                         NUMBER 13-13-00195-CV

                            COURT OF APPEALS

                  THIRTEENTH DISTRICT OF TEXAS

                     CORPUS CHRISTI - EDINBURG


JOHN SCHELLENBERG AND
LISA SCHELLENBERG,                                                     Appellants,

                                          v.

FIRST STATE BANK
CENTRAL TEXAS,                                                           Appellee.


                   On appeal from the 53rd District Court
                         of Travis County, Texas.


                         MEMORANDUM OPINION

 Before Chief Justice Valdez and Justices Rodriguez and Benavides
            Memorandum Opinion by Justice Rodriguez
      This is a negligent misrepresentation and fraudulent inducement case brought

incident to a bankruptcy proceeding.       Appellants John Schellenberg and Lisa

Schellenberg, plaintiffs in the trial court, challenge the traditional summary judgment
granted in favor of appellee First State Bank Central Texas (FSB). By four issues, the

Schellenbergs argue that the trial court erred in granting summary judgment to FSB

because (1) their claims sound in tort and not contract; (2) the evidence was insufficient

to show that their causes of action had accrued at the time of the signed release; (3) the

evidence was insufficient to show that the representations made by FSB were true; and

(4) the evidence was insufficient to show that their reliance on FSB’s representations was

unreasonable. We affirm.

                                          I. Background1

        It is undisputed that in early 2006, the Schellenbergs contracted with a mortgage

broker, Roger Rheinheimer, to help them secure a construction loan.                        Rheinheimer

arranged a one-year interim construction loan for the Schellenbergs through FSB. The

interim loan imposed a one-year construction deadline and was conditioned on the

Schellenbergs securing permanent financing to refinance the interim loan at the

completion of construction.

        The interim loan agreement was executed by the parties on August 10, 2006. In

their petition, the Schellenbergs allege that both Rheinheimer and an FSB loan officer

told them that permanent financing was "sourced and locked" at the time of the interim

loan contract. In a letter, which was attached as evidence to FSB's motion for summary

judgment, Mortgage Acceptance Corporation (MAC) committed to provide permanent

financing; the commitment letter also conditioned financing on the completion of


        1 This case is before the Court on transfer from the Third Court of Appeals in Austin pursuant to a

docket equalization order issued by the Supreme Court of Texas. See TEX. GOV'T CODE ANN. § 73.001
(West, Westlaw through 2013 3d C.S.).


                                                    2
construction within one year of the interim loan agreement, or by August 10, 2007. The

parties dispute whether the Schellenbergs ever saw this commitment letter. Finally, as

part of the loan agreement, the Schellenbergs paid a $7,720 commitment fee to MAC; the

Schellenbergs allege that Rheinheimer told them that this fee was necessary to secure

the permanent financing.

       It is undisputed that during the summer of 2007, the parties began to question

whether the Schellenbergs were going to meet their August 10 construction deadline.

The Schellenbergs alleged that, "knowing that the interim construction was coming due

in approximately two months," they contacted Rheinheimer in both June and July 2007 to

check on the status of the permanent financing.      At these times, the Schellenbergs

alleged, Rheinheimer informed them that it was "'too early'" for him to advise them on the

terms of the permanent financing.     The Schellenbergs alleged that in August 2007,

because "the interim construction loan was due but construction was not quite complete

on the Schellenberg residence," they "visited with Rheinheimer and FSB to discuss

extending the note with FSB and to discuss the terms of the permanent loan that would

be used to refinance the interim construction loan."       When they asked about the

permanent financing, "Rheinheimer told [them], 'They aren't making those anymore,'" and

that they "would have to find permanent financing elsewhere because he could not make

those kinds of loans anymore." The Schellenbergs alleged, and FSB does not dispute,

that the expiration of the original interim loan "coincided with one of the worst mortgage

markets in recent history."

       Rheinheimer searched for new permanent financing throughout the fall of 2007 but

near the end of September, informed the Schellenbergs that he was unable to find it and
                                            3
suggested that the Schellenbergs list their property for sale. FSB agreed to extend its

interim loan to the Schellenbergs later in the fall.                  On November 9, 2007, the

Schellenbergs and FSB signed an extension of the interim construction agreement, which

extended the maturity date of the interim loan to February 6, 2008 and included a release

of any and all claims against FSB, known and unknown, that had accrued up to that date.

