Vemex Trading Corporation v. Technology Ventures , 563 F. App'x 318 ( 2014 )

Case: 11-20723 Document: 00512598959 Page: 1 Date Filed: 04/16/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 11-20723 April 16, 2014
Lyle W. Cayce
Clerk
VEMEX TRADING CORPORATION,
Plaintiff-Appellee/Cross-Appellant,
v.
TECHNOLOGY VENTURES, INC.,
Defendant-Appellant/Cross-
Appellee,
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 4:08-CV-3791
Before DeMOSS, OWEN, and HAYNES, Circuit Judges.*
PER CURIAM:**
This appeal arises from a contract dispute between Vemex Trading
Corporation (“Vemex”) and Technology Ventures, Inc. (“TVI”) relating to the
construction and sale of a coiled tubing unit (the “Equipment”) for use in arctic
drilling operations. Vemex, the buyer, sued TVI, the manufacturer and seller,
*
Judge Haynes concurs in judgment only, except as to Section V in which she concurs
in full.
**
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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alleging that TVI delivered defective Equipment and failed to put the Equipment
into working operation at the drilling site in Siberia. After a bench trial before
Judge Gilmore (the “trial judge”), the court found that TVI breached the contract
and awarded $564,200 in damages. Both parties appeal.
I.
On March 18, 2004, Vemex and TVI entered into Contract No. 11351 (the
“Contract”). Section 1, which sets forth the “Subject of the Contract,” identifies
two areas of performance for TVI. The first was to sell Vemex “one New Three
Piece Design Coiled Tubing Unit High Capacity including Crane for Arctic
conditions . . . and spare parts.” The second area of performance, which the
Contract defines as “Supervision,” was to “fulfill supervision of putting the Goods
into operation . . . in Russia.” Section 2 specifies the amounts Vemex was to pay
TVI: $564,200.00 for the Equipment and $19,600.00 for the Supervision. At the
time that the parties entered into the Contract, Vemex had already “pre-sold”
the Equipment to a company called Rustek for $729,750.00. Rustek, in turn, had
already sold the Equipment to a company called Vend 2000 (“Vend”).
On August 31, 2004, TVI delivered the Equipment to the Port of Houston
for shipment to Russia. A number of difficulties arose with the Equipment once
it arrived in Russia, although the parties dispute the causes and severity of the
problems. Beginning in early 2005, representatives from TVI traveled to Siberia
to fulfill the Supervision duties set forth in the Contract. The parties continued
to encounter difficulties with the Equipment, and TVI ceased its Supervision
efforts in August or September of 2005. TVI claims that its representatives
made the Equipment operational before they left, while Vemex asserts that the
Equipment never became operational. Vemex claims that it made a request to
TVI to return the Equipment for a full refund; TVI denies that Vemex ever made
such a request. Rustek refused to accept the Equipment from Vemex or pay the
purchase price.
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II.
On December 31, 2008, Vemex filed suit against TVI, asserting claims
based on breach of contract, breach of express warranty, fraud, and unjust
enrichment. In an April 19, 2011 order (the “Summary Judgement Order”),
which was subsequently modified on May 16, 2011, the trial judge ruled on a
number of the issues disputed by the parties. The court held that Vemex’s
unjust enrichment, fraud, and breach of warranty claims were all barred by the
statutes of limitations. Vemex does not contest the trial judge’s holding that it
failed to bring its unjust enrichment claim within the two-year statute of
limitations, but appeals the court’s holding that its fraud and breach of warranty
claims were barred. With respect to Vemex’s breach of contract claim, the trial
judge allowed the claim to go forward on the theory that, because the contract
required TVI to both manufacture and install the Equipment, it might not have
breached the contract until sometime between January and September of 2005,
when it attempted to fulfill its Supervision obligations.
