1532-33.
      16
           See infra Part III.C.
      17
           See Tarver v. City of Edna, 410 F.3d 745, 753 (5th Cir. 2005).

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succeed with their fraudulent concealment defense to the statute of limitations
because “reasonable inquiry by [the Welks] would have provided them more than
four years before this action was instituted sufficient information from which
they could infer that one of the defendants had authorized Dr. Foland to make
the injections.” In other words, the district court, like this court, determined
that the Welks could not establish the “reasonable reliance” prong of the
fraudulent concealment defense. Since the allegations of error in the district
court’s order that the Welks now raise do not relate to that element of the
defense, but instead address whether Darren Simpkins ever denied and then
admitted his role in the injections, they do not serve as a basis for reversing the
district court’s judgment.
      The Welks’ argument that the district court relied on records of a phone
conversation between Darren Simpkins and Lynn Welk on June 13, 2005, to
infer improperly that Darren Simpkins admitted to Lynn Welk on that date that
he had authorized an injection of Juan Bad Cat is also meritless, as it appears
to stem from a misreading of the district court’s order. The only inference that
the district court appears to have drawn from the records of this conversation is
“that Mr. Simpkins informed Ms. Welk of the horse’s June 10, 2005, treatment
and would have responded to whatever inquiry Ms. Welk might have made.”
The district court’s inference relates to the date that Darren Simpkins informed
Lynn Welk that the injections occurred; it does not address the date that Darren
Simpkins actually admitted to authorizing those injections. Since the Welks do
not dispute that they had knowledge of the injections no later than July 13,
2005—more than four years prior to the commencement of their action—the
district court’s speculation that the Welks may have known of the existence of
the injections in June of 2005 is of no import to the relevant issue of whether the
Simpkinses fraudulently concealed their role in authorizing those injections.

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                                      No. 10-10337

                                             C
       Finally, the Welks contend that an informal fiduciary relationship existed
between the Welks and Darren and Kelly Simpkins, and that the existence of
this relationship meant that Darren and Kelly Simpkins had an affirmative duty
to disclose their misconduct to the Welks. Specifically, the Welks point to their
five-year-long business relationship with Darren and Kelly Simpkins; the fact
that the parties often attended horse shows together, at which times they would
share meals; the fact that Darren and Kelly Simpkins visited the Welks in
California; the fact that Lynn Welk and Kelly Simpkins often conversed on the
phone; and the fact that Kelly Simpkins once confided a personal matter to Lynn
Welk. The Welks claim that these facts established a genuine issue with respect
to the existence of an informal fiduciary relationship under Texas law, which
recognizes that such relationships may arise when “one person trusts in and
relies upon another, whether the relation is a moral, social, domestic or merely
personal one,”18 and that the district court erred when it granted summary
judgment to the Simpkinses.
       “Although . . . the existence of a[n] [informal fiduciary relationship] is
ordinarily a question of fact, when the issue is one of no evidence, it becomes a
question of law.”19 The district court determined that the Welks presented no
evidence of an informal fiduciary relationship between the Welks and Darren
and Kelly Simpkins, and we agree. At best, the Welks’ evidence shows that they
maintained a business relationship with Darren and Kelly Simpkins and that
the couples interacted socially incident to that relationship.              “[T]he fact a
business relationship has been cordial and of long duration is not by itself

       18
         Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591, 594 (Tex.
1992) (internal quotation marks and citation omitted).
       19
            Id.

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evidence of a [fiduciary] relationship.”20 To be sure, the Welks do appear to have
trusted Darren and Kelly Simpkins, but “mere subjective trust alone is not
enough to transform arms-length dealing into a fiduciary relationship.” 21
“Businessmen generally do trust one another,” and the evidence in this case
establishes nothing more than the cordiality that often characterizes business
relationships.22
                                      *        *         *
      For the above reasons, the judgment of the district court is AFFIRMED.

      20
         Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 675 (Tex. App.—Houston [1st
Dist.] 1996, no writ).
      21
           Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962).
      22
        Id.; see also Crim Truck & Tractor Co., 823 S.W.2d at 594 (“The fact that one
businessman trusts another . . . does not rise to a confidential relationship.”).

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