When they signed the extension agreement, the Schellenbergs reserved their right to

assert claims against Rheinheimer and MAC. When the Schellenbergs failed to meet

their obligations under the extended terms, FSB foreclosed on the loan. In March 2009,

the Schellenbergs filed for bankruptcy.

        The Schellenbergs sued FSB, alleging claims for promissory estoppel, negligent

misrepresentation, and fraudulent inducement.2 Specifically, the Schellenbergs alleged

that FSB promised and represented to them at the time of the August 10, 2006 loan that:

a permanent loan commitment had been "sourced and locked"; FSB was "satisfied with

the Schellenbergs' permanent loan" commitment; and FSB "does not make interim

construction loans unless permanent financing is in place." The Schellenbergs also

alleged that FSB showed them a "HUD-1 settlement statement showing fees paid for its

promised permanent financing loan."                     The Schellenbergs claimed that these

representations were either negligent misstatements of fact or knowingly false and that

they reasonably relied on these statements to their detriment.                     The Schellenbergs

claimed that they suffered damages in the form of "loss of the actual land, loss of actual



        2The Schellenbergs also alleged claims of common-law fraud and fraud by non-disclosure against
MAC, Rheinheimer, and others not parties to this appeal; these claims were non-suited after the trial court
granted summary judgment to FSB.
                                                    4
value of the land, cost of the improvements to the land, cost of third party providers that

provided services for the development of the land, loan fees, damage to credit reputation,

and loss of future earnings derived from the stables that were constructed on the property

as part of the Schellenbergs' livelihood."

        FSB filed a traditional motion for summary judgment, arguing that the

Schellenbergs' claims were barred as a matter of law because: (1) they signed an

agreement releasing FSB from all claims; (2) their claims sounded in contract and not

tort; (3) FSB could conclusively disprove the promise, reasonable reliance, and falsity

elements of fraud; and (4) the statute of frauds barred the promissory estoppel claim.

FSB attached as evidence:             excerpts from the Schellenbergs' depositions, which

included as exhibits the various documents involved in effectuating the interim

construction loan; the affidavit of FSB's loan officer; a series of emails between

Rheinheimer and the Schellenbergs; and the HUD statement.                         The Schellenbergs

responded, in relevant part, that because they were unaware of the facts giving rise to

their claims at the time of the November 2007 extended loan agreement, the discovery

rule barred application of the release. The Schellenbergs attached Lisa's affidavit to their

response as evidence.

        The trial court granted FSB's motion for summary judgment on all claims by the

Schellenbergs against FSB but did not specify the grounds.3 The Schellenbergs then

filed this appeal.


        3   The Schellenbergs' brief addresses the trial court's ruling only as to their negligent
misrepresentation and fraudulent inducement claims. Because they do not challenge the trial court's ruling
on their promissory estoppel claim, they have waived our review as to that claim. See TEX. R. APP. P.
38.1(f), (h).
                                                    5
                                 II. Standard of Review

       We review a trial court's ruling on a summary judgment motion de novo. Travelers

Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Alejandro v. Bell, 84 S.W.3d 383,

390 (Tex. App.—Corpus Christi 2002, no pet.). In reviewing the granting of a traditional

motion for summary judgment, we follow these well-established rules: (1) the movant

bears the burden of showing that there is no genuine issue of material fact and that it is

entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material

fact issue precluding summary judgment, we will take as true the evidence favorable to

the nonmovant; and (3) we will indulge every reasonable inference and resolve any

doubts in favor of the nonmovant. Am. Tobacco Co., Inc. v. Grinnell, 951 S.W.2d 420,

425 (Tex. 1997); see TEX. R. CIV. P. 166a(c).        A defendant can obtain a traditional

summary judgment if it can, as a matter of law, disprove one or more elements essential

to the plaintiff's claims, see Alba v. Nueces County Sheriff's Dep't, 89 S.W.3d 132, 133

(Tex. App.—Corpus Christi 2002, no pet.), or establish each element of its affirmative

defense. See ABC, Inc. v. Shanks, 1 S.W.3d 230, 234 (Tex. App.—Corpus Christi 1999,

pet. denied).   When the district court's order granting summary judgment does not

specify the ground relied on for the ruling, as is the case here, we will affirm summary

judgment if any of the theories advanced are meritorious. See FM Props. Operating Co.

v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).

