Nick Hinojosa, Diamantina H. Saenz, Lilia H. McGee, Marcial Hinojosa, Francisco J. Hinojosa, Shelby S. Startz, Federico Hinojosa and Angela Flores v. Romeo Garcia and Raquel Alvarez--Appeal from 229th Judicial District Court of Duval County

MEMORANDUM OPINION
No. 04-06-00750-CV

Nick HINOJOSA, Diamantina H. Saenz, Lilia H. McGee, Marcial Hinojosa,

Francisco J. Hinojosa, Shelby S. Startz, Federico Hinojosa, and Angela Flores,

Appellants
v.
Romeo GARCIA and Raquel Alvarez,
Appellees
From the 229th Judicial District Court, Duval County, Texas
Trial Court No. DC-05-174
Honorable Alex William Gabert, Judge Presiding

Opinion by: Catherine Stone, Justice

 

Sitting: Catherine Stone, Justice

Phylis J. Speedlin, Justice

Rebecca Simmons, Justice

 

Delivered and Filed: May 23, 2007

 

REVERSED and RENDERED

This appeal arises from an action for reformation of two 1981 deeds brought by Romeo Garcia and Raquel Alvarez against Nick Hinojosa and his family. The deeds cover two tracts: a 50 acre tract and a 22.22 acre tract. In their suit to reform the two deeds, Garcia and Alvarez claim the 22.22 acres owned by the Hinojosa family are in the northern portion of the tracts, while the 50 acres are in the southern portion of the tracts. The trial court granted reformation and the Hinojosa family now appeals contending the action for deed reformation is barred by the applicable statute of limitation. We agree and reverse the trial court's judgment.

Factual and Procedural Background

Federico Garcia, Sr. acquired a total of 72.22 acres of land through two separate partition deeds: 50 acres in 1924 and 22.22 acres in 1941. Garcia and his wife died intestate and their property passed to their five children, two of which, Efigenia G. Hinojosa and Federico Garcia, Jr., acquired all of the interest in the property from their siblings. The appellees are the children of Federico Garcia, Jr., and the appellants are the children of Efigenia Hinojosa.

By a deed dated February 3, 1981, Efigenia Hinojosa conveyed 50 acres to Federico Garcia Jr. and Dalia L. Garcia, and by another deed dated February 5, 1981, Federico Garcia, Jr. and Dalia Garcia conveyed 22.22 acres to Efigenia Hinojosa for her life with the remainder to her children, Diamantia Saenz, Nicolas Hinojosa, Lilia McGee, Marcial Hinojosa, Francisco Hinojosa, Shelby Startz, and Federico Hinojosa.

Romeo Garcia and Raquel Alvarez (collectively "Garcia") claim that prior to 1981, all parties understood that the Hinojosa family was to own the northern-most 22.22 acres of the 72.22 acre tract, while the Garcia family was to own the southern-most 50 acres of the 72.22 acre tract. Garcia alleges that the failure of the two 1981 deeds to express the true intent of the parties was due to a mutual mistake that occurred in the process of reducing the agreements into writing. In 1986, Garcia hired Homer Dean, who had previously been an attorney for the Hinojosa family, to prepare two quitclaim deeds in order to correct what he claimed were mutual mistakes in the two 1981 deeds. The first quitclaim deed provided for Federico Garcia and his family to quitclaim their interest in the north 22.22 acres to Efigenia Hinojosa and her family and the second quitclaim deed provided for Efigenia Hinojosa and her family to quitclaim their interest in the south 50 acres to Federico Garcia and his family. The Garcias executed the first quitclaim deed and conditionally delivered it to Dean while requesting the Hinojosa family sign the second deed. Romeo Garcia claims that although various members of the Hinojosa family promised to sign the second deed on several occasions, they had not done so at the time this lawsuit was filed nearly twenty years after the quitclaim deeds were drafted.

In contrast, Nick Hinojosa, Diamantina H. Saenz, Lilia H. McGee, Marcial Hinojosa, Francisco J. Hinojosa, Shelby S. Startz, Federico Hinojosa, and Angela Flores (collectively "Hinojosa") contend there were no mistakes in the original deed and that Garcia wished to change the deeds because he was informed by a landman in 1983 that they would not receive any oil and gas royalties from the 22.22 acres in the south claimed by the Hinojosas. Hinojosa claims that his family refused to sign the quitclaim deed sent to them by Dean because they viewed the deeds as a scheme by Garcia to receive the oil and gas royalties.

On July 15, 2006, Garcia filed suit against Hinojosa for declaratory judgment of ownership of the 22.22 acres; in response Hinojosa filed a denial and request for dismissal. Garcia then filed an amended petition adding a new cause of action for reformation. Hinojosa later moved for a directed verdict during the trial. Following the trial, the court entered a judgment granting the reformation.

