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`CIVIL ACTION NO. 4:16-CV-00017-KPJ
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`FLST, LTD, FLCT, LTD, AND FLSC, LTD,
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`Plaintiffs,
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`v.
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`EXPLORER PIPELINE COMPANY,
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`§
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`ORDER AND OPINION
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`Defendant.
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`Pending before the Court is Defendant’s Motion for Summary Judgment (Dkt. 49).
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`Plaintiffs filed a Response (Dkt. 54). Defendant filed a Reply (Dkt. 59), and Plaintiffs filed a
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`Sur-Reply (Dkt. 60). The Court held a hearing on the matter on April 20, 2017, and the Court
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`allowed the parties to file supplemental briefing regarding the application of the discovery rule
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`under Texas law in this case (Dkt. 62). Both parties filed supplemental briefs (Dkts. 66, 67). For
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`the following reasons, the Court finds Defendant’s motion (Dkt. 49) is DENIED.
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`I.
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`BACKGROUND
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`This matter involves a claim for trespass and concerns the existence and placement of a
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`pipeline and easement on a seventeen (17) acre tract of land in Denton County, Texas (the
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`“Property”). See Dkt. 48 at 6. In 1948, the then-owners of the Property granted an easement (the
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`“Easement”) to Sinclair Refining Company to install and operate a petroleum products pipeline
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`(the “Pipeline”) on the Property, which was then a part of a larger tract of land. See id. at 7. Both
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`ownership of the Property and rights under the Pipeline and the Easement passed to other parties
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`several times in the subsequent decades. See id.
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`1
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 2 of 15 PageID #: 1944
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`In 2001, the owners of the larger tract of land on which the Property was located, D-F
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`Funds GP, LLC (“D-F Funds”), and the holders of the Easement at that time, Citgo Products
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`Pipeline Company (“Citgo”), entered into an amendment to the Easement that allegedly
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`relocated the Easement off the Property to another portion of the then-owner’s land (the
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`“Amendment”) (Dkt. 48-7 at 11-13). Based on a review of the survey by Plaintiffs and of title
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`documents by their real estate professionals, Plaintiffs purchased the Property in 2007 with the
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`understanding that several easements previously located on the Property had been abandoned or
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`moved, including the Easement. See Dkt. 48-1 at 1-2. Defendant purchased the Pipeline and the
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`rights of the Easement in late 2007, after Plaintiffs purchased the Property. See Dkt. 48-7 at 8.
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`In or around 2014, Plaintiffs began negotiating to sell the Property, along with other
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`adjacent tracts of land as part of the same purchase, to JBGL Chateau, LLC (“JBGL”). See Dkt.
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`48-1 at 2. The parties to the transaction learned from JBGL’s engineers that a pipeline might be
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`located on the Property, and it was later confirmed. See id. Plaintiffs demanded that Defendant
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`remove the Pipeline, but Defendant refused to do so. See id. Plaintiffs and JBGL adjusted the
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`purchase price of the Property and amended their sales contract to reflect a sales price reduced by
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`approximately $805,000.00. See id. On December 1, 2015, Plaintiffs closed on the sale of the
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`Property. See id. at 3. On November 25, 2015, Plaintiffs filed suit against Defendant for damages
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`resulting from the reduction in purchase price. See Dkt. 5. Defendant removed the case to federal
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`court based on diversity jurisdiction. See Dkt. 1.
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`On February 1, 2017, Plaintiffs filed a motion requesting the Court to designate a date for
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`Plaintiffs’ damages analysis. See Dkt. 39 at 4-6. On February 14, 2017, the Court ordered the
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`parties to confer on the issue of the Court designating a date for the damages analysis. See Dkt.
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`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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`2
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 3 of 15 PageID #: 1945
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`summary judgment limited to the issue of the damages analysis. See id. On February 22, 2017,
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`Plaintiffs filed a motion for partial summary judgment (Dkt. 48). On February 27, 2017,
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`Defendant filed a response (Dkt. 52). On March 1, 2017, Plaintiffs filed a reply (Dkt. 53). The
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`Court entered an order on March 13, 2017, finding the appropriate date for the damages analysis
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`to be February 5, 2001. See Dkt. 57.
