## Facts

- C. Daniel Hurlbut and A.C. Hovater, insurance agents associated with Gulf Atlantic Life Insurance Company, discussed with Gulf Atlantic officers a proposed group health-insurance trust to be underwritten by Gulf Atlantic.
- Gulf Atlantic representatives proposed that Hurlbut and Hovater form a partnership to serve as the trust administrator.
- Hurlbut and Hovater formed “Agency Associates,” received start-up funding from Gulf Atlantic, and used counsel recommended by Gulf Atlantic to prepare trust-related documents.
- With Gulf Atlantic’s knowledge, Agency Associates began marketing and selling the health plan before a master policy was issued.
- Gulf Atlantic later encountered regulatory difficulties obtaining approval for the master policy and denied that it had agreed to the trust arrangement.
- A Gulf Atlantic representative told an assistant attorney general that Hurlbut and Hovater lacked authority to write group insurance through the trust plan with Gulf Atlantic as the underwriter.
- Hurlbut and Hovater alleged Gulf Atlantic’s conduct and communications destroyed their business relationships and constituted fraud, business disparagement, and tortious interference.
- A jury found for Hurlbut and Hovater on the asserted torts and awarded actual and exemplary damages against defendants.
- The court of appeals reversed and rendered a take-nothing judgment, holding all claims time-barred and treating business disparagement as slander subject to a one-year limitations period.

## Issues

1. Whether limitations barred the fraud and related tort claims, or whether the discovery rule raised a fact issue on when plaintiffs should have discovered the alleged fraud.
2. Whether business disparagement is a distinct tort from defamation (slander/libel) for limitations and elements purposes.
3. What proof is required for business disparagement, including malice and special damages, and how those requirements affect the claim.

## Decision

- The Supreme Court of Texas reversed the court of appeals’ take-nothing judgment.
- The Court held the evidence raised a fact issue on when plaintiffs, using reasonable diligence, should have discovered the alleged fraud; limitations could not be resolved as a matter of law on that record.
- Because the court of appeals also made a factual-sufficiency determination on discovery, the proper disposition was remand for a new trial rather than rendition.
- The Court rejected treating business disparagement as merely defamation for limitations analysis and clarified it is a distinct tort with separate elements, including proof of special damages.

## Legal Principles

- Under Texas law, fraud is subject to a two-year limitations period, but accrual is deferred by the discovery rule until the fraud is discovered or could have been discovered through reasonable diligence.
- When evidence conflicts on when a plaintiff should have discovered fraud, the discovery/limitations question presents a fact issue.
- If an intermediate appellate court resolves a limitations dispute by weighing evidence (factual sufficiency), the appropriate remedy is generally remand for a new trial, not rendition.
- Business disparagement (injurious falsehood/trade libel) protects economic interests rather than personal reputation and is distinct from defamation.
- Business disparagement requires proof of: (1) publication of disparaging words, (2) falsity, (3) malice (knowledge of falsity or reckless disregard), (4) lack of privilege, and (5) special damages—pecuniary loss directly attributable to the publication.
- Special damages in business disparagement must be specifically proved; generalized injury is insufficient.

## Conclusion

The Texas Supreme Court held that disputed evidence on discovery of alleged fraud precluded a limitations take-nothing judgment and required a new trial, and it clarified that business disparagement is separate from defamation and demands proof of malice and specifically proven pecuniary loss.


Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762 (Tex. 1987)