Why am I always reporting on plaintiffs who wait too long to file their lawsuit? See below for a few possible answers.
In the latest Texas case, Trahan v. Mettlen, the Trahans sued in 2010 on a 2006 warranty deed.
The earnest money contract for the sale of property from the Mettlens to the Trahans didn’t mention reservation of mineral rights. The warranty deed included a “clear and unequivocal” reservation. Mr. Trahan testified that he did not read the deed at the closing and a deed was not given to him at closing. More than four years later, when leasing activity began, the Trahans realized that the minerals had been reserved.
The clear and unequivocal reservation
The court’s first duty was to ask, When did the cause of action accrue? A mistake plainly evident or clearly disclosed on the face of a deed (such as this reservation of minerals) means that all parties are chargeable with knowledge of the contents of the deed. The court’s view was that a mutual mistake was plainly evident on the face of the deed. The statute began to run on the day the deed was executed by the grantor or on the date it was delivered to the grantee.
The discovery rule is sometimes available to the plaintiff. If the mutual mistake was not plainly evident but related instead to the legal effect of the material term, the statute will begin to run when the mistake was or in the exercise of due diligence should have been discovered. Subsequent conduct of the parties might rebut the presumption that all parties are chargable with immediate knowledge of the mistake. None of that happened in this case. The discovery rule was inapplicable.
What could have been
Game over, which is unfortunate for the Trahans because there might have been a legitimate claim to reform the deed for mutual mistake. A Texas court will find a mutual mistake when (1) there is a mistake of fact; (2) held mutually by the parties; (3) which materially affects the agreed upon exchange.
There is another way to go about it. A Texas court will consider a unilateral mistake by one party coupled with knowledge of that mistake by the other party as the equivalent of that mutual mistake.
Why do these things happen?
I’m tempted to offer platitudes: Read and understand your contract, act if and when you need to. But the downfall of many unsuccessful plaintiffs is neglect. Your delay in acting is not forgiven if your mistake is about a term that isn’t important at the time. I suspect the Trahans didn’t act sooner because the didn’t think about the minerals until the landman came knocking on the door bearing bonus payments.
The second culprit is trust. Trust has two components: Integrity and competence. Your counterparty can be honest, but he also must be trusted to prepare a document correctly. Ronald Reagan had the right attitude on this subject.
A musical interlude. Don’t let this be you.