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`On February 22, 2017, Defendant filed a Motion for Summary Judgment (Dkt. 49),
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`claiming that Plaintiffs’ trespass claim is barred by the statute of limitations. On March 8, 2017,
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`Plaintiffs filed a Response (Dkt. 54). On March 15, 2017, Defendant filed a Reply (Dkt. 59). On
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`March 21, 2017, Plaintiffs filed a Sur-Reply (Dkt. 60). On April 27, 2017, following a hearing on
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`the matter, the parties submitted supplemental briefing regarding the application of the discovery
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`rule under Texas law (Dkts. 66, 67).
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`II.
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`LEGAL STANDARD
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`Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper
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`“if the pleadings, depositions, answers to interrogatories, and admissions on file, together with
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`affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
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`party is entitled to a judgment as a matter of law.” Rule 56(c) mandates the entry of summary
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`judgment, after adequate time for discovery and upon motion, against a party who fails to make a
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`showing sufficient to establish the existence of an element essential to that party’s case, and on
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`which that party will bear the burden of proof at trial. See FED. R. CIV. P. 56(c); Celotex Corp. v.
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`Catrett, 477 U.S. 317, 322 (1986).
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`The mere existence of some alleged factual dispute between the parties will not defeat
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`summary judgment; the requirement is that there be no genuine issue of material fact. See
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`Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A fact is “material” if a dispute
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`3
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 4 of 15 PageID #: 1946
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`over it might affect the outcome of a suit under governing law; factual disputes that are
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`“irrelevant or unnecessary” do not affect the summary judgment determination. See id. at 248.
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`An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the
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`nonmoving party. See id.
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`III. EVIDENCE PRESENTED
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`Defendant has offered the following summary judgment evidence in support of its
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`motion:
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`1. Sworn Deposition of Stephen Williams, Plaintiff’s corporate representative (Dkt. 49-
`1);
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`2. Sworn Deposition of Sean Shropshire, who conducted and authored 2007 surveys of
`the Property (Dkt. 49-2);
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`3. Sworn Deposition of William Anderson, civil engineer engaged by Plaintiffs to
`develop the Property (Dkt. 49-3);
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`4. Sworn Deposition of William Sanders, representative of Defendant (Dkt. 49-4);
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`5. Sworn Deposition of Laura Keith, former attorney of D-F Funds (Dkt. 49-5);
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`6. Certified copy of original Right of Way Easement from 1948 (Dkt. 49-6);
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`7. Certified copy of the Amendment (Dkt. 49-7);
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`8. Certified copy of the 1998 Special Warranty Deed by which D-F Funds acquired the
`Property (Dkt. 49-8);
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`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);
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`10. Certified copy of the 2007 Special Warranty Deed by which Plaintiffs acquired the
`Property (“2007 Deed”) (Dkt. 49-10);
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`11. 2007 surveys of the Property conducted by Sean Shropshire (Dkt. 49-11);
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`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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`4
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 5 of 15 PageID #: 1947
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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).
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`Plaintiffs have offered the following summary judgment evidence in opposition to
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`Defendant’s motion:
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`1. Affidavit of Stephen Williamson (Dkt. 54-1);
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`2. 2007 Deed (Dkt. 54-2);
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`3. Certified copy of original Right of Way Easement from 1948 (Dkt. 54-3);
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`4. Certified copy of the Amendment (Dkt. 54-4);
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`5. 2007 survey Plaintiffs received as to the Property (Dkt. 54-5);
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`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);
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`7. True and correct copy of the email between Stephen Williamson and purchasers of the
`Property (Dkt. 54-15);
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`8. True and correct copy of Plaintiffs’ demand for Defendant to remove the Pipeline (Dkt.
