FLST, Ltd et al v. Explorer Pipeline Company

Filing 68

OPINION AND ORDER - DENYING 49 MOTION for Summary Judgment filed by Explorer Pipeline Company. Signed by Magistrate Judge Kimberly C Priest Johnson on 5/11/2017. (baf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
FLST, LTD, FLCT, LTD, AND FLSC, LTD,
Plaintiffs,
v.
EXPLORER PIPELINE COMPANY,
Defendant.

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CIVIL ACTION NO. 4:16-CV-00017-KPJ

ORDER AND OPINION
Pending before the Court is Defendant’s Motion for Summary Judgment (Dkt. 49).
Plaintiffs filed a Response (Dkt. 54). Defendant filed a Reply (Dkt. 59), and Plaintiffs filed a
Sur-Reply (Dkt. 60). The Court held a hearing on the matter on April 20, 2017, and the Court
allowed the parties to file supplemental briefing regarding the application of the discovery rule
under Texas law in this case (Dkt. 62). Both parties filed supplemental briefs (Dkts. 66, 67). For
the following reasons, the Court finds Defendant’s motion (Dkt. 49) is DENIED.
I.

BACKGROUND

This matter involves a claim for trespass and concerns the existence and placement of a
pipeline and easement on a seventeen (17) acre tract of land in Denton County, Texas (the
“Property”). See Dkt. 48 at 6. In 1948, the then-owners of the Property granted an easement (the
“Easement”) to Sinclair Refining Company to install and operate a petroleum products pipeline
(the “Pipeline”) on the Property, which was then a part of a larger tract of land. See id. at 7. Both
ownership of the Property and rights under the Pipeline and the Easement passed to other parties
several times in the subsequent decades. See id.

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In 2001, the owners of the larger tract of land on which the Property was located, D-F
Funds GP, LLC (“D-F Funds”), and the holders of the Easement at that time, Citgo Products
Pipeline Company (“Citgo”), entered into an amendment to the Easement that allegedly
relocated the Easement off the Property to another portion of the then-owner’s land (the
“Amendment”) (Dkt. 48-7 at 11-13). Based on a review of the survey by Plaintiffs and of title
documents by their real estate professionals, Plaintiffs purchased the Property in 2007 with the
understanding that several easements previously located on the Property had been abandoned or
moved, including the Easement. See Dkt. 48-1 at 1-2. Defendant purchased the Pipeline and the
rights of the Easement in late 2007, after Plaintiffs purchased the Property. See Dkt. 48-7 at 8.
In or around 2014, Plaintiffs began negotiating to sell the Property, along with other
adjacent tracts of land as part of the same purchase, to JBGL Chateau, LLC (“JBGL”). See Dkt.
48-1 at 2. The parties to the transaction learned from JBGL’s engineers that a pipeline might be
located on the Property, and it was later confirmed. See id. Plaintiffs demanded that Defendant
remove the Pipeline, but Defendant refused to do so. See id. Plaintiffs and JBGL adjusted the
purchase price of the Property and amended their sales contract to reflect a sales price reduced by
approximately $805,000.00. See id. On December 1, 2015, Plaintiffs closed on the sale of the
Property. See id. at 3. On November 25, 2015, Plaintiffs filed suit against Defendant for damages
resulting from the reduction in purchase price. See Dkt. 5. Defendant removed the case to federal
court based on diversity jurisdiction. See Dkt. 1.
On February 1, 2017, Plaintiffs filed a motion requesting the Court to designate a date for
Plaintiffs’ damages analysis. See Dkt. 39 at 4-6. On February 14, 2017, the Court ordered the
parties to confer on the issue of the Court designating a date for the damages analysis. See Dkt.
44 at 2. If the parties could not agree to a date, the parties were ordered to file a motion for

