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Keywords

contractbreach of contractstatuteappealtrialmotionsummary judgmentstatute of limitationssustainedliensmotion for summary judgment

contractbreach of contracttrialmotionsummary judgmentmotion for summary judgment

Related Cases

Stewart Title Guaranty Co. v. Hadnot, 101 S.W.3d 642, 4 A.L.R.6th 763

Facts

In 1993, the Hadnots contracted with Gibraltar Homes to build a residence and purchased a title insurance policy from Stewart Title. After the home was completed, subcontractors claimed they were unpaid and filed mechanic's liens against the property. The Hadnots submitted a proof of loss to Stewart Title, which denied the claim. Subsequent to the denial, the subcontractors sued the Hadnots, resulting in a judgment against them. The Hadnots continued to seek coverage from Stewart Title, which repeatedly denied their claims. In 2001, the Hadnots filed suit against Stewart Title for breach of contract.

In the summer of 1993, the Hadnots entered into a Mechanic's and Materialman's Contract with Gibraltar Homes to construct a residence. When the home was finished in the spring of 1994, the Hadnots paid Gibraltar, obtained a mortgage loan, and bought a title insurance policy underwritten by Stewart Title.

Issue

Did the trial court err in denying Stewart Title's motion for summary judgment based on the statute of limitations and in granting the Hadnots' motion for summary judgment?

In issue one, Stewart Title contends that the trial court erred in denying its motion for summary judgment because the Hadnots' suit is time-barred by limitations.

Rule

A suit for breach of contract must be brought within four years from the date the cause of action arose, which in the case of an insurance claim begins when the insurer first denies coverage.

A suit for breach of contract must be brought within four years from the date the cause of action arose. Tex. Civ. Prac. & Rem.Code Ann. § 16.051 (Vernon 1997).

Analysis

The court determined that the Hadnots' cause of action for breach of contract began on October 21, 1994, when Stewart Title first denied their claim. The Hadnots argued that limitations did not begin until they sustained out-of-pocket losses, but the court rejected this interpretation, affirming that the denial of coverage itself constituted the injury that triggered the statute of limitations. The court also found that Stewart Title was not estopped from asserting the limitations defense, as the Hadnots had been informed of their rights in previous correspondence.

We are persuaded that this injury was the event that began the running of limitations.

Conclusion

The Court of Appeals reversed the trial court's summary judgment in favor of the Hadnots and rendered a take-nothing judgment against them, concluding that their suit was barred by the statute of limitations.

We hold that Stewart Title was not estopped from asserting the defense of limitations.

Who won?

Stewart Title Guaranty Company prevailed in the case because the court found that the Hadnots' claim was time-barred by the statute of limitations.

Stewart Title established its limitations defense as a matter of law, and the trial court erred in denying its motion for summary judgment.

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