`54-16);
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`9. True and correct photograph of the northeast corner of the Property, looking south in
`October 2007 (Dkt. 54-17 at 1);
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`10. True and correct photograph of the eastern edge of the Property, looking northwest in
`October 2007 (Dkt. 54-17 at 2);
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`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);
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`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);
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`13. Affidavit of Phillip Conley (Dkt. 54-18);
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`14. True and correct copy of deposition of William James Sanders (Dkt. 54-19);
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`15. True and correct copy of deposition of William A. Anderson (Dkt. 54-20);
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`5
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 6 of 15 PageID #: 1948
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`16. True and correct copy of deposition of Sean Shropshire (Dkt. 54-21);
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`17. True and correct copy of deposition of Stephen R. Williamson (Dkt. 54-22); and
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`18. True and correct copy of deposition of Laura Keith (Dkt. 54-23).
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`Defendant has offered the following summary judgment evidence in opposition of
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`Plaintiffs’ response:
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`1. True and correct copy of Plaintiffs’ Responses to Defendant’s First Requests for
`Admissions to Plaintiffs (Dkt. 59-1).
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`IV. OBJECTION TO SUMMARY JUDGMENT EVIDENCE
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`Defendant objects to Plaintiffs’ images replicated through Google Street View and
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`Stephen Williamson’s (“Mr. Williamson’s”) affidavit testimony regarding the depiction of the
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`Property in October 2007, and October 2013. See Dkt. 59 at 9. Defendant argues the images are
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`not properly authenticated and Mr. Williamson lacks foundation and competence to testify from
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`such materials. See id. (citing FED. R. EVID. 901, 701, 702).
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`Rule 901 does not require absolute certainty in authentication, but rather evidence
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`sufficient to support a finding that the matter in question is what its proponent claims. See United
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`States v. Mojica, 746 F.2d 242, 245 (5th Cir. 1984) (citing Mauldin v. Upjohn Co., 697 F.2d 644,
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`648 (5th Cir. 1983), cert. denied, 464 U.S. 848 (1984)). Mr. Williamson’s affidavit offers the
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`photographs from Google Street View as a depiction of the Property in 2007 and 2013. See Dkt.
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`54-17. Mr. Williamson’s affidavit provides that the photographs are true and accurate depictions
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`of the scene at the time of their taking, and that he could testify to this matter because he drove
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`around the Property at the time the photographs were taken. See Dkt. 54-1 at 3-4. Because Mr.
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`Williamson is qualified to testify as to the photography as a lay witness, the Court finds
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`Defendant’s objection is OVERRULED.
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`6
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 7 of 15 PageID #: 1949
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`V.
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`ANALYSIS
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`Defendant argues summary judgment should be granted for two (2) reasons. First,
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`Defendant contends the trespass claim accrued on February 5, 2001, the date D-F Funds
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`allegedly agreed with Citgo to relocate the Easement of the Pipeline. See Dkt. 49 at 2. If this is
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`true, Defendant additionally argues that any trespass claim would have belonged to D-F Funds
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`and D-F Funds never expressly assigned a claim to Plaintiffs; thus, Plaintiffs do not have
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`standing to bring this suit. See id. Second, Defendant contends, independently and alternatively,
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`that Plaintiffs’ claim would have accrued when Plaintiffs acquired the Property on August 23,
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`2007, because that is when Plaintiffs knew or should have known of facts that would have led a
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`reasonable purchaser to discover the alleged trespass. See id.
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`A. STATUTE OF LIMITATIONS STANDARD
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`For claims under Texas law, a claim accrues when a wrongful act causes some legal
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`injury, even if the fact of the injury is not discovered until later, and even if all resulting damages
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`have not yet occurred. See Estate of Garrett v. Cherokee Water Co., 109 F. App’x 674, 675 (5th
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`Cir. 2004) (citing S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996)). Where injury to land results, the
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`right of action for all damages resulting from the injury accrues to the owner of the land at the
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`time the injury commences to affect the land. See Boerschig v. Sw. Holdings, Inc., 322 S.W.3d
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`752, 767 (Tex. App.—El Paso 2010, no pet.); see also Exxon Corp. v. Emerald Oil & Gas Co.,
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`331 S.W.3d 419, 424 (Tex. 2010) (right to sue for injury to real property belongs to the person
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`who owns the property at the time of the injury).
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`Plaintiffs’ trespass claim is one for permanent injury to real property. See Dkt. 38 at 2, 5.