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summary judgment limited to the issue of the damages analysis. See id. On February 22, 2017,
Plaintiffs filed a motion for partial summary judgment (Dkt. 48). On February 27, 2017,
Defendant filed a response (Dkt. 52). On March 1, 2017, Plaintiffs filed a reply (Dkt. 53). The
Court entered an order on March 13, 2017, finding the appropriate date for the damages analysis
to be February 5, 2001. See Dkt. 57.
On February 22, 2017, Defendant filed a Motion for Summary Judgment (Dkt. 49),
claiming that Plaintiffs’ trespass claim is barred by the statute of limitations. On March 8, 2017,
Plaintiffs filed a Response (Dkt. 54). On March 15, 2017, Defendant filed a Reply (Dkt. 59). On
March 21, 2017, Plaintiffs filed a Sur-Reply (Dkt. 60). On April 27, 2017, following a hearing on
the matter, the parties submitted supplemental briefing regarding the application of the discovery
rule under Texas law (Dkts. 66, 67).
II.

LEGAL STANDARD

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper
“if the pleadings, depositions, answers to interrogatories, and admissions on file, together with
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Rule 56(c) mandates the entry of summary
judgment, after adequate time for discovery and upon motion, against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial. See FED. R. CIV. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986).
The mere existence of some alleged factual dispute between the parties will not defeat
summary judgment; the requirement is that there be no genuine issue of material fact. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A fact is “material” if a dispute

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over it might affect the outcome of a suit under governing law; factual disputes that are
“irrelevant or unnecessary” do not affect the summary judgment determination. See id. at 248.
An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party. See id.
III.

EVIDENCE PRESENTED

Defendant has offered the following summary judgment evidence in support of its
motion:
1. Sworn Deposition of Stephen Williams, Plaintiff’s corporate representative (Dkt. 491);
2. Sworn Deposition of Sean Shropshire, who conducted and authored 2007 surveys of
the Property (Dkt. 49-2);
3. Sworn Deposition of William Anderson, civil engineer engaged by Plaintiffs to
develop the Property (Dkt. 49-3);
4. Sworn Deposition of William Sanders, representative of Defendant (Dkt. 49-4);
5. Sworn Deposition of Laura Keith, former attorney of D-F Funds (Dkt. 49-5);
6. Certified copy of original Right of Way Easement from 1948 (Dkt. 49-6);
7. Certified copy of the Amendment (Dkt. 49-7);
8. Certified copy of the 1998 Special Warranty Deed by which D-F Funds acquired the
Property (Dkt. 49-8);
9. Business Records Affidavit and accompanying documents from Geary Porter, and
Donovan, P.C., attorneys for D-F Funds when they owned the Property (Dkt. 49-9);
10. Certified copy of the 2007 Special Warranty Deed by which Plaintiffs acquired the
Property (“2007 Deed”) (Dkt. 49-10);
11. 2007 surveys of the Property conducted by Sean Shropshire (Dkt. 49-11);
12. Owner Policy of Title Insurance, purchased by Plaintiffs in connection with their
acquisition of the Property in 2007 (“Title Insurance Policy”) (Dkt. 49-12); and