The trial judge held a bench trial from May 16, 2011 to May 19, 2011. On
July 27, 2011, the trial judge issued her Findings of Fact and Conclusions of Law
(the “Order”). Relevant to the instant appeal, the trial judge found the following
facts:
• The Contract provided for separate payment amounts
for the Equipment ($564,200.00) and TVI’s Supervision
services ($19,600.00). While Vemex paid the
$562,200.00 to TVI in two payments of $120,00.00 and
one payment of $324,200.00, it did not pay the
$19,600.00 for the Supervision services. When TVI
delivered the Equipment to the Port of Houston for
shipment to Russia on August 31, 2004, the Equipment
was “defective due to missing parts, poor quality parts,
and parts that were not suitable for use in arctic
conditions.”
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• Beginning in 2005, TVI spent several months
supervising the installation of the Equipment in Siberia.
During the installation process, Vemex discovered
defects in the Equipment and notified TVI of the defects
orally and in writing. TVI assured Vemex that it could
cure the defects. Despite the defects, it was possible for
TVI “to make the Equipment operational during the
installation period.” TVI ceased its installation efforts
in September of 2005, without making the Equipment
operational. The reason the Equipment never became
operational was that TVI’s “employees lacked the
knowledge and skills to cure the Equipment’s defects.”
• In the fall of 2005, Valentin Zhevlakov, the corporate
representative of Vemex, spoke to Evgheniya
Pashkevich, the director of TVI’s Moscow office, and
asked to return the Equipment for a refund. Pashkevich
refused.
• The Equipment never became operational.
Based on these facts, the court found that Vemex’s breach of contract claim
accrued in September 2005, when TVI “ended its attempts to cure the defects in
the Equipment while the Equipment was being installed.” Accordingly, it held
that Vemex brought its breach of contract claim within the four-year statute of
limitations. The court found that TVI “breached the Contract with [Vemex] by
tendering defective Equipment and failing to cure the Equipment’s defects
during installation of the Equipment.” The court further found that although
Vemex had initially accepted the Equipment, it had only done so on the
reasonable assumption that TVI would cure the defects in the Equipment. The
court also found that, after TVI ceased its efforts to fix the defects in the
Equipment during the installation process, Vemex revoked its acceptance of the
Equipment pursuant to Texas Business and Commercial Code § 2.608.
The court also found that although Vemex requested payment from
Rustek, the company to which it had pre-sold the Equipment, Rustek never paid
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Vemex. Pursuant to Texas Business and Commercial Code § 2.711(a), which
provides that a buyer who has justifiably revoked acceptance of goods may
recover “so much of the price as has been paid,” the court awarded Vemex
$564,200.00 in damages, the amount Vemex had paid to TVI under the Contract.
The court refused Vemex’s request for an award of $729,750.00, the amount
Rustek had agreed to pay Vemex, because Vemex had “not provided any
evidence showing that $729,750.00 rather than $583,800.00 [the amount Vemex
paid for the Equipment plus the $19,600.00 it did not pay for the Supervision]
or some other price reflected the market price at the time that the buyer learned
of the breach in September 2005.”
TVI appeals the trial judge’s finding that it breached the contract and the
trial judge’s damages award. Vemex filed a cross-appeal, challenging the trial
judge’s refusal to award incidental damages and its summary judgment holdings
that Vemex’s fraud and breach of warranty claims were barred by the statutes
of limitations. The district court had jurisdiction under 28 U.S.C. § 1332 and we
have jurisdiction pursuant to 28 U.S.C. § 1291. The parties agree that Texas law
applies.
III.
On appeal from a bench trial, “the appellate court reviews findings of fact
for clear error.” In re Omega Protein, Inc., 548 F.3d 361, 367 (5th Cir. 2008).
If the district court’s account of the evidence is plausible in light of
the record viewed in its entirety, the court of appeals may not
reverse it even though convinced that had it been sitting as the trier
of fact, it would have weighed the evidence differently. Where there
are two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.
Id. (quoting Anderson v. Bessemer City, 470 U.S. 564, 573-74 (1985)). “Findings
based on the credibility of witnesses demand even greater deference.” Id.