On appeal, Hinojosa contends the trial court erred when it failed to find that Garcia's claims for reformation were barred by the applicable four year statute of limitation. Hinojosa also argues the judgment for reformation was not supported by law or fact, the trial court erred in granting Garcia's cause for reformation due to the doctrines of laches and unclean hands, and Garcia failed to comply with the statute of frauds. Finally, Hinojosa claims the trial court erred when it failed to rule on objections to evidence that were properly before it, and in admitting hearsay evidence, evidence predicated on hearsay, irrelevant evidence, and parol evidence. Because it is dispositive, we address only the statute of limitation argument.

Discussion

In his first issue, Hinojosa argues the trial court erred when it failed to find that Garcia's claims for reformation were barred by the applicable four-year statute of limitation. A suit for reformation of a deed is governed by the four-year statute of limitation. See Tex. Civ. Prac. & Rem. Code Ann. 16.051 (Vernon 1997); Brown v. Harvard, 593 S.W.2d 939 (Tex. 1980). Hinojosa argues that the statute of limitation begins to run from the time of the delivery of the deed, and that a grantee is charged with knowledge of the recitals in the deed. See Dillon v. Rosalie Dahl Estate Trust, No. 14-01-01240-CV, 2003 WL 1565959, *4 (Tex. App.-Houston [14th Dist.] Mar. 27, 2003, pet. denied) (mem. op., not designated for publication).

However, when a mutual mistake is made about the legal effect of a written instrument, the statute of limitation begins to run when the mistake is discovered or when, in the exercise of reasonable diligence, the mistake should have been discovered. Id. at 944; Cullins v. Foster, 171 S.W.3d 521, 531 (Tex. App.-Houston [14th Dist.] 2005, pet. denied). The question of when a mistake should have been discovered is a fact question and we review a trial court's findings of fact under the same legal standards as applied to a review of jury verdicts, that of factual sufficiency of the evidence. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). We will review all of the evidence in the record and will overturn the trial court's findings only if they are so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. Id.

Here, the deed transferring the 22.22 acres to Hinojosa was signed by Garcia on February 5, 1981 and was filed with the Duval County Clerk on the same date; arguably this was the first date that Garcia was given notice of the alleged mistake. Hinojosa argues that even though this deed was filed, he allowed the Garcia family to live on the southern 22.22 acres and that Federico Garcia, Jr. paid Hinojosa for grazing rights and other productivity on the land. Hinojosa contends this course of dealing also shows that Garcia had knowledge of Hinojosa's ownership of the southern 22.22 acres at the sale in 1981.

On December 6, 1983, Garcia was given actual notice of the alleged mistake when an oil company landman, Holly Hardy, informed Garcia of Hinojosa's ownership of the southern 22.22 acres. Garcia admits that he received a letter from Hardy stating this fact, and that after this notification he hired a lawyer to prepare the two quitclaim deeds to clear up any confusion regarding the location of the 22.22 acres owned by Hinojosa. Because Garcia's admission establishes that he knew of the alleged mistake by 1983, and because Garcia did not file suit until July 15, 2005, over 17 years later, Hinojosa argues he has conclusively established that limitations bars Garcia's claim of mistake.

In response, Garcia argues that in suits for reformation based upon mutual mistake in deeds, courts have recognized a blanket exception to the statue of limitation so long as no rights of bona fide purchasers have intervened. See Sullivan v. Barnett, 471 S.W.2d 39 (Tex. 1971); Snellings v. Snellings, 482 S.W.2d 707 (Tex. Civ. App.-Waco 1972, no writ). We do not agree that these cases establish such a blanket exception. In Snellings, while the court held that the actions to correct a mutual mistake in a deed would not be barred by the four year statute of limitation, it held that the statute of limitation was applicable and began to run once the parties were put on notice of the mistake. Snellings, 482 S.W.2d at 709.

In Sullivan, the court specifically stated that "the weight of authority is that once the presumption of immediate knowledge is rebutted, the statute of limitation will commence to run when the mutual mistake was, or in the exercise of reasonable diligence should have been, discovered." Sullivan, 471 S.W.2d at 45. The Sullivan court held that the four-year statute of limitation was not applicable because the jury found that the Sullivans did not discover the deed error more than four years prior to the filing of their lawsuit, the Sullivans did not fail to use due diligence in discovering the mistake, and Barnett assured the Sullivans that the mistake would be corrected but he failed to do so with the purpose of defrauding the Sullivans. Id. at 46. While Garcia's argument implies that the Sullivan and Snellings courts upheld a blanket exception to the statute of limitation, in reality these courts held that the limitation period began to run once a mistake was or should have been discovered. Because Garcia learned of the alleged mistake by 1983 and did not file suit until 2005, he clearly exceeded the statute of limitation and is thus barred from initiating a lawsuit for reformation.

Conclusion

Based on the foregoing, we reverse the judgment of the trial court and render judgment that Romeo Garcia and Raquel Alvarez take nothing by their suit.

Catherine Stone, Justice