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13. Contract for Sale and Purchase of Unimproved Real Property, by which Plaintiffs’
agreed to purchase the Property from their predecessors in title in 2007 (Dkt. 49-13).
Plaintiffs have offered the following summary judgment evidence in opposition to
Defendant’s motion:
1. Affidavit of Stephen Williamson (Dkt. 54-1);
2. 2007 Deed (Dkt. 54-2);
3. Certified copy of original Right of Way Easement from 1948 (Dkt. 54-3);
4. Certified copy of the Amendment (Dkt. 54-4);
5. 2007 survey Plaintiffs received as to the Property (Dkt. 54-5);
6. Copy of the Phase I Environmental Site Assessment of Alpha Testing that Plaintiffs
received in connection of the purchase of the Property in 2007 (the “Environmental
Survey”) (Dkts. 54-6, 54-7, 54-8, 54-9, 54-10, 54-11, 54-12, 54-13, 54-14);
7. True and correct copy of the email between Stephen Williamson and purchasers of the
Property (Dkt. 54-15);
8. True and correct copy of Plaintiffs’ demand for Defendant to remove the Pipeline (Dkt.
54-16);
9. True and correct photograph of the northeast corner of the Property, looking south in
October 2007 (Dkt. 54-17 at 1);
10. True and correct photograph of the eastern edge of the Property, looking northwest in
October 2007 (Dkt. 54-17 at 2);
11. True and correct photograph of the northeast corner of the Property, looking north, across
the road from the Property, in October 2013 (Dkt. 54-17 at 3);
12. True and correct photograph taken by Stephen Williamson of the northeast corner of the
Property looking north in 2016 (Dkt. 54-17 at 4);
13. Affidavit of Phillip Conley (Dkt. 54-18);
14. True and correct copy of deposition of William James Sanders (Dkt. 54-19);
15. True and correct copy of deposition of William A. Anderson (Dkt. 54-20);
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16. True and correct copy of deposition of Sean Shropshire (Dkt. 54-21);
17. True and correct copy of deposition of Stephen R. Williamson (Dkt. 54-22); and
18. True and correct copy of deposition of Laura Keith (Dkt. 54-23).
Defendant has offered the following summary judgment evidence in opposition of
Plaintiffs’ response:
1. True and correct copy of Plaintiffs’ Responses to Defendant’s First Requests for
Admissions to Plaintiffs (Dkt. 59-1).
IV.

OBJECTION TO SUMMARY JUDGMENT EVIDENCE

Defendant objects to Plaintiffs’ images replicated through Google Street View and
Stephen Williamson’s (“Mr. Williamson’s”) affidavit testimony regarding the depiction of the
Property in October 2007, and October 2013. See Dkt. 59 at 9. Defendant argues the images are
not properly authenticated and Mr. Williamson lacks foundation and competence to testify from
such materials. See id. (citing FED. R. EVID. 901, 701, 702).
Rule 901 does not require absolute certainty in authentication, but rather evidence
sufficient to support a finding that the matter in question is what its proponent claims. See United
States v. Mojica, 746 F.2d 242, 245 (5th Cir. 1984) (citing Mauldin v. Upjohn Co., 697 F.2d 644,
648 (5th Cir. 1983), cert. denied, 464 U.S. 848 (1984)). Mr. Williamson’s affidavit offers the
photographs from Google Street View as a depiction of the Property in 2007 and 2013. See Dkt.
54-17. Mr. Williamson’s affidavit provides that the photographs are true and accurate depictions
of the scene at the time of their taking, and that he could testify to this matter because he drove
around the Property at the time the photographs were taken. See Dkt. 54-1 at 3-4. Because Mr.
Williamson is qualified to testify as to the photography as a lay witness, the Court finds
Defendant’s objection is OVERRULED.

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V.

ANALYSIS

Defendant argues summary judgment should be granted for two (2) reasons. First,
Defendant contends the trespass claim accrued on February 5, 2001, the date D-F Funds
allegedly agreed with Citgo to relocate the Easement of the Pipeline. See Dkt. 49 at 2. If this is
true, Defendant additionally argues that any trespass claim would have belonged to D-F Funds
and D-F Funds never expressly assigned a claim to Plaintiffs; thus, Plaintiffs do not have
standing to bring this suit. See id. Second, Defendant contends, independently and alternatively,
that Plaintiffs’ claim would have accrued when Plaintiffs acquired the Property on August 23,
2007, because that is when Plaintiffs knew or should have known of facts that would have led a
reasonable purchaser to discover the alleged trespass. See id.
A. STATUTE OF LIMITATIONS STANDARD
For claims under Texas law, a claim accrues when a wrongful act causes some legal
injury, even if the fact of the injury is not discovered until later, and even if all resulting damages
have not yet occurred. See Estate of Garrett v. Cherokee Water Co., 109 F. App’x 674, 675 (5th
Cir. 2004) (citing S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996)). Where injury to land results, the
right of action for all damages resulting from the injury accrues to the owner of the land at the
time the injury commences to affect the land. See Boerschig v. Sw. Holdings, Inc., 322 S.W.3d
752, 767 (Tex. App.—El Paso 2010, no pet.); see also Exxon Corp. v. Emerald Oil & Gas Co.,
331 S.W.3d 419, 424 (Tex. 2010) (right to sue for injury to real property belongs to the person
who owns the property at the time of the injury).
Plaintiffs’ trespass claim is one for permanent injury to real property. See Dkt. 38 at 2, 5.
In Texas, a person must bring suit for trespass for injury to the estate or to the property of

