1

United States Court of Appeals,

Fifth Circuit.

No. 95-10688.

CLARDY MANUFACTURING COMPANY, Plaintiff-Appellee/Cross-Appellant,

v.

MARINE MIDLAND BUSINESS LOANS INC, Defendant-Appellant/CrossAppellee,

and

Jim L. Ely, Movant.

July 22, 1996.

Appeal from the United States District Court for the Northern

District of Texas.

Before WISDOM, EMILIO M. GARZA and PARKER, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Plaintiff Clardy Manufacturing Company ("Clardy

Manufacturing") sued Marine Midland Business Loans, Inc.

("Marine"), alleging that Marine breached its commitment to lend

under a satisfaction contract. Following a bench trial, the

district court concluded that Marine had obligated itself to make

a loan to Clardy Manufacturing under the satisfaction contract once

certain creditworthiness criteria had been satisfied and awarded

damages in favor of Clardy Manufacturing. Marine now appeals.

Clardy Manufacturing cross-appeals the district court's denial of

its claim under the Texas Deceptive Trade Practices Act ("DTPA")

and the district court's failure to consider its alternative common

law claims for fraudulent misrepresentation, negligent

misrepresentation, and promissory estoppel. Concluding that there
 

1Premier Air Parts, Inc., which was also in the after-market

air conditioner business, sold air conditioner parts to customers

of Clardy Manufacturing and its competitors. 

 

2On sales of nearly $16 million in 1989, the company suffered

a loss of $663,000. 

2

was no satisfaction contract obligating Marine to make a loan, and

that Clardy Manufacturing's remaining claims fail as a matter of

law, we reverse in part, affirm in part, and render judgment in

favor of Marine.

I

Clardy Manufacturing Company is a family owned business that

makes and sells after-market air conditioners for automobiles. In

1989, John Clardy, Jr., began looking for new financing for the

company, primarily in order to purchase the shares of the company's

retiring founder, his father John Clardy, Sr., and thereby take

over ownership of the company. The company also needed financing

in order to effect a merger with Premier Parts, Inc.,1 to refinance

its existing debt, and to obtain additional working capital.2

Clardy Manufacturing unsuccessfully sought financing from at least

six different lenders. The company was eventually referred to

Marine, an asset-based lender with an office in Dallas, Texas. In

contrast to a commercial bank, which primarily makes loans based on

a company's cash flow, an asset-based lender like Marine makes

loans on the basis of a company's collateral.

In the middle of 1990, Clardy Manufacturing discussed a

potential loan with Michael Norvet, the senior business development

officer for Marine's Dallas office. After Clardy Manufacturing
3

submitted some preliminary financial information, Norvet informed

the company that it did not meet Marine's minimum loan

requirements. Discussions resumed, however, in the fall of 1991,

after Marine reduced its minimum loan requirements from $5 million

to $3 million. Clardy Manufacturing had not yet been able to

secure financing, and John Clardy, Jr., and Norvet discussed the

possibility of a $4 million loan. John Clardy, Jr., provided

Norvet with additional financial information about the company, and

he also completed Marine's pre-loan questionnaire and submitted the

required financial projections.

In early January 1992, representatives from Clardy

Manufacturing and Marine met in Dallas to discuss the loan

application. John Clardy, Jr., arrived with Richard Berman, the

President of Premier Air Parts. Norvet introduced the two men to

Jim Ely, Marine's senior regional manager of the Dallas office, and

Frank Mederos, Marine's national marketing director. There was

conflicting evidence presented at trial regarding what exactly the

Marine representatives told John Clardy, Jr., and Berman regarding

Marine's credit approval process. Nevertheless, the parties agree

that at the close of the meeting, Mederos authorized the issuance

of a proposal letter, which would permit Marine to proceed further

in evaluating Clardy Manufacturing's loan application.

Accordingly, at another meeting ten days later, a proposal letter,

or letter agreement, was signed by John Clardy, Jr., and Norvet.

Clardy Manufacturing argues that this letter constituted a

"satisfaction contract," while Marine, on the other hand, contends
 

3Putkonen explained at trial that he had been concerned about

the company's history of losses during the previous three years,

that the company was significantly behind in its current year plan,

4

that it was merely an agreement to undertake due diligence.

