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Gator Frac Heating v. Brooks

Court of Appeals of Texas, Seventh District, Amarillo

July 30, 2019


          On Appeal from the 72nd District Court Lubbock County, Texas Trial Court No. 2017-527, 045, Honorable Mackey K. Hancock, Presiding

          Before CAMPBELL and PIRTLE and PARKER, JJ.



         Appellant Gator Frac Heating and Rentals, LLC sued its former attorney, Dustin Brooks, alleging Brooks committed legal malpractice in a transactional matter. It further alleged the discovery rule extended the accrual date of its cause of action so that suit was timely filed. Brooks raised the statute of limitations as an affirmative defense and moved for summary judgment on that and another defensive ground. Without specifying the ground, the trial court rendered summary judgment that Gator Frac take nothing. We will overrule Gator Frac's two issues on appeal and affirm the judgment of the trial court.


         In 2013 Gator Frac retained Brooks to draft documents for Gator Frac's lease of two frac-water heating units to Big Eagle Limited Partnership, a Canadian company. Brooks drafted the documents and delivered them to Gator Frac on May 28, 2013; Gator Frac and Big Eagle completed and signed the leases two days later. Big Eagle took possession of the two units in December 2013 and transported them to Canada.

         Meanwhile, in 2008 Wells Fargo Foothill Canada, ULC, provided Big Eagle a credit facility secured by a continuing security interest in all of Big Eagle's personal property "whether now owned or hereafter acquired or arising and wherever located" including Big Eagle's "right, title and interest in" goods, equipment, and fixtures. Also in June 2008, Wells Fargo registered notice of its security agreement with the Alberta, Canada, Personal Property Registry.

         Big Eagle did not make the lease payments to Gator Frac in April 2015. On June 8, 2015, Big Eagle was placed in Canadian receivership. On August 10, 2015, Gator Frac registered notice of its interest in the two units with the Alberta Registry.

         On August 31, 2015, a Canadian court, acting on the receiver's application for advice and direction, ruled that Wells Fargo's security interest in the two heating units was superior to Gator Frac's interest. The summary judgment record contains a copy of the opinion. Wells Fargo Foothill Canada, ULC v. Big Eagle Hydro-Vac, Inc., 2015 ABQB 546 (Can.) In reaching its decision the court stated under Canadian law, in a case of competing security interests, "the true owner must forfeit title, when faced with a competing interest, if [it] failed to register [its] interest as required." Id. at 36. Gator Frac, the court found, did not register notice of its security interest and therefore did not perfect its security interest. Id. at ¶ 54. The court observed Gator Frac could have preserved a priority position in the two units had it taken a purchase-money security interest or, alternatively, it could have made a priority and postponement agreement with Wells Fargo. But it did neither. Id. at ¶ 62. The court ordered that the receiver was entitled to dispose of the units. Id. at ¶ 63. Jerry McKee, who identified himself as a "partner, owner" of Gator Frac, testified by deposition that he was told the heating units were "auctioned off."

         Two years later, on August 31, 2017, Gator Frac filed suit against Brooks. Brooks answered and, relying on the two-year statute of limitations of Civil Practice and Remedies Code section 16.003, alleged Gator Frac's suit was barred because it was filed more than two years after the cause of action accrued. Brooks moved for traditional summary judgment on the limitations defense and another ground and the trial court granted summary judgment without specifying the ground.

         The summary judgment record contains McKee's deposition testimony given in the suit against Brooks. The testimony contains exchanges establishing that McKee was aware by July 29, 2015, that Gator Frac had retained counsel in Canada to deal with the receivership, and by that date he was aware there was "an issue about Wells Fargo claiming that its lien on this equipment was better than Gator Frac's[.]" He acknowledged a July 30, 2015, email from another Gator Frac official giving an update on information from Gator Frac's Canadian counsel. McKee acknowledged he knew that "the problem being raised by Wells Fargo and the receiver was that Gator Frac had not registered or made some kind of filing of its position in Canada."

         The summary judgment record contains also the affidavit of the other Gator Frac official, prepared for filing in the Canadian court proceeding.[1] The affidavit details that official's communications with an officer of Big Eagle, beginning on June 19, 2015, regarding efforts to obtain the receiver's authorization for release of the heating units to Gator Frac. It also describes, and attaches a copy of, the July 22, 2015 letter from Gator Frac's Canadian counsel to counsel for the receiver, requesting return of the units from the receiver.


         Through two issues which we will discuss together, Gator Frac contends summary judgment was improper because the discovery rule postponed accrual of its legal malpractice claim against Brooks until August 31, 2015, when the Canadian court issued its opinion. Only then, Gator Frac ...

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