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another no later than two (2) years after the day the cause of action accrues. See TEX. CIV. PRAC
& REM. CODE § 16.003(a); Cherokee Water Co., 109 F. App’x at 675. Limitations may be tolled
if the discovery rule applies. See Askanase v. Fatjo, 130 F.3d 657, 666 (5th Cir. 1997). The
discovery rule, which applies to both the act and the injury, requires that a claim be inherently
undiscoverable and objectively verifiable. See id. (citing S.V., 933 S.W.2d at 6).
B. FACT ISSUE AS TO WHETHER CLAIMS ACCRUED ON FEBRUARY 5, 2001
Plaintiffs allege in their Amended Complaint that Citgo, the former owner of the
Pipeline, and D-F Funds, the former owner of the Property, agreed to relocate or move the
Easement off the Property to an adjacent tract of land. See Dkt. 26 at 2. Assuming this
interpretation of the Amendment is true, if Citgo failed to relocate or move the Easement off the
Property, then the trespass would have first become unauthorized the moment the Amendment
was executed. See Boerschig, 322 S.W.3d at 767 (the right of action for all the damages resulting
from an injury to land accrues to the owner of the land at the time the thing that causes the injury
commences to affect the land) (citing Vann v. Bowie Sewerage Co., 90 S.W.2d 561, 562 (Tex.
1936)). Thus, it logically follows that the statute of limitations began to run the date the injury
affected the land, February 5, 2001, and would be barred two (2) years later, unless the discovery
rule applies. See Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 279 (Tex. 2004).
If Plaintiffs’ interpretation of the Amendment is true, Defendant argues that D-F Funds
had knowledge that Citgo maintained the Pipeline on the Property and that Citgo was no longer
authorized to do so. However, the Court fails to find any evidence in the record that conclusively
establishes this assertion. First, Defendant states that because D-F Funds was a party to the
Amendment, D-F Funds knew the exact moment that Citgo’s maintenance of the Pipeline on the
Property became unauthorized. See Dkt. 49 at 18. However, this assertion does not conclusively

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establish that D-F Funds was aware that Citgo continued maintaining the Pipeline on the
Property; the Amendment only shows that D-F Funds allegedly had an agreement that Citgo
would not maintain the Pipeline on the Property. Second, Defendant argues that D-F Funds’
lawyers were aware of the Pipeline’s existence, and Defendant points to deposition testimony of
D-F Funds’ lawyer as support. See Dkt. 49-5 at 4. The deposition testimony provides:
Q. Okay. So let me rephrase. So in the course of your representation of the D-F
Funds to – to locate the blanket easement, you became aware of the pipeline in the
easement, correct?
A. Yes.
See id. The Court fails to understand how this shows D-F Funds’ lawyers knew that Citgo
continued to maintain the Pipeline on the Property after the date of the Amendment, and
Defendant failed to provide an explanation at the hearing for summary judgment. Finally,
Defendant argues that in a letter dated November 12, 1998, D-F Funds’ lawyers acknowledged
that the “Citgo line” had been installed pursuant to the same pipeline easements listed as
exceptions to the revised commitment for title insurance. See Dkt. 49-9 at 123. But this letter was
dated more than two (2) years before the date of the Amendment. Again, the Court is unaware
how this letter demonstrates that D-F Funds was aware that Citgo continued to maintain the
Pipeline on the Property when it was allegedly unauthorized to do so by the Amendment. Thus,
Defendant has failed to conclusively establish that D-F Funds was aware of the Pipeline’s
maintenance after the date of the Amendment. Because there is a fact issue as to D-F Funds’
knowledge and whether the discovery rule should apply as to D-F Funds, the Court cannot
decide the statute of limitations issue as a matter of law without further evidence.
Defendant argues RayMax Mgmt., L.P. v. Am. Tower Corp. supports its position. See
2016 Tex. App. LEXIS 8748, at *16 (Tex. App.—Fort Worth, Aug. 11, 2016, pet. denied). In