Marine proceeded to conduct due diligence aimed at evaluating

the financial health of Clardy Manufacturing, as well as the

company's collateral that would form the basis for the $4 million

loan. As part of this effort, Marine had appraisals made of Clardy

Manufacturing's real property, inventory, and equipment. Marine's

auditors also conducted a field examination of Clardy

Manufacturing's books and records. In April of 1992, the resulting

due diligence information was analyzed by David Boyd, the senior

officer at Marine's Dallas office. Boyd's responsibility was to

generate the "PCREF," Marine's computer generated, credit

evaluation form. Based on the computer analysis, Boyd concluded

that Clardy Manufacturing did not meet all of Marine's credit

approval requirements, and as a consequence the loan application

would have to go through an additional level of home office

approval. Nevertheless, Boyd, who did not have any credit approval

authority, recommended that the loan be approved.

Clardy Manufacturing's loan application and the PCREF results

were then reviewed by Kurt Putkonen, who was administrative

vice-president and territory manager for Marine. Putkonen also had

no credit approval authority. After making an independent

evaluation of the loan documents, Putkonen decided not to recommend

to the home office that Clardy Manufacturing's loan application be

approved,

3 and in the middle of June 1992, Norvet communicated to
that there were potential problems with dilution of the company's

accounts receivable collateral, and that the company was just

beginning to implement a perpetual inventory system, which Marine

considered critical to Clardy Manufacturing's slow-moving

inventory. Putkonen also noted that only a small portion of the

loan would be going towards additional working capital, and the

rest would be used for "non-growth" business purposes such as

buying the stock of John Clardy, Sr., and paying off existing debt.

5

John Clardy, Jr., that the credit approval process had come to an

end.

In the middle of March 1992, while Marine was still conducting

due diligence, John Clardy, Jr., introduced Norvet at a lunch

meeting to Graeme McDougall, the Chairman of Environmental Products

Amalgamated ("Environmental Products"), an Australian company that

sold freon recovery and recycling equipment. John Clardy, Jr., was

considering entering into a licencing agreement with Environmental

Products. Although the Environmental Products deal was not part of

the proposed Marine loan package, Berman testified at trial that

Clardy Manufacturing, as a matter of priorities, was not going to

enter into the Environmental Products deal unless the Marine loan

was approved. At this lunch meeting, Norvet is alleged to have

assured John Clardy, Jr., and McDougall that a "commitment letter"

would be issued within the next two to five days, or in other

words, that the loan would be approved within a matter of days.

John Clardy, Jr., claims that based on this assurance, he entered

into the contemplated licencing agreement with Environmental

Products two days later. According to Clardy Manufacturing,

Marine's failure to approve the loan made it impossible for the

company to make timely payments as called for in the Environmental
6

Products licencing agreement.

Clardy Manufacturing eventually brought suit against Marine

alleging breach of contract, fraudulent misrepresentation,

negligent misrepresentation, and promissory estoppel. After a

bench trial, the district court awarded Clardy Manufacturing

$8,111,467 on its breach of contract claim, rejected the DTPA

claim, and declined to consider Clardy Manufacturing's alternative

common law theories of recovery. Marine appeals from the award of

damages, and Clardy Manufacturing cross-appeals from the district

court's denial of its DTPA claim and failure to consider its

alternative common law claims.

II

A

 Marine contends that the district court erred in concluding

that the January 1992 letter agreement was a satisfaction contract.