(internal quotation marks and citation omitted).
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TVI expressly identifies four factual findings that it contends were clearly
erroneous: (1) that the Equipment never became operational; (2) that Vemex
made the second $120,000 payment toward the $564,200 due under the Contract
for the Equipment; (3) that Vemex informed TVI that the Equipment was
defective during the installation period; and (4) that Vemex asked to return the
Equipment for a refund and was refused by TVI.
A.
With respect to the trial judge’s conclusions that the Equipment never
became operational and that Vemex made the second $120,000 payment, TVI
argues that the only evidence supporting these findings was the testimony of
Valentin Zhevlakov, who served as Vemex’s sole Rule 30(b)(6) designee. TVI
asserts that the court erred in admitting Zhevlakov’s testimony because he
lacked personal knowledge concerning those points and his testimony was based
on hearsay.
“This court reviews a district court’s evidentiary rulings for abuse of
discretion, subject to harmless error review.” United States v. Towns, 718 F.3d
404, 407 (5th Cir. 2013). “In a bench trial, reversal is only warranted if all of the
competent evidence is insufficient to support the judgment, or if it affirmatively
appears that the incompetent evidence induced the court to make an essential
finding which it otherwise would not have made.” St. Martin v. Mobil
Exploration & Producing U.S. Inc., 224 F.3d 402, 405 (5th Cir. 2000) (internal
quotation marks and citation omitted). Because we conclude that there was
sufficient competent evidence besides the testimony of Zhevlakov to support the
trial judge’s findings that the Equipment never became operational and that
Vemex made the second $120,000 payment, we do not reach the question of
whether the trial judge erred in admitting the testimony.
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1.
With respect to the second $120,000 payment, Zhevlakov testified that a
company called ATS had made the $120,000 payment to TVI on behalf of Vemex.
TVI concedes that it received a transfer of $120,000 from ATS, but asserts that
the payment was unconnected to the Contract. However, although TVI now
questions whether the payment it received from ATS was connected to the
Contract, it initially credited that payment to Vemex’s account. Further, TVI
admitted at its 30(b)(6) deposition that it received both payments of $120,000 as
provided under the Contract. On that record, it was not clearly erroneous for the
trial court to conclude that Vemex made the second $120,000 payment required
by the Contract.
With respect to the question of whether the Equipment ever became
operational, Vemex relies on, among other things, Trial Exhibit 52, which is an
audit report prepared by a engineering consulting firm for Vend, the end-user
of the Equipment. The report states: “From February through August 2005, the
OOO RUSTEK provided expert installation of the coil-tubing assembly using
American specialists in equipment production Technology Ventures, Inc./Drilling
& Coiled Technology, Inc. However, specialists from Technology Ventures,
Inc./Drilling & Coiled Technology, Inc. did not put the equipment into
operation.” The report also states that efforts beginning in April 2006, after TVI
left the project, were unsuccessful in putting the Equipment into operation and
that later work revealed a variety of manufacturing defects.
TVI asserts that Exhibit 52 is hearsay and was erroneously admitted by
the trial judge over TVI’s objection. Vemex responds that TVI stipulated to the
admissibility of Exhibit 52 as a business record early on in the litigation, when
both parties agreed that documents produced by third-party Vend would be
admissible as business records. The record reflects that the parties did indeed
enter into such a stipulation and TVI offers no response to Vemex’s arguments
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on this point. Given that the parties stipulated to the admissibility of Exhibit
52 as a business record, the trial judge did not abuse her discretion in admitting
the document. See 5 JACK B. WEINSTEIN & MARGARET A. BERGER, WEINSTEIN’S
FEDERAL EVIDENCE § 803.08[8][c] & n.78 (Joseph M. McLaughlin ed., 2d ed.
2013) (citing cases). In view of Exhibit 52, it was not clearly erroneous for the
trial judge to conclude that the Equipment never became operational.