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RayMax, the plaintiff filed a suit for trespass in 2013, based on the defendant’s building of
telecommunications equipment on concrete pads on the plaintiff’s property in 2006. See id. at *4.
The court held that the statute of limitations barred the plaintiff’s claim because the defendant
installed its equipment in the disputed area in 2006. See id. However, this case is inapplicable
because in this case, the alleged trespass occurred before Plaintiffs purchased the Property.
Further, unlike the telecommunications equipment on the concrete pads of the plaintiff’s
property in RayMax, the Pipeline is not a visible, aboveground condition.
Additionally, Defendant argues Plaintiffs lack standing to bring the trespass claim. Where
injury to land results, the right of action for all the damages resulting from the injury commences
to affect the land. See Boerschig, 322 S.W.3d 767. A subsequent landowner may assert a cause
of action for pre-existing injuries only if there is an express assignment of the cause of action.
See Exxon, 331 S.W.3d 424; Ranchero Esperanza, Ltd. v. Marathon Oil Co., 488 S.W.3d 354,
359 (Tex. App.—El Paso 2015, no pet.). Accordingly, a mere subsequent purchaser of property
cannot recover for an injury committed before its purchase. See Exxon, 331 S.W.3d 424.
Although a subsequent landowner may assert a cause of action for a pre-existing injury only if
there is an express assignment, the Court is unaware how D-F Funds could expressly assign the
injury of trespass if D-F Funds was unaware of the trespass. As previously stated, there is a fact
issue as to D-F Funds’ knowledge. Thus, the Court cannot decide the standing issue as a matter
of law without further evidence.
C. FACT ISSUE AS TO WHETHER CLAIMS ACCRUED ON AUGUST 23, 2007
Defendant argues Plaintiffs had knowledge of facts that would have caused a reasonably
diligent purchaser of real property to discover the Pipeline on the Property and the resulting

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claim for trespass. See Dkt. 49 at 21. Plaintiffs argue they were reasonably diligent in their
investigation and could not have discovered the Pipeline before 2014. See Dkt. 54 at 23.
The discovery rule applies when the nature of the injury is inherently undiscoverable and
the evidence of the injury is objectively verifiable. See TIG Ins. Co. v. Aon Re, Inc., 521 F.3d
351, 359 (5th Cir. 2008). The application of the “inherently undiscoverable” standard recognizes
that the discovery rule applies “only in circumstances where ‘it is difficult for the injured party to
learn of the negligent act or omission.’” See Computer Assocs. Int’l, Inc. v. Altai, Inc., 918
S.W.2d 453, 456 (Tex. 1996). Discovery of a particular injury is dependent not solely on the
nature of the injury, but on the circumstances in which it occurred and plaintiff’s diligence. See
S.V., 933 S.W.2d at 8; USPPS, Ltd. v. Avery Dennison Corp., 326 F. App’x 842, 847 (5th Cir.
2009). Because there is no dispute that Defendant maintains the Pipeline on the Property, the
only issue before the Court is whether the Pipeline was inherently undiscoverable.
Purchasers are charged with notice of the terms of the deed, which forms an essential link
in their chain of ownership. See Cooksey v. Sinder, 682 S.W.2d 252, 253 (Tex. 1984). Under
Texas law, constructive notice is notice given by properly recorded instruments and charged to a
person as a matter of law, regardless of the person’s actual knowledge. See In re Hamilton, 125
F.3d 292, 299 (5th Cir. 1997). Thus, a party is on notice of the deed records contained in the
public record for the purposes of limitations. See HECI Exploration Co. v. Neel, 982 S.W.2d
881, 887 (Tex. 1998).
Plaintiffs’ corporate representative, Mr. Williamson, testified that prior to acquiring the
Property, he reviewed the survey of the Property. See Dkt. 49-1 at 7. Mr. Williamson admitted
that the survey indicated there were gas pipeline markers on the Property. See id. at 8. Defendant
argues that this fact alone should have led Plaintiffs to discover the Pipeline on the Property. See