The interpretation of an unambiguous contract is a question of law

which we review de novo. Guidry v. Halliburton Geophysical Servs.,

Inc., 976 F.2d 938, 940 (5th Cir.1992). However, when a contract

is ambiguous and its construction turns on the consideration of

extrinsic evidence, we review the district court's interpretation

for clear error only. Id. The initial determination that a

contract is ambiguous, such that its interpretation warrants the

consideration of extrinsic evidence, is itself a legal conclusion

subject to de novo review. Id. We look to state law to provide

the rules of contract interpretation. Matter of Haber Oil Co.,

Inc., 12 F.3d 426, 443 (5th Cir.1994).
7

 Under Texas law, a contract is ambiguous if, after applying

established rules of interpretation, the written instrument

"remains reasonably susceptible to more than one meaning." R & P

Enterprises v. LaGuarta, Gavrel & Kirk, 596 S.W.2d 517, 519

(Tex.1980); see also Towers of Texas, Inc. v. J & J Systems, Inc.,

834 S.W.2d 1, 2 (Tex.1992) ("A written instrument is ambiguous when

its meaning is uncertain and doubtful or it is reasonably

susceptible to more than one meaning, taking into consideration the

circumstances present when the instrument was executed."); Harris

v. Rowe, 593 S.W.2d 303, 306 (Tex.1979) (requiring a "genuine

uncertainty" as to which of two meanings is proper). On the other

hand, if a contract is worded so that a court can give it a certain

or definite legal meaning or interpretation, it is not ambiguous.

R & P Enterprises, 596 S.W.2d at 519. Where the contract is

unambiguous, extrinsic evidence "will not be received for the

purpose of creating an ambiguity or to give the contract a meaning

different from that which its language imports." Universal C.I.T.

Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (1951);

Lewis v. East Texas Finance Co., 136 Tex. 149, 146 S.W.2d 977, 980

(1941).

We must enforce the unambiguous language in a contract as

written, and the applicable standard is "the objective intent"

evidenced by the language used, rather than the subjective intent

of the parties. Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726,

731 (Tex.1981). In determining whether the language of the

contract is unambiguous, however, we "should examine and consider
 

4Under the "Revolving Credit" line, Marine stated that it

would consider offering advances in an aggregate principal amount

at any time outstanding equal to the lesser of $3 million, or up to

eighty percent (80%) of the company's eligible accounts receivable

plus up to fifty percent (50%) of the lower of cost or market value

of Clardy Manufacturing's eligible finished goods inventory, but

that in no event would inventory advances exceed $1 million. 

 

5Under the "Term Loan," Marine stated that the loan would be

in a principle amount equal to the lesser of $1 million or the sum

of (i) up to sixty percent (60%) of the auction value of the

Company's eligible machinery and equipment and (ii) up to fifty

percent (50%) of the fair market value of the Company's real

property. 

8

the entire writing in an effort to harmonize and give effect to all

the provisions of the contract so that none will be rendered

meaningless." Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983)

(emphasis in original). Furthermore, "[n]o single provision taken

alone will be given controlling effect; rather, all the provisions

must be considered with reference to the whole instrument." Id.

With these rules of construction in mind, we turn now to the

January 1992 letter agreement between Clardy Manufacturing and

Marine.

B

The letter agreement begins by stating that its purpose is to

"set forth the financial accommodations that Marine would be

willing to consider in addressing CM's [Clardy Manufacturing's]

financial needs." The letter proceeds to describe these financial

accommodations, or "Credit Facilities," in some detail: "Marine

would consider offering CM a 3 year revolving credit facility";4

"Marine would consider offering the Company a 3 year term loan

facility."5 The letter states when the "Credit Facility" and "Term
 

6The letter also states, "Proceeds from the credit facilities

would be used to refinance bank debt, acquire certain assets of

Premier Air Parts, Inc., purchase capital stock from John Clardy

Sr. and provide continuing working capital." 

9

Loan" would be repayable, what interest would be applicable to the

principle outstanding, how collections would be processed, and what

secured interests in collateral and personal guarantees would be

required.6 Under the heading "Fees: Prepayment Premium," the

letter states, "If the Credit Facilities are approved and funded,

CM would be required to pay to Marine" certain origination fees and

unused line fees. The letter also states, "If the Credit

Facilities are approved and funded, Marine would require CM to

provide" certain monthly financial statements and other periodic

financial reporting as specified.

In setting forth the financial accommodations that Marine

would be willing to consider, the letter also frames the proposed

terms and conditions in conditional language. Marine would

consider offering Clardy Manufacturing a revolving credit facility

and term loan. The letter notes that if the Credit Facilities are

approved and funded, then these would be the terms and conditions.

