233 Ford v. Exxon Mobil Chem. Co.

Richard F. Brown

 
The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
 
Ford v. ExxonMobil Chemical Co., 235 S.W.3d 615 (Tex. 2007), examines whether limitations should bar an equitable action to quiet title. Five years after signing an amendment granting a pipeline easement across three tracts of land, Ford sued ExxonMobil for real estate fraud and to quiet title by a removal order. Ford alleged that he only signed the amendment because ExxonMobil represented that the original pipeline easement covered all three tracts, but in actuality, it only covered one tract. The Texas Supreme Court held that the Statute of Limitations precluded both Ford’s fraud claim and his equitable claim for quiet title.
 
The parties agreed that the fraud claim should have been brought within four years of when a person exercising reasonable diligence should have discovered the fraud; they disagreed as to when the fraud should have been discovered. The court recognized the general rule that not all public records establish an irrebuttable presumption of notice, but when the recorded instrument is in the grantee’s chain of title, public records generally establish an irrebuttable presumption of notice. In the present case, Ford’s fraud claim was based on recorded instruments in his chain of title, which were recorded prior to the amendment he executed. Therefore, the Statute of Limitations began to run no later than the moment when Ford signed the amendment, because the recorded instruments in his chain of title placed him on constructive notice of the alleged fraud (Ford did not claim, plead, or try to prove that there was a fiduciary relationship with ExxonMobil).
 
In holding that the suit to quiet title was also barred, the Texas Supreme Court first pointed out that Ford did not plead quiet title as an independent cause of action, and therefore, “having asserted limitations against Ford’s fraud claim, ExxonMobil did not have to assert limitations against each item of legal or equitable relief that stemmed from it.”
 
However, even if Ford had pleaded his action to quiet title as an independent cause of action, it still would have been barred by limitations. Although it is true that “an equitable action to remove cloud on title is not subject to limitations if a deed is void or has expired by its own terms” this rule does ”not apply when a deed is voidable rather than void.” When a deed is voidable, the claimant has an adequate remedy at law, and equity will not intervene.
 
In this case, Ford claimed that the deed was obtained by fraud. “Deeds obtained by fraud are voidable rather than void, and remain in effect until set aside.” Once limitations expired for setting aside the deed allegedly obtained by fraud, Ford could not simply evade this bar by asserting the claim in equity. The Court recognized that if it were to hold otherwise, virtually every real estate case “could be recast as an action to remove cloud on title,” and limitations would rarely apply.
 
The significance of the case is the holding that the Discovery Rule will not apply to matters which were disclosed in the public records of the plaintiff’s own chain of title.  Deeds acquired by fraud or voidable, not void, and therefore limitations applies. A claim for fraud based on misrepresentations by the defendant as to the plaintiff’s own title, will be barred by limitations, if the plaintiff could have discovered the fraud by examining his own chain of title.