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Dkt. 49 at 21. In support of its argument, Defendant relies on Jones v. Texaco, Inc., wherein the
court held that when the information concerning the injury is contained in public records, the
purchaser of the land has constructive notice of all information. See 945 F. Supp. 1037, 1043
(S.D. Tex. 1996). Defendant argues that the Pipeline was openly located on the Property, via
pipeline markers. See Dkt. 49 at 23. Plaintiffs contend, however, that it is plausible for old
markers to remain on real property after the removal or abandonment of a pipeline. Defendant
has offered no evidence that the presence of the old markers conclusively establishes that a
functional pipeline was presently buried on the Property. Defendant merely argues that the old
markers should have caused a reasonably diligent purchaser to inquire further as to the existence
of a pipeline. The Court finds that there is a fact issue best decided by a jury.
Additionally, Defendant argues that Plaintiffs were on notice of the Pipeline because of
the documents in the chain of title. Plaintiffs’ 2007 Deed and Title Insurance Policy state that the
Easement affects the Property, as stated in the Amendment. See Dkts. 49-10 at 7; 49-14 at 8. To
the contrary, the survey Plaintiffs received indicated that the Easement in question “[d]oes not
affect subject tract.” See Dkt. 54-5. Regardless, Defendant asserts that this conflict would have
caused a reasonably diligent purchaser to inquire about the existence of the Pipeline. See Dkt. 59
at 5 (citing Bergeron v. Select Comfort Corp., 2016 WL 155088, at *6-7 (W.D. Tex. Jan. 11,
2016)). Further, Defendant cites to numerous cases where courts declined to apply the discovery
rule because the plaintiffs were not reasonably diligent in discovering the alleged trespasses. See
HECI Exploration, 982 S.W.2d at 886-88 (visible oil wells should have led the royalty owners to
discover the injury); Brown v. Caldwell & Family Custom Homes, Inc., 2012 Tex. App. LEXIS
8370, at *12-13 (Tex. App.—Fort Worth Oct. 4, 2012, no pet.) (an inspection report disclosed
the negative drain angle advising the plaintiffs to determine whether the condition caused the

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damage); Zimmerhanzel v. Green, S.W.3d 721, 726 (Tex. App.—El Paso, pet. denied) (statute of
limitations for violations of the Deceptive Trade Practices Act began to accrue on the date of
closing because the grantor verbally disclosed to the purchaser that there was a condition on the
land); DBMS Invs., L.P. v. ExxonMobil Corp., 2009 Tex. App. LEXIS 4140, at *32-33 (Tex.
App.—Corpus Christi June 11, 2009, pet. denied) (summary judgment granted because appraisal
report and public records disclosed gas spills, the alleged trespass; appraisal report recommended
an environmental impact study on the property); Hunt Oil Co. v. Live Oak Energy, Inc. 313
S.W.3d 384, 392 (Tex. App.—Dallas 2009, pet. denied) (a reasonable purchaser of mineral rights
would have investigated whether visible wells on property precluded future recovery of oil);
Alamo Fireworks, Inc. v. Truckload Fireworks, Inc., 2002 WL 313191, at *1 (Tex. App—El
Paso Feb. 28, 2002, no pet.) (the plaintiff had a duty of inquiry in addition to actual notice
because the condition could have been uncovered through reasonable diligence).
The cases to which Defendant cites are inapplicable in this case because either there were
numerous documents or reports indicating the alleged trespasses which the plaintiffs ignored, or
the condition was open, visible, and aboveground. Here, there was a survey indicating that the
Easement no longer affected the Property, and the Pipeline itself was not physically visible
aboveground on the Property. The Court finds that Plaintiffs were entitled to rely on the
Amendment because it was in the chain of title. Further, even though there may have been a
conflict between the 2007 Deed, Title Insurance Policy, and the survey Plaintiffs received, the
Court finds that Plaintiffs conducted at least some inquiry—specifically, they obtained the
Environmental Survey—to discover whether a pipeline existed on the Property, rather than
ignoring the conflict presented in the documents. The Environmental Survey of the Property,
conducted on July 31, 2007, indicated there were no petroleum pipelines or markers on the