                                     III. Discussion

       In their second issue, the Schellenbergs argue that the trial court erred if it granted

summary judgment on the ground that the release in the November 2007 loan extension


                                              6
agreement precluded the Schellenbergs' claims.4 The Schellenbergs argue that they did

not know of FSB's wrongful act—what they characterize as FSB's "misrepresent[ation]"

on August 10, 2006 "that permanent financing was in place"—at the time they signed the

modified loan agreement that contained the release. In short, the Schellenbergs argue

that the discovery rule bars application of the release. We disagree.

      A bolded paragraph on page 5 of the loan extension agreement provided that the

Schellenbergs

      do hereby fully release, indemnify, acquit and forever discharge [FSB and
      its employees and agents] . . . and from any and all rights, liabilities, claims,
      demands, suits, controversies, debts, damages, attorneys' fees, penalty or
      Interest, court costs, and/or causes of action, known or unknown, including,
      but not limited to, the payment of any money, for the performance or
      furnishing of any consideration, for damages relating to, or resulting from
      and arising out of, all matters, facts, circumstances relating to the business
      relationship between [the Schellenbergs and FSB], accrued to the date
      hereof in favor of any of the [Schellenbergs] . . . .

(Emphasis removed.) In signing the agreement, the Schellenbergs acknowledged that

they had "carefully reviewed" the agreement, had the opportunity to review the agreement

with their attorney, and understood the meaning and effect of the agreement. In her

deposition, Lisa testified that on the advice of an attorney, they added to the agreement

a notation reserving their right to assert claims against Rheinheimer and MAC.

      The Schellenbergs do not dispute that the release would have covered their claims

had they accrued at the time of the modified loan agreement. They do not dispute that

their claims were related to and arose out of their business relationship with FSB; nor do

they contend that their claims are the sort not covered by the language of the release.



      4   Because this issue is dispositive of the appeal, we review it first. See TEX. R. APP. P. 47.1.
                                                     7
Instead, they contend that at the time of the signing of the release they did not know that

FSB's August 2006 representation that permanent financing was secured was false, and

therefore, their claims had not yet accrued and the release did not bar their claims.

       "Generally, a cause of action accrues when a wrongful act causes a legal injury."

Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 623 (Tex. 2011) (citing Provident Life &

Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003)). A cause of action may

accrue even if the fact of the injury is not discovered until later and even if all resulting

damages have not yet occurred. Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997).

Determining the accrual date of a cause of action is a question of law. Etan Indus., Inc.,

359 S.W.3d at 623 (citations omitted).              Here, the Schellenberg's negligent

misrepresentation and fraudulent inducement claims accrued at the time of the alleged

misrepresentation, or on August 10, 2006, when FSB told them that permanent financing

had been secured. See Seureau v. Exxon Mobil Corp., 274 S.W.3d 206, 226 (Tex.

App.—Houston [14th Dist.] 2008, no pet.) ("A cause of action for fraud accrues on the

date that the defendant makes the allegedly false representations") (citing Woods v.

William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988)); see also Mauskar v.

Hardgrove, No. 14-02-00756-CV, 2003 WL 21403464, at *3 (Tex. App.—Houston [14th

Dist.] June 19, 2003, no pet.) (mem. op.) (holding that plaintiff's negligent

misrepresentation claim accrued at the time he signed his insurance contract, which was

when his agent made the allegedly negligent representation).          The question for the

Court, then, is whether the discovery rule tolled the accrual of the Schellenbergs' claims




                                             8
such that the release does not apply. Assuming without deciding that the discovery rule

applies here,5 it does not save the Schellenbergs' claims.