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`In Texas, a person must bring suit for trespass for injury to the estate or to the property of
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`7
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 8 of 15 PageID #: 1950
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`another no later than two (2) years after the day the cause of action accrues. See TEX. CIV. PRAC
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`& REM. CODE § 16.003(a); Cherokee Water Co., 109 F. App’x at 675. Limitations may be tolled
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`if the discovery rule applies. See Askanase v. Fatjo, 130 F.3d 657, 666 (5th Cir. 1997). The
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`discovery rule, which applies to both the act and the injury, requires that a claim be inherently
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`undiscoverable and objectively verifiable. See id. (citing S.V., 933 S.W.2d at 6).
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`B. FACT ISSUE AS TO WHETHER CLAIMS ACCRUED ON FEBRUARY 5, 2001
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`Plaintiffs allege in their Amended Complaint that Citgo, the former owner of the
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`Pipeline, and D-F Funds, the former owner of the Property, agreed to relocate or move the
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`Easement off the Property to an adjacent tract of land. See Dkt. 26 at 2. Assuming this
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`interpretation of the Amendment is true, if Citgo failed to relocate or move the Easement off the
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`Property, then the trespass would have first become unauthorized the moment the Amendment
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`was executed. See Boerschig, 322 S.W.3d at 767 (the right of action for all the damages resulting
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`from an injury to land accrues to the owner of the land at the time the thing that causes the injury
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`commences to affect the land) (citing Vann v. Bowie Sewerage Co., 90 S.W.2d 561, 562 (Tex.
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`1936)). Thus, it logically follows that the statute of limitations began to run the date the injury
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`affected the land, February 5, 2001, and would be barred two (2) years later, unless the discovery
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`rule applies. See Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 279 (Tex. 2004).
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`If Plaintiffs’ interpretation of the Amendment is true, Defendant argues that D-F Funds
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`had knowledge that Citgo maintained the Pipeline on the Property and that Citgo was no longer
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`authorized to do so. However, the Court fails to find any evidence in the record that conclusively
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`establishes this assertion. First, Defendant states that because D-F Funds was a party to the
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`Amendment, D-F Funds knew the exact moment that Citgo’s maintenance of the Pipeline on the
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`Property became unauthorized. See Dkt. 49 at 18. However, this assertion does not conclusively
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`8
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 9 of 15 PageID #: 1951
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`establish that D-F Funds was aware that Citgo continued maintaining the Pipeline on the
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`Property; the Amendment only shows that D-F Funds allegedly had an agreement that Citgo
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`would not maintain the Pipeline on the Property. Second, Defendant argues that D-F Funds’
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`lawyers were aware of the Pipeline’s existence, and Defendant points to deposition testimony of
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`D-F Funds’ lawyer as support. See Dkt. 49-5 at 4. The deposition testimony provides:
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`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?
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`A. Yes.
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`See id. The Court fails to understand how this shows D-F Funds’ lawyers knew that Citgo
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`continued to maintain the Pipeline on the Property after the date of the Amendment, and
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`Defendant failed to provide an explanation at the hearing for summary judgment. Finally,
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`Defendant argues that in a letter dated November 12, 1998, D-F Funds’ lawyers acknowledged
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`that the “Citgo line” had been installed pursuant to the same pipeline easements listed as
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`exceptions to the revised commitment for title insurance. See Dkt. 49-9 at 123. But this letter was
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`dated more than two (2) years before the date of the Amendment. Again, the Court is unaware
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`how this letter demonstrates that D-F Funds was aware that Citgo continued to maintain the
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`Pipeline on the Property when it was allegedly unauthorized to do so by the Amendment. Thus,
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`Defendant has failed to conclusively establish that D-F Funds was aware of the Pipeline’s
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`maintenance after the date of the Amendment. Because there is a fact issue as to D-F Funds’
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`knowledge and whether the discovery rule should apply as to D-F Funds, the Court cannot
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`decide the statute of limitations issue as a matter of law without further evidence.