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Property. See Dkts. 54-7 at 6; 54-6 at 14, 17. Thus, Plaintiffs seemingly did not fail to ask about
the Pipeline, as Defendant contends, because they conducted the Environmental Survey. See Dkt.
59 at 10 (citing Hunt Oil Co., 313 S.W.3d at 392 (“Failing to even ask,” according to the Texas
Supreme Court, “is not due diligence.”)). Regardless, Defendant argues the lone statement in the
Environmental Survey does not permit Plaintiffs to ignore all other evidence to the contrary. See
Dkt. 59 at 7-8 (citing Collective Asset Partners v. McDade, 400 S.W.3d 213, 217-18 (Tex.
App.—Dallas 2013, no pet.)).
The Court finds Defendant’s argument is better suited for a jury, and the Court cannot
decide as a matter of law whether Plaintiffs were reasonably diligent in their investigation.
Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex. 1998) (citing Strickland v. Johns-Manville Int’l
Corp., 461 F. Supp. 215, 218 (S.D. Tex. 1978); Hassell v. Missouri Pac. R.R. Co., 880 S.W.2d
39, 44 (Tex. App.—Tyler 1994, writ denied)). Defendant has not provided any evidence to
conclusively establish that Plaintiffs could not rely on the Amendment and Environmental
Report, and Defendant has not conclusively established that the Amendment did not move the
Pipeline off the Property; thus, the Court cannot decide this issue as a matter of law.
Plaintiffs argue that they purchased the Property as real estate investors, not land
developers; thus, Plaintiffs argue the Court should apply a more lenient standard on whether they
conducted their investigation as reasonably diligent purchasers. See Dkt. 54 at 27-29. Defendant
argues there is no case law supporting this notion. In Bruning v. Hollowell, the plaintiff argued
that “he is a layman with little experience on the standards used by appraisers to establish the
value of residential real estate;” thus, the plaintiff would not be able to discover the inaccuracies
and misrepresentations in an appraisal within two (2) years. See 2015 WL 1291378, at *4 (Tex.
App.—Dallas Mar. 23, 2015, pet. denied). However, distinguishable in this case is that there

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were conflicts between the 2007 Deed, the Title Insurance Policy, and the survey of the Property.
Plaintiffs conducted the Environmental Survey indicating the Pipeline did not exist on the
Property. Here, the issue of whether Plaintiffs were reasonably diligent purchasers is a fact issue
for a jury to decide. The Court will not decide as a matter of law whether Plaintiffs were required
to inquire further even though they were real estate investors rather than developers.
Finally, Defendant argues Plaintiffs could have discovered the Pipeline in 2007 by simply
calling Defendant because the pipeline markers provided a telephone number for anyone to call.
See Dkt. 59 at 9. However, Defendant did not purchase the Pipeline from Citgo until after
Plaintiffs purchased the Property; thus, there were no pipeline markers specifically providing
Defendant’s phone number at that time. See Dkt. 26 at 3. Thus, even if the pipeline markers on
the survey required Plaintiffs to investigate further, the Court finds there is a fact issue as to
whether Plaintiffs were reasonably diligent in their investigation.
VI.

CONCLUSION

For the foregoing reasons, the Court finds Defendant’s motion (Dkt. 49) is DENIED.
It is SO ORDERED.
SIGNED this 11th day of May, 2017.

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