Face Challenges Confidently

199 Vial v. Gas Solutions, Ltd.

Thursday, September 3rd, 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.
Vial v. Gas Solutions, Ltd., 187 S.W.3d 220 (Tex. App.—Texarkana 2005, no pet.) determines whether the heirs to an alleged defrauded party have standing to bring suit and whether fraudulent concealment tolls the statute of limitations. Vial contended Vial’s predecessor was fraudulently induced to sign a well-spacing agreement with Gas Solutions’ predecessors in 1931. In the agreement, all parties agreed not to drill any additional wells. The agreement contained the following recital, which is the basis of this lawsuit: “WHEREAS, the above tract of land adjoins on the south the right of way of the Texas & Pacific Railroad which right of way is under lease for oil and gas purposes to Gregg Oil Company.” Vial alleged that there was no lease on the right-of-way, the recital misled Vial’s predecessor into believing that Gregg Oil Company had a valid lease on the right-of-way, and the false representation fraudulently induced Vial’s predecessor to enter into the well-spacing agreement.
Gas Solutions first challenged Vial’s standing to sue, because the general rule is that a party lacks standing to sue for damage to property when an injury to the property occurs before the plaintiff purchases the property. That is, the right to sue belongs to the predecessor in title, and if it is not expressly conveyed, then the subsequent purchaser has no cause of action. However, in this case, Vial was not a subsequent purchaser of the property, but heir to the predecessor in title. Moreover, the suit was not for damages to property, but for fraud. A fraud claim is personal to the defrauded party, and the heirs of the defrauded party have standing to sue to recover for the fraud. Therefore, Vial had standing to bring suit as heir to the injured party. Similarly, the fact that the right-of-way may have been subsequently adversely possessed had no relevance to Vial’s claim for fraud in connection with the 1931 well-spacing agreement.
The four-year statute of limitations is applicable to claims based on fraud, and therefore Vial’s claim was clearly barred unless the statute was tolled. Vial contended that the statute of limitations was tolled by Gas Solutions’ fraudulent concealment of the fraudulent inducement. Fraudulent concealment is an equitable defense to limitations that estops the defendant from relying on the statute of limitations. Fraudulent concealment tolls the statute of limitations until the plaintiff, using reasonable diligence, discovers or should have discovered the injury.
The court held that even if a fact issue existed concerning the underlying tort, i.e., whether some misleading recital or some subsequent conduct or document created a duty to disclose, Vial did not raise a fact issue concerning fraudulent concealment. Fraudulent concealment requires actual knowledge by the defendant that a wrong has occurred and that there was a “fixed purpose to conceal the facts necessary for the plaintiff to know that it has a cause of action.” Vial did not present any evidence to indicate that Gas Solutions’ predecessors intended to conceal the cause of action from Vial. There was just confusion about who owned the right- of-way.
The court also found that Vial or Vial’s predecessors should have discovered  their alleged injury concerning the land years ago. Mineral interest owners have an obligation to exercise due diligence to protect their interests. The doctrine of fraudulent concealment only tolls the statute of limitations until the plaintiffs, using reasonable diligence, discover or should have discovered the cause of action. Gas Solutions and their predecessors had been openly extracting oil and gas from the land covered by the lease since the 1930’s. The wells on the property were clearly visible, and there was no evidence that Gas Solutions or its predecessors conducted their activities in a clandestine manner. Because the alleged fraud occurred more than seventy years ago and the statute of limitations had not been tolled, the court found that the four- year statute of limitations barred Vial’s claim to bring suit.