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`Defendant argues RayMax Mgmt., L.P. v. Am. Tower Corp. supports its position. See
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`2016 Tex. App. LEXIS 8748, at *16 (Tex. App.—Fort Worth, Aug. 11, 2016, pet. denied). In
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`9
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 10 of 15 PageID #: 1952
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`RayMax, the plaintiff filed a suit for trespass in 2013, based on the defendant’s building of
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`telecommunications equipment on concrete pads on the plaintiff’s property in 2006. See id. at *4.
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`The court held that the statute of limitations barred the plaintiff’s claim because the defendant
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`installed its equipment in the disputed area in 2006. See id. However, this case is inapplicable
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`because in this case, the alleged trespass occurred before Plaintiffs purchased the Property.
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`Further, unlike the telecommunications equipment on the concrete pads of the plaintiff’s
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`property in RayMax, the Pipeline is not a visible, aboveground condition.
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`Additionally, Defendant argues Plaintiffs lack standing to bring the trespass claim. Where
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`injury to land results, the right of action for all the damages resulting from the injury commences
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`to affect the land. See Boerschig, 322 S.W.3d 767. A subsequent landowner may assert a cause
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`of action for pre-existing injuries only if there is an express assignment of the cause of action.
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`See Exxon, 331 S.W.3d 424; Ranchero Esperanza, Ltd. v. Marathon Oil Co., 488 S.W.3d 354,
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`359 (Tex. App.—El Paso 2015, no pet.). Accordingly, a mere subsequent purchaser of property
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`cannot recover for an injury committed before its purchase. See Exxon, 331 S.W.3d 424.
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`Although a subsequent landowner may assert a cause of action for a pre-existing injury only if
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`there is an express assignment, the Court is unaware how D-F Funds could expressly assign the
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`injury of trespass if D-F Funds was unaware of the trespass. As previously stated, there is a fact
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`issue as to D-F Funds’ knowledge. Thus, the Court cannot decide the standing issue as a matter
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`of law without further evidence.
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`C. FACT ISSUE AS TO WHETHER CLAIMS ACCRUED ON AUGUST 23, 2007
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`Defendant argues Plaintiffs had knowledge of facts that would have caused a reasonably
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`diligent purchaser of real property to discover the Pipeline on the Property and the resulting
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`10
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 11 of 15 PageID #: 1953
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`claim for trespass. See Dkt. 49 at 21. Plaintiffs argue they were reasonably diligent in their
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`investigation and could not have discovered the Pipeline before 2014. See Dkt. 54 at 23.
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`The discovery rule applies when the nature of the injury is inherently undiscoverable and
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`the evidence of the injury is objectively verifiable. See TIG Ins. Co. v. Aon Re, Inc., 521 F.3d
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`351, 359 (5th Cir. 2008). The application of the “inherently undiscoverable” standard recognizes
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`that the discovery rule applies “only in circumstances where ‘it is difficult for the injured party to
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`learn of the negligent act or omission.’” See Computer Assocs. Int’l, Inc. v. Altai, Inc., 918
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`S.W.2d 453, 456 (Tex. 1996). Discovery of a particular injury is dependent not solely on the
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`nature of the injury, but on the circumstances in which it occurred and plaintiff’s diligence. See
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`S.V., 933 S.W.2d at 8; USPPS, Ltd. v. Avery Dennison Corp., 326 F. App’x 842, 847 (5th Cir.
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`2009). Because there is no dispute that Defendant maintains the Pipeline on the Property, the
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`only issue before the Court is whether the Pipeline was inherently undiscoverable.
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`Purchasers are charged with notice of the terms of the deed, which forms an essential link
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`in their chain of ownership. See Cooksey v. Sinder, 682 S.W.2d 252, 253 (Tex. 1984). Under
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`Texas law, constructive notice is notice given by properly recorded instruments and charged to a
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`person as a matter of law, regardless of the person’s actual knowledge. See In re Hamilton, 125
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`F.3d 292, 299 (5th Cir. 1997). Thus, a party is on notice of the deed records contained in the
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`public record for the purposes of limitations. See HECI Exploration Co. v. Neel, 982 S.W.2d
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`881, 887 (Tex. 1998).
