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Davis v. Long2/26/2003
l July 1997, but no evidence substantiating this point was placed in the record. We are unwilling to affirm a summary judgment on such an incomplete record.
Second, for the reasons previously discussed, even if every factual assertion made in defendants' separate statement is assumed to be undisputed, the facts do not conclusively demonstrate that Davis was on inquiry notice of the alleged fraud more than three years before he filed suit. The facts claimed to be undisputed show only that Chevron and Davis had unspecified disputes beginning in 1996. The existence of a dispute with his business partner, without more, did not place Davis on inquiry notice that the attorneys who documented the transaction had engaged in fraud or other tortious conduct.
Accordingly, the trial court's summary disposition of Davis's fraud claim cannot be upheld on statute of limitations grounds.
Causation Issue
Defendants urge that the judgment may be affirmed on the alternative ground of lack of causation. According to defendants, the undisputed facts demonstrate that Davis's alleged damages were caused or rendered speculative, as a matter of law, by his own breach of contractual and fiduciary duties owed to Chevron, not by any wrongful conduct attributable to defendants. We are not persuaded.
Defendants' causation argument assumes that Davis is primarily seeking to recover the funds he paid in settlement of Chevron's claims against him. According to defendants, the causal chain shown by the undisputed facts is that: (1) Davis's breaches of duty caused Chevron to withhold its annual capital contributions; (2) Chevron's refusal to make its capital contributions caused its capital account to go negative; (3) Chevron's negative capital account caused Davis to believe that Chevron could not derive any further tax benefits or economic value from the partnership and, therefore, it was imperative for Davis to sell the building so that the value of the tax benefits associated with it would not be lost; and (4) Davis's unauthorized sale of the building precipitated Chevron's lawsuit against him and led to the settlement requiring him to pay Chevron $489,000, which is the only item of damage Davis can claim in this action.
Defendants' analysis of the causation issue is faulty. First, two critical facts on which it depends do not appear in defendants' separate statement. The separate statement does not assert that Davis's breaches caused Chevron to withhold its capital contributions. Defendants' statement of undisputed facts merely quotes the bankruptcy court's oral finding that Davis's sale of the property without Chevron's consent was a breach of the partnership agreement. The sale occurred after Chevron's account went negative. Moreover, the separate statement includes no facts showing that Davis's settlement payment to Chevron is the only item of damage he can claim in this lawsuit. Instead, defendants argued in the trial court that the specifics of Davis's damages claims were irrelevant because all of his alleged damages flowed from Chevron's withholding of its annual capital contributions.
Second, the premise of defendants' causation argument is mistaken. Davis's claimed damages are not wholly attributable to his business disputes with Chevron. The following additional facts asserted by Davis, and conceded by defendants for purposes of their motion, are directly relevant to causation: (1) Davis was never repaid for the $200,000 he expended to buy out the limited partners and never recovered the majority of his $1.9 million partner advance; (2) Davis would not have expended funds to buy out the remaining limited partners and would not have entered into a
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