The conditional or proposed nature of the financial accommodations

is underscored by the bold language that follows the recitation of

potential terms and conditions, where the letter states, "NonBinding Proposal Only: Due Diligence Required" and "THIS PROPOSAL

LETTER IS NOT A COMMITMENT TO LEND." Clardy Manufacturing argues

that this language merely establishes that the letter agreement is

not yet a firm commitment to lend, and that the commitment to lend
 

7In addition, the letter does not spell out the details of

"Marine's internal credit approval process," which must also be

completed before a commitment letter will be issued. 

10

does become binding once Clardy Manufacturing satisfies Marine's

due diligence requirements. The letter does set out a number of

events that would have to precede the issuance of a commitment

letter obligating Marine to extend the loan to Clardy

Manufacturing:

Prior to the issuance of any commitment letter, Marine would

perform a field examination of CM, perform background

investigations of CM management and shareholders, complete

Marine's internal credit approval process, review financial

information with CM, evaluate current appraisal information,

and verify the Company's compliance with all regulations,

rules, and directives of all local state, and federal

regulatory and licensing agencies, including, without

limitation, environmental agencies. Marine would require CM

to prepare a long-range business and strategic plan, in form

and substance satisfactory to Marine, including monthly

forecast for the first twelve (12) months following the

Closing Date, encompassing all segments of CM's business.

Issuance of a commitment letter would be subject to, among

other things, your completion of all of the foregoing items,

to Marine's satisfaction and all of the matters discussed in

this letter.

We do not find that it is reasonable, however, to read this

language to suggest that a commitment letter would necessarily

issue upon the completion of these enumerated items. They are

neither so definite nor so all inclusive as to warrant such a

conclusion. In fact, the list concludes with the statement that

issuance of a commitment letter would be subject to the completion

of, among other things, the foregoing items.7 This language

clearly signals that Marine's credit approval process will consist

of more steps than are set out in this proposal letter.

The agreement that Clardy Manufacturing and Marine reached in
 

8Marine eventually returned $6,840.35 to Clardy Manufacturing,

which represented the unused portion of the $25,000 deposit. 

 

9Under Texas law, a contract's language may be construed in

light of "surrounding circumstances," which includes "what the

particular industry considered to be the norm or reasonable or

prudent at the time." Staff Indus., Inc. v. Hallmark Contracting,

Inc., 846 S.W.2d 542, 546 (Tex.App.—Corpus Christi 1993, no writ).

Berman acknowledged at trial that the analysis of a loan

application was necessarily a somewhat subjective procedure. See

generally DAVID A. ROBINSON, ACCOUNTS RECEIVABLE AND INVENTORY LENDING 10 (3d

ed.1987) (offering guidance regarding the "sophisticated credit

judgments" that bear on accounts receivable and inventory lending).

11

this letter is clear and unambiguous. Under the heading "Execution

of Proposal Letter," the letter states that "Marine will undertake

further efforts to assess whether CM satisfies Marine's criteria

for the extension of the Credit Facilities outlined herein only if"

Clardy Manufacturing signs the letter and deposits $25,000 with

Marine to be applied toward the cost of conducting due diligence.

In other words, Marine agreed to undertake further efforts towards

determining Clardy Manufacturing's eligibility for a loan if the

company agreed to pay for the related expense.8 There is nothing

in this agreement which suggests that Marine was binding itself to

issue a commitment letter upon the successful completion of the due

diligence outlined in the letter. Such a conclusion would require

us, unreasonably, to believe that Marine had contracted away the

normal and customary subjective decision making which enters into

the final stages of a loan approval process.9 This reading of the

proposal letter is belied even by the language covering the return

of the $25,000 deposit. The letter states, "If the Credit

Facilities close," any remaining deposit after costs will be
12

applied to the facilities fee. However, "If Marine declines to

close the Credit Facilities," the deposit will be returned less

costs. If the issuance of a commitment letter was guaranteed upon

the successful completion of due diligence, Marine would have no

power to decline to close the credit facilities.

