In Melton v. Waddell, a sister sued her brother for breach of fiduciary duty for misapplying funds in a joint account and not properly allocating revenues from real estate that they owned as tenants in common. No. 07-18-00105-CV, 2019 Tex. App. LEXIS 9531 (Tex. App.—Amarillo October 30, 2019, no pet. history). The brother filed a motion for summary judgment alleging that the statute of limitations had run because the sister had access to the account and could have discovered the alleged breaches of fiduciary duty. The trial court granted the motion, and the sister appealed.

The court of appeals held that the brother had the duty to establish when the statute of limitations accrued and to disprove the application of the discovery rule. Regarding the discovery rule, the court held that there was a fact issue:

The discovery rule applies in instances of breached fiduciary duty. Goughnour v. Patterson, No. 12-17-00234-CV, 2019 Tex. App. LEXIS 1665, at *8-9 (Tex. App.—Tyler Mar. 5, 2019, pet. filed) (mem. op.). Normally, under that rule, the accrual of a cause of action is deferred until the  plaintiff knew or, in exercising reasonable diligence, should have known of facts giving rise to the claim. Id. at *8. Yet, the second prong of the test is inapplicable in fiduciary situations. Id. That is, our Supreme Court deemed a fiduciary’s misconduct to be inherently undiscoverable. S.V. v. R.V., 933 S.W.2d 1, 8 (Tex. 1996). So, the person to whom the fiduciary duty is owed is relieved of the responsibility of diligent inquiry. Id. That means the cause accrues when the misconduct becomes known or apparent. See id.; Goughnour, 2019 Tex. App. LEXIS 1665, at *8-9. Consequently, Rhea’s ready access to the account and her ability to have discovered the alleged misconduct had she used diligence is irrelevant given the alleged fiduciary relationship. Furthermore, Rhea proffered summary judgment evidence indicating that she did not know of his supposed misconduct until 2015. Having filed suit in 2016, a material issue of fact existed as to whether the four-year limitations period had lapsed. See Agar Corp. v. Electro Circuits Int’l, L.L.C., 580 S.W.3d 136, 139 (Tex. 2019) (noting that the four-year period applies to claims of breached fiduciary duty).

Id. The court also held that the brother’s summary judgment motion did not address the sister’s other claims, especially the claim that the brother did not properly allocate revenues from their cattle operation. The court reversed the trial court’s summary judgment.