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`Plaintiffs’ corporate representative, Mr. Williamson, testified that prior to acquiring the
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`Property, he reviewed the survey of the Property. See Dkt. 49-1 at 7. Mr. Williamson admitted
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`that the survey indicated there were gas pipeline markers on the Property. See id. at 8. Defendant
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`argues that this fact alone should have led Plaintiffs to discover the Pipeline on the Property. See
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`11
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 12 of 15 PageID #: 1954
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`Dkt. 49 at 21. In support of its argument, Defendant relies on Jones v. Texaco, Inc., wherein the
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`court held that when the information concerning the injury is contained in public records, the
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`purchaser of the land has constructive notice of all information. See 945 F. Supp. 1037, 1043
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`(S.D. Tex. 1996). Defendant argues that the Pipeline was openly located on the Property, via
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`pipeline markers. See Dkt. 49 at 23. Plaintiffs contend, however, that it is plausible for old
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`markers to remain on real property after the removal or abandonment of a pipeline. Defendant
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`has offered no evidence that the presence of the old markers conclusively establishes that a
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`functional pipeline was presently buried on the Property. Defendant merely argues that the old
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`markers should have caused a reasonably diligent purchaser to inquire further as to the existence
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`of a pipeline. The Court finds that there is a fact issue best decided by a jury.
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`Additionally, Defendant argues that Plaintiffs were on notice of the Pipeline because of
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`the documents in the chain of title. Plaintiffs’ 2007 Deed and Title Insurance Policy state that the
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`Easement affects the Property, as stated in the Amendment. See Dkts. 49-10 at 7; 49-14 at 8. To
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`the contrary, the survey Plaintiffs received indicated that the Easement in question “[d]oes not
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`affect subject tract.” See Dkt. 54-5. Regardless, Defendant asserts that this conflict would have
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`caused a reasonably diligent purchaser to inquire about the existence of the Pipeline. See Dkt. 59
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`at 5 (citing Bergeron v. Select Comfort Corp., 2016 WL 155088, at *6-7 (W.D. Tex. Jan. 11,
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`2016)). Further, Defendant cites to numerous cases where courts declined to apply the discovery
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`rule because the plaintiffs were not reasonably diligent in discovering the alleged trespasses. See
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`HECI Exploration, 982 S.W.2d at 886-88 (visible oil wells should have led the royalty owners to
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`discover the injury); Brown v. Caldwell & Family Custom Homes, Inc., 2012 Tex. App. LEXIS
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`8370, at *12-13 (Tex. App.—Fort Worth Oct. 4, 2012, no pet.) (an inspection report disclosed
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`the negative drain angle advising the plaintiffs to determine whether the condition caused the
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`12
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 13 of 15 PageID #: 1955
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`damage); Zimmerhanzel v. Green, S.W.3d 721, 726 (Tex. App.—El Paso, pet. denied) (statute of
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`limitations for violations of the Deceptive Trade Practices Act began to accrue on the date of
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`closing because the grantor verbally disclosed to the purchaser that there was a condition on the
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`land); DBMS Invs., L.P. v. ExxonMobil Corp., 2009 Tex. App. LEXIS 4140, at *32-33 (Tex.
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`App.—Corpus Christi June 11, 2009, pet. denied) (summary judgment granted because appraisal
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`report and public records disclosed gas spills, the alleged trespass; appraisal report recommended
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`an environmental impact study on the property); Hunt Oil Co. v. Live Oak Energy, Inc. 313
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`S.W.3d 384, 392 (Tex. App.—Dallas 2009, pet. denied) (a reasonable purchaser of mineral rights
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`would have investigated whether visible wells on property precluded future recovery of oil);
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`Alamo Fireworks, Inc. v. Truckload Fireworks, Inc., 2002 WL 313191, at *1 (Tex. App—El
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`Paso Feb. 28, 2002, no pet.) (the plaintiff had a duty of inquiry in addition to actual notice
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`because the condition could have been uncovered through reasonable diligence).
