February 21, 2025, the Texas Supreme Court handed down an opinion clarifying the “anti-fracturing rule” in professional malpractice cases: Case No. 23-0427, Pitts, et al., v. Rivas, et al.
Briefly, a home builder used an accounting firm to handle its financial records. The accounting firm duplicated several asset entries and over-inflated shareholder equity. This caused an overvaluation of taxes owed, resulting in insufficient cash reserves and a lack of access of credit. The homebuilder hired another accounting firm that discovered these errors and while a refund was granted by the government, the builder filed bankruptcy due to the alleged lack of cash reserved and access to credit, leading to a lawsuit being filed against the accounting firm.
To avoid issues with the statute of limitations, negligence claims were coupled with fraud and breach of fiduciary duty claims by the plaintiff which in Texas, the “anti-fracturing rule” prohibits in certain cases. The Supreme Court ended up entering judgment in favor of the accounting firm based on the “anti-fracturing rule,” reversing the court of appeals in the process. Key opinions are noted below:
“Courts… must look not merely at the labels chosen by the plaintiff but instead to the gravamen of the facts alleged to determine how to treat the claim.”
“Under the anti-fracturing rule, if the crux or gravamen of the plaintiff’s claim is a compliant about the quality of professional services provided by the defendant, then the claim will be treated as one for professional negligence even if the petition also attempts to repackage the allegations under the banner of additional claims.”
“In other words, if the gist of a client’s complaint or the real issue is that the professional failed to exercise the degree of care, skill, or diligence that professionals of ordinary skill and knowledge would exercise, the anti-fracture rule requires the claim to be litigated as one for professional negligence, and the plaintiff may not re-label the allegation under a different claim to obtain a litigation advantage.” The full opinion is linked below.
https://www.txcourts.gov/media/1460054/230427.pdf
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Christopher Chapaneri a distinguished Lydecker attorney with extensive expertise in civil litigation, construction defect, premises liability, amusement park litigation, commercial motor vehicle/trucking, employment law, and environmental litigation—including mold exposure and vegetation management/overspray matters. Chapaneri also has a robust appellate practice, having successfully handled cases before the Texas Supreme Court and the Fifth Circuit Court of Appeals.
In addition, Chapaneri brings substantial experience in handling high exposure and high-risk cases, further strengthening Lydecker’s ability to serve clients across multiple industries in Texas and beyond. Chapaneri also provides services in the State of Oklahoma.