B.
TVI also asserts that the trial judge clearly erred in finding that Vemex
informed TVI that the Equipment was defective during the installation period
and that Vemex asked to return the Equipment for a refund and was refused by
TVI. The basis for TVI’s arguments on these points is that the evidence
supporting the factual findings was inadmissible hearsay. In particular, TVI
points to Zhevlakov’s testimony that he repeatedly informed Evgheniya
Pashkevich, his counterpart at TVI, of problems with the Equipment and that
he made a request to return the Equipment to her and she refused. The
testimony that TVI complains of, however, was not hearsay because it was not
offered for the truth of the matters asserted, but rather for the fact that the
statements were made. FED. R. EVID. 801(c); Snyder v. Whittaker Corp., 839
F.2d 1085, 1090 (5th Cir. 1988). Accordingly, the trial judge did not err in
admitting the testimony or in her factual findings concerning the statements
described.
C.
Beyond the above four issues, TVI makes several other challenges to the
trial judge’s factual findings, although it does not expressly identify them as
such. First, TVI argues that Vemex was precluded from revoking acceptance of
the Equipment because it altered the Equipment, thereby exercising dominion
and control over it. Vemex responds that any alternations were, at most,
reasonable use of provisionally accepted goods by a buyer. What constitutes
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reasonable use of goods, the acceptance of which the buyer later attempts to
revoke, “is a question of fact.” Toshiba Mach. Co., Am. v. SPM Flow Control, Inc.,
180 S.W.3d 761, 772 (Tex. App.—Fort Worth 2005) (pet. granted, judgm’t
vacated w.r.m.). As the trial judge noted, none of the modifications made to the
Equipment were material. Indeed, TVI’s own witness testified that the
alterations–the addition of a corporate logo and some metal siding to keep the
unit warm during the Siberian winter–had no impact on the functioning of the
Equipment. Accordingly, we agree with the trial judge that the purported
modifications were not a “substantial change in condition of the goods,” Tex. Bus.
& Com. Code Ann. § 2.608(b), but simply reasonable use of the Equipment by a
buyer prior to its revocation of acceptance, see Toshiba Mach. Co., 180 S.W.3d
at 772-73.
TVI additionally asserts that Vemex did not properly revoke acceptance
of the Equipment because it failed to seasonably notify TVI of the defects in the
Equipment or provide particularized notice of the defects. Whether Vemex
properly revoked acceptance is a fact issue. Neily v. Arron, 724 S.W.2d 908, 913
(Tex. App.—Fort Worth 1987, no writ). As noted by the trial judge, Vemex
provided TVI with both written and oral notification of specific problems with
the Equipment throughout the installation process. Moreover, as noted above,
the trial judge had an adequate factual basis based on the admissible evidence
to find that Vemex sought to return the Equipment for a refund and TVI refused.
Finally, TVI argues that Vemex could not have revoked its acceptance of
the Equipment because Vemex had already sold the Equipment to Rustek. As
Vemex points out, however, it was acting as a broker and had agreed to sell
Rustek an operable item of Equipment before it entered into the Contract with
TVI. If we were to accept TVI’s logic, a broker such as Vemex could never revoke
acceptance or even initially reject delivery of defective goods. Accordingly, we
agree with the trial judge that Vemex’s agreement with Rustek did not preclude
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Vemex from revoking acceptance of the Equipment. In a similar vein, TVI
argues that Vemex could not have revoked acceptance of the Equipment because
Vemex left the Equipment in the custody of Vend. The evidence at trial,
however, was that even after Vend purportedly took possession of the
Equipment, Vemex requested to return the Equipment to TVI for a refund. TVI
does not suggest, and there is nothing in the record indicating, that Vemex
would have been unable to return the Equipment to TVI if TVI had accepted
Vemex’s demand to return the Equipment for a refund.
IV.
Having found that the trial judge did not clearly err in her findings of fact,
we turn to her conclusions of law, which we review de novo. Dickerson v.