        "Where the discovery rule applies, the cause of action accrues when the plaintiff

knows, or through the exercise of reasonable care and diligence should have discovered,

the nature of his injury and the likelihood that it was caused by the wrongful acts of

another." Seureau, 274 S.W.3d at 228 (citing Childs v. Haussecker, 974 S.W.2d 31, 40

(Tex. 1998)). The plaintiff need not know the identity of the wrongdoer, the extent of its

injuries, or the exact cause and possible cures. See Childs, 974 S.W.2d at 40; see also

PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79, 93 (Tex.

2004). In short, the discovery rule tolls accrual only until the plaintiff learns of a wrongful

injury. PPG Indus., 146 S.W.3d at 93 (citing KPMG Peat Marwick v. Harrison Cnty.

Hous. Fin. Corp., 988 S.W.2d 746, 749 (Tex. 1999); Moreno v. Sterling Drug, Inc., 787

S.W.2d 348, 351 (Tex. 1990)).

        Here, it was the lack of permanent financing that doomed the Schellenbergs'

construction project and caused their alleged injuries. The commitment letter from MAC

required that construction be completed within one year of the interim loan, and when the

Schellenbergs failed to complete construction in that time, that financing was no longer

available. It is undisputed that the Schellenbergs knew this fact as early as August 2007,

several months before they signed the loan extension agreement with FSB in November.

In her deposition, Lisa testified that Rheinheimer informed them in August 2007, when

        5  FSB argued in its motion for summary judgment, and now on appeal, that the discovery rule does
not apply because the release included both known and unknown claims and that it is therefore irrelevant
whether the Schellenbergs knew of their claims against FSB at the time they signed the modified loan
agreement. Because we dispose of this issue on the basis of the discovery rule, we express no opinion
on this argument.
                                                   9
the interim loan from FSB was due and it was apparent that the Schellenbergs were not

going to meet their construction deadline, that they no longer had permanent financing

and he was likely not going to be able to find them permanent financing because of the

unfortunate coinciding of the housing-bubble burst. At the very latest, the Schellenbergs

knew that they no longer had permanent financing on September 22, 2007, when

Rheinheimer gave them final notice that his search for new permanent financing had been

fruitless and advised them to put their property on the market.

      Because the Schellenbergs knew that they no longer had permanent financing for

their project months before they signed the release, they knew that FSB's alleged

representation in August 2006—that financing had been secured—had been false. Even

if the Schellenbergs were not aware of the exact nature of their injuries or the extent of

their damages, they knew at that point that the promise FSB allegedly made had been

broken.   The fact they knew something had gone awry is further evidenced by the

extended loan agreement, in which the Schellenbergs explicitly reserved their right to

assert claims against MAC and Rheinheimer.           At the time they signed the loan

agreement containing the release, the Schellenbergs were in possession of facts from

which they should have deduced that they may have suffered a wrongful injury.

      Taking as true the evidence favorable to the Schellenbergs and indulging every

reasonable inference and resolving any doubts in their favor, we conclude that there are

no genuine issues of material fact as to the applicability of the release in the November

2007 extended loan agreement and that FSB was entitled to judgment as a matter of law

that the release barred the Schellenbergs' claims. See Am. Tobacco Co., Inc. v. Grinnell,

951 S.W.2d 420, 425 (Tex. 1997); see also TEX. R. CIV. P. 166a(c).         Those claims
                                           10
accrued in August 2006, and the undisputed evidence shows that the Schellenbergs

should have discovered their injury by August or September 2007. See Childs, 974

S.W.2d at 40; see also PPG Indus., Inc., 146 S.W.3d at 93. The discovery rule therefore

does not save the Schellenbergs' claims from the release, and the trial court did not err

in granting FSB summary judgment on this basis. The Schellenbergs' second issue is

overruled.   And because we may affirm the trial court's summary judgment on any

meritorious ground, we need not reach the remainder of the Schellenbergs' issues. See

FM Props. Operating Co., 22 S.W.3d at 872.

                                   IV. Conclusion

      We affirm the judgment of the trial court.



                                                             NELDA V. RODRIGUEZ
                                                             Justice

Delivered and filed the 20th
day of November, 2014.




                                           11