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`The cases to which Defendant cites are inapplicable in this case because either there were
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`numerous documents or reports indicating the alleged trespasses which the plaintiffs ignored, or
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`the condition was open, visible, and aboveground. Here, there was a survey indicating that the
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`Easement no longer affected the Property, and the Pipeline itself was not physically visible
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`aboveground on the Property. The Court finds that Plaintiffs were entitled to rely on the
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`Amendment because it was in the chain of title. Further, even though there may have been a
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`conflict between the 2007 Deed, Title Insurance Policy, and the survey Plaintiffs received, the
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`Court finds that Plaintiffs conducted at least some inquiry—specifically, they obtained the
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`Environmental Survey—to discover whether a pipeline existed on the Property, rather than
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`ignoring the conflict presented in the documents. The Environmental Survey of the Property,
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`conducted on July 31, 2007, indicated there were no petroleum pipelines or markers on the
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`13
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 14 of 15 PageID #: 1956
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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
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`the Pipeline, as Defendant contends, because they conducted the Environmental Survey. See Dkt.
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`59 at 10 (citing Hunt Oil Co., 313 S.W.3d at 392 (“Failing to even ask,” according to the Texas
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`Supreme Court, “is not due diligence.”)). Regardless, Defendant argues the lone statement in the
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`Environmental Survey does not permit Plaintiffs to ignore all other evidence to the contrary. See
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`Dkt. 59 at 7-8 (citing Collective Asset Partners v. McDade, 400 S.W.3d 213, 217-18 (Tex.
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`App.—Dallas 2013, no pet.)).
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`The Court finds Defendant’s argument is better suited for a jury, and the Court cannot
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`decide as a matter of law whether Plaintiffs were reasonably diligent in their investigation.
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`Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex. 1998) (citing Strickland v. Johns-Manville Int’l
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`Corp., 461 F. Supp. 215, 218 (S.D. Tex. 1978); Hassell v. Missouri Pac. R.R. Co., 880 S.W.2d
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`39, 44 (Tex. App.—Tyler 1994, writ denied)). Defendant has not provided any evidence to
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`conclusively establish that Plaintiffs could not rely on the Amendment and Environmental
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`Report, and Defendant has not conclusively established that the Amendment did not move the
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`Pipeline off the Property; thus, the Court cannot decide this issue as a matter of law.
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`Plaintiffs argue that they purchased the Property as real estate investors, not land
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`developers; thus, Plaintiffs argue the Court should apply a more lenient standard on whether they
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`conducted their investigation as reasonably diligent purchasers. See Dkt. 54 at 27-29. Defendant
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`argues there is no case law supporting this notion. In Bruning v. Hollowell, the plaintiff argued
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`that “he is a layman with little experience on the standards used by appraisers to establish the
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`value of residential real estate;” thus, the plaintiff would not be able to discover the inaccuracies
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`and misrepresentations in an appraisal within two (2) years. See 2015 WL 1291378, at *4 (Tex.
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`App.—Dallas Mar. 23, 2015, pet. denied). However, distinguishable in this case is that there
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`14
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`Case 4:16-cv-00017-KPJ Document 68 Filed 05/11/17 Page 15 of 15 PageID #: 1957
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`were conflicts between the 2007 Deed, the Title Insurance Policy, and the survey of the Property.
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`Plaintiffs conducted the Environmental Survey indicating the Pipeline did not exist on the
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`Property. Here, the issue of whether Plaintiffs were reasonably diligent purchasers is a fact issue
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`for a jury to decide. The Court will not decide as a matter of law whether Plaintiffs were required
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`to inquire further even though they were real estate investors rather than developers.
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`Finally, Defendant argues Plaintiffs could have discovered the Pipeline in 2007 by simply
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`calling Defendant because the pipeline markers provided a telephone number for anyone to call.
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`See Dkt. 59 at 9. However, Defendant did not purchase the Pipeline from Citgo until after
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`Plaintiffs purchased the Property; thus, there were no pipeline markers specifically providing
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`Defendant’s phone number at that time. See Dkt. 26 at 3. Thus, even if the pipeline markers on
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`the survey required Plaintiffs to investigate further, the Court finds there is a fact issue as to
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`whether Plaintiffs were reasonably diligent in their investigation.
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`VI.
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`CONCLUSION
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`For the foregoing reasons, the Court finds Defendant’s motion (Dkt. 49) is DENIED.
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`It is SO ORDERED.
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`SIGNED this 11th day of May, 2017.
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`15
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