Lexington Ins. Co., 556 F.3d 290, 294 (5th Cir. 2009). Given that the contract
price for the Equipment vastly exceeds the contract price for the Supervision
services, we have little trouble concluding that the Contract was primarily for
the sale of goods and is therefore governed by the Texas version of the Uniform
Commercial Code. See Propulsion Techs., Inc. v. Attwood Corp., 369 F.3d 896,
900-04 (5th Cir. 2004) (applying Texas law).
TVI asserts numerous errors by the trial judge, chief among them that the
trial judge incorrectly found that Vemex’s breach of contract claim was not
barred by the statute of limitations. The parties agree that the relevant statute
of limitations period is set forth in Texas Business and Commercial Code §
2.725(a), which provides that “[a]n action for breach of any contract for sale must
be commenced within four years after the cause of action has accrued.” “A
breach of contract claim arising from the sale of goods accrues when the contract
is breached . . . .” Conquest Drilling Fluids, Inc. v. Tri-Flo Int’l, Inc., 137 S.W.3d
299, 305 (Tex. App.—Beaumont 2004, no pet.). The trial judge held that TVI
“breached the contract by delivering defective goods and failing to cure the
Equipment’s defects during installation of the Equipment.” The trial judge
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further held that Vemex’s breach of contract claim “accrued in September 2005,
when Defendant ended its attempts to cure the defects in the Equipment while
the Equipment was being installed.”
Vemex filed suit on December 31, 2008. TVI argues that the statute of
limitations began to run on Vemex’s breach of contract claim when TVI delivered
the Equipment to the Port of Houston for shipment to Russia on August 31,
2004. TVI further asserts that its attempts to cure the defects in the Equipment
could not have tolled the running of the statute of limitations. Thus, according
to TVI, Vemex’s breach of contract claim is untimely because Vemex filed suit
over four years after TVI delivered the Equipment.
In response, Vemex offers a number of arguments as to why its breach of
contract claim was timely, only one of which we discuss because it is the only one
we find persuasive. Specifically, Vemex asserts that, because the contract called
for TVI to not only design and manufacture the Equipment but also install it at
the end-user’s site, the Equipment was only “delivered” when TVI installed (or
attempted to install) the Equipment. Because we have found no Texas authority
addressing this issue and because Texas law directs that uniform acts such as
the U.C.C. be interpreted to make the law consistent throughout the states that
have enacted it, we may look to authority from other jurisdictions to determine
when delivery occurs when a sales contract obligates the seller to install the
goods. See Tex. Gov’t Code § 311.028; 1/2 Price Checks Cashed v. United Auto.
Ins. Co., 344 S.W.3d 378, 391 (Tex. 2011) (“The UCC should be construed to
promote uniformity with other jurisdictions.”); Toshiba Mach. Co., 180 S.W.3d
at 773 n.2 (“[I]n determining and applying the Texas version of the Uniform
Commercial Code, [courts] may consider and apply pertinent decisions from
other jurisdictions.”); Mueller v. McGill, 870 S.W.2d 673, 676 n.2 (Tex.
App.—Houston [1st Dist.] 1994, writ denied) (“[W]e feel free to look to the law
of other states when interpreting the Uniform Commercial Code, if Texas law is
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silent on the issue.”).
“Where installation by the seller is a material part of the contract, there
is authority that the breach occurs when the installation is made of the defective
goods rather than when the seller tenders the defective goods to the buyer or
when the buyer discovers the defect.” 4B LARY LAWRENCE, LAWRENCE’S
ANDERSON ON THE UNIFORM COMMERCIAL CODE § 2-725:109 (3d ed.). Indeed, the
general rule appears to be that “[w]hen installation is required under a sales
contract, tender of delivery occurs not when the goods are physically brought to
the site, but rather when installation is complete.” Jandreau v. Sheesley
Plumbing & Heating Co., Inc., 324 N.W.2d 266, 270 (S.D. 1982); see also, e.g.,
Baker v. DEC Int’l, 580 N.W.2d 894, 895 (Mich. 1998) (“We hold that where the
seller is obligated to install goods under a contract, tender of delivery does not
occur until installation is completed.”); Dowling v. S.W. Porcelain, Inc., 701 P.2d
954, 960 (Kan. 1985). Moreover, courts have applied this rule in situations
where the seller never succeeds in installing the goods in an operational manner.
