Face Challenges Confidently

482 Tipton v. Brock

Tuesday, December 8th, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Tipton v. Brock, 431 S.W.3d 673 (Tex. App.—El Paso 2014, pet. filed), held that the discovery rule did not toll the running of limitations in a deed reformation action. In August 1999, a group of land owners (“Sellers”) entered into a Farm and Ranch Contract to sell a tract of land to Tipton. The contract reserved all mineral rights to Sellers. The parties executed a warranty deed that contained no express reservation of minerals. In 2009, Sellers sued Tipton for breach of contract and sought reformation of the warranty deed based on mutual mistake. Tipton asserted the statute of limitations barred the claim. Sellers argued that the discovery rule tolled the statute of limitations.

The case was allowed to go to a jury, which found for Sellers. In answer to a jury question, the jury found that the suit was timely filed after the Sellers first reasonably knew or should have known that the mistake occurred. Tipton contended that the trial court misapplied the discovery rule by allowing the question to go to the jury. Tipton argued that the proper test was whether the mistake in the deed was inherently undiscoverable and that this was a question for the court, not the jury.

Sellers contended the Texas Supreme Court’s decision in Lesley v. Veterans Land Board “reaffirms the application of the knew or should have known discovery rule standard in reformation cases.” The court held that the ruling in Lesley was distinguishable from the present case because in Lesley, the language in the deed was found to be ambiguous enough to raise material issues of fact; whereas in the present case, the language in the deed was plain and unambiguous. “A warranty deed which clearly describes a reservation of mineral rights in contravention of the grantor’s intent is not the type of inherently undiscoverable injury contemplated by the discovery rule.” Reasoning that Sellers had “some obligation to exercise reasonable diligence in protecting their interests,” and that the omission of a reservation of mineral rights is not inherently undiscoverable as a matter of law, the court held Sellers had failed to meet the standard necessary to benefit from the discovery rule’s tolling of the statute of limitations. Accordingly, the court reversed and rendered judgment for Tipton.

The case affirms the general rule that the court will determine whether a particular type of injury is inherently undiscoverable by category and that the statute of limitations, with regard to a reformation claim, ordinarily begins to run on the date the deed is executed. However, in deed reformation cases there may be a fact issue as to the meaning of the language used in the deed.