See, e.g., Standard Alliance Indus., Inc. v. Black Clawson Co., 587 F.2d 813, 819
(6th Cir. 1978). (“[A] cause of action accrues upon initial installation of the
product regardless whether it functions properly or not . . . .”).
TVI’s efforts to install the Equipment all occurred between January and
September of 2005. Accordingly, the earliest TVI could have delivered the
defective Equipment, and therefore the earliest date on which the breach of
contract claim could have occurred for purposes of § 2.725(a), is sometime in
January of 2005. Because Vemex filed suit within four years of the time that
TVI began its efforts to fulfill the Supervision requirements of the contract, its
breach of contract claim was timely. Further, because we find that TVI
delivered the defective Equipment less than four years before Vemex filed suit,
we need not consider whether TVI’s efforts to cure the Equipment’s defects tolled
the running of the statute of limitations. Additionally, because TVI did not
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begin its installation efforts until early 2005, we need not decide whether, in a
case such as this where the buyer never succeeds in installing functioning goods,
the claim accrues when the seller begins or abandons its installation efforts. See
Standard Alliance Indus., 587 F.2d at 819 (discussing the distinction).
TVI raises several other challenges to the trial judge’s judgment, which we
may dispose of without much discussion. First, TVI argues that because Vemex
initially accepted the Equipment, any cause of action Vemex has concerning
defects in the Equipment must be a breach of warranty action, not a breach of
contract claim. Where a buyer accepts goods but later revokes that acceptance,
however, the buyer has a breach of contract claim under Texas law. See Trident
Steel Corp. v. Wiser Oil Co., 223 S.W.3d 520, 525-26 (Tex. App.—Amarillo 2006,
pet. denied).
Second, TVI argues that the trial judge erred in awarding as damages the
amount Vemex had paid to TVI under the Contract. As the trial judge noted,
however, because Vemex revoked its acceptance of the goods, it was entitled to
“so much of the price as has been paid.” Tex. Bus. & Com. Code Ann. § 2.711(a).
Finally, TVI asserts that the trial judge erred in denying its motion for a
new trial, which was based on photographs of the Equipment produced in a
related state-court action between Vend and TVI after the trial of the instant
case. We will not reverse a trial court’s denial of a motion for a new trial unless
there is “a clear abuse of discretion.” Union Mechling Corp. v. Carmadelle, 624
F.2d 677, 679 (5th Cir. 1980)(internal quotation marks and citation omitted). In
deciding whether newly discovered evidence requires a new trial, we look to,
among other things, whether the evidence could have been discovered earlier
with proper diligence. Id. Here, TVI presents no information concerning what
efforts, if any, it made during the instant case to obtain the photographs that
Vend produced in the state-court action. Accordingly, the trial judge did not
clearly abuse her discretion in denying TVI’s motion for a new trial.
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V.
A.
Vemex cross appeals on several issues. First, Vemex argues that the trial
judge erred in failing to award it incidental damages. The trial judge’s Order
does not address the issue of incidental damages. After judgment, Vemex filed
a motion to alter judgment under Federal Rule of Civil Procedure 52(b) arguing
that it had presented sufficient evidence at trial to support a finding that it
incurred incidental costs for which TVI should be liable, including: (1) $77,110
for coiled tubing to be used on the Equipment; (2) $45,318.88 for a blow-out
preventer to be used on the Equipment; and (3) $37,580 for shipping the
Equipment to Russia. The trial judge denied Vemex’s motion.
This court reviews the denial of motion to alter or amend judgement for
an abuse of discretion. See United States v. Texas, 601 F.3d 354, 362 (5th Cir.
2010). “A district court abuses its discretion if it bases its decision on an
erroneous view of the law or on a clearly erroneous assessment of the evidence.”
Id. (internal quotation marks and citation omitted). On the record before us, we
cannot find that the trial judge abused her discretion in denying Vemex’s motion
to amend the judgment to award incidental damages. Even assuming arguendo
that the costs incurred by Vemex qualified as incidental damages and that
incidental damages were permitted under the Contract, the record reveals that
there was a fact issue at trial as to whether these losses were suffered by Vemex
or instead by a third party. In denying Vemex’s motion, the trial judge implicitly
found against Vemex on this factual issue. See French v. Allstate Indem. Co., 637
F.3d 571, 580-81 (5th Cir. 2011) (holding that, where an argument is raised prior
to judgment and post-judgment in a Rule 52(b) motion, the trial judge’s denial
of the motion implicitly indicates a rejection of the argument). Because Vemex
provides no argument as to why this factual finding was clearly erroneous, we
affirm the trial judge’s decision not to award Vemex incidental damages.
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B.
Second, Vemex argues that the trial judge erred in finding that its fraud
and breach of warranty claims were barred by the statute of limitations. In
particular, Vemex asserts that the trial judge misapplied the discovery rule with
respect to both claims.
1.
With respect to the fraud claim, which carries a four-year limitations
period beginning at the time of the alleged misrepresentation, the trial judge
noted that the only purported misrepresentations Vemex identified occurred no
later than September 9, 2004. Accordingly, the trial judge found that Vemex’s
fraud claim was time-barred. Vemex argues that the trial judge should have
applied the discovery rule applicable to fraud claims, which “defers accrual of the
cause of action if (1) the nature of the injury is inherently undiscoverable and (2)
the evidence of injury is objectively verifiable.” Beavers v. Metro. Life Ins. Co.,
566 F.3d 436, 439 (5th Cir. 2009); see also Computer Assocs. Int’l v. Altai, Inc.,
918 S.W.2d 453, 456 (Tex. 1996). The trial judge found that Vemex could have
discovered the purported fraud during the installation process and, as a result,
found that the discovery rule was inapplicable.
“An injury is inherently undiscoverable if it is, by its nature, unlikely to
be discovered within the prescribed limitations period despite due diligence. The
inquiry focuses categorically on the type of injury alleged rather than on the
circumstances of the particular case.” Beavers, 566 F.3d at 439 (internal
quotation marks and citations omitted). Some fraud claims do not involve
inherently undiscoverable injuries and therefore cannot take advantage of the
discovery rule. Shell Oil Co. v. Ross, 356 S.W.3d 924, 929-30 (Tex. 2011).
Vemex has made no showing that the type of injury it alleges cannot
generally be discovered within the four-year limitations period. It does not
argue the point on appeal and instead focuses on whether it acted as a
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“reasonable buyer,” which does not bear on the question of whether the discovery
rule applies to its fraud claim. Accordingly, the trial judge was correct to find
that the discovery rule did not apply and to hold that Vemex’s fraud claim is
barred by the statute of limitations.
2.
We need not reach the question of whether the trial court erred in holding
that Vemex’s breach of warranty claim was barred by the statute of limitations.
Vemex presents no argument or authority suggesting that it would be entitled
to any relief beyond the breach-of-contract damages awarded by the district
court, if it prevailed on its breach of warranty claim. Indeed, Vemex states in its
brief that we can “cure” the district court’s purportedly erroneous holding
concerning its breach of warranty claim simply by “affirming Vemex’s right to
recover on its contract claim.” Accordingly, since we have affirmed the district
court’s judgment in favor of Vemex on its breach of contract claim, we do not
address Vemex’s arguments concerning its breach of warranty claim.
VI.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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