Having considered the entire writing, we conclude that the

language of the letter agreement between Clardy Manufacturing and

Marine is reasonably susceptible to only one meaning. In part, the

proposal letter serves to set out the terms and conditions of the

credit facilities, or loans, that Marine is considering extending

to Clardy Manufacturing. Beyond this, the letter also contains an

agreement by Marine to undertake further efforts to assess whether

Clardy Manufacturing satisfied its credit criteria by conducting

due diligence as outlined in the letter. The letter does not,

however, constitute a satisfaction contract. We find that the

letter agreement between Clardy Manufacturing and Marine is

unambiguous and does not require us to consider extrinsic evidence

to determine its meaning.

The district court concluded that the letter agreement was

ambiguous as to "what, if anything, was Marine obligated to do if

it became satisfied with Clardy Manufacturing's demonstration of

creditworthiness?" This conclusion, however, flows from the faulty

assumption that the letter agreement was intended to address each

and every step leading up to the issuance of the commitment letter.

As we have found, the proposal letter unambiguously memorializes

the agreement that Marine should undertake further due diligence as
13

part of its effort to evaluate Clardy Manufacturing's loan

application. The letter agreement's failure to address what

further steps Marine would undertake as part of its internal credit

approval process once it had become satisfied with Clardy

Manufacturing's creditworthiness does not necessarily render

ambiguous the agreement to undertake due diligence. As the letter

agreement did not obligate Marine to take further steps upon the

successful completion of due diligence, the writing had no need to

speak to this issue. While it may seem unfair to suggest that

Marine was free to simply walk away following the completion of due

diligence, the letter agreement's silence on this issue does not

destabilize the letter's clear and unambiguous language.

Although we will not consider extrinsic evidence for the

purpose of creating an ambiguity in what we perceive to be the

clear meaning of the letter agreement's language, see Universal

C.I.T. Credit Corp., 243 S.W.2d at 157, we note that the extrinsic

evidence relied on by the district court does not cast doubt on our

reading of the document. Drawing on a comparison between the

letter agreement and language required by Marine's credit policy

manual, the district court concluded that Norvet intended to make

the letter agreement sound "more binding" than the normal proposal

letter. The district noted that according to Marine's policy

manual, a letter of intent or a preliminary proposal "must contain

language substantially in conformance with the following:"

Please note that this letter is not a binding commitment of

[borrower] or [Marine], nor does it define all of the terms

and conditions of the financing, but is a framework upon which

the documentation for this transaction shall be structured,
 

10The presence of this agreement in what is otherwise a

proposal letter also helps explain why the district court is

mislead in its reliance on another piece of extrinsic evidence.

The district court focussed on the fact that the letter agreement

contained a signature line for Clardy Manufacturing with the

recitation, "ACKNOWLEDGED AND AGREED TO," similar to Marine's form

commitment letter which has a signature line for the borrower and

the recitation, "Accepted and Agreed to." In light of the

agreement between the parties in this case to have further due

diligence undertaken, we do not find that the inclusion of a

signature line and "agreed to" language casts any doubt on our

conclusion as to the unambiguous meaning of the proposal letter.

Clardy Manufacturing also argues that evidence that

approval of the loan was contingent upon the satisfactory

completion of due diligence can be found in the required

payment of the $25,000 deposit and the confidentiality clause,

which, Clardy Manufacturing claims, were "intended to prevent

Clardy Manufacturing from looking elsewhere." At trial,

Marine's representatives acknowledged that the confidentiality

clause was intended to prevent Clardy Manufacturing from

"shopping" these loan terms and conditions with other banks.

Even if we accept that these provisions were intended to keep

Clardy Manufacturing from seeking financing elsewhere, we fail

14

and is a basis for further discussion and negotiation of the

terms as may be appropriate. The credit shall be subject to

due diligence review of the business and financial affairs of

[borrower] with [borrower's] management, the approval of the

proposed terms and conditions by the [Marine] credit

authorities, and the execution and delivery of documentation

satisfactory in form and substance to [Marine's] legal

counsel.

Although the language in the policy manual is perhaps worded more

pointedly than the letter agreement, we disagree with the district

court that the letter agreement does not contain language

substantially in conformance with this paragraph. Moreover, in

contrast to the typical letter of intent contemplated by the

language in Marine's policy manual, the proposal letter in this

case does contain a definite agreement between the parties, namely

to have further due diligence conducted as part of the credit

approval process.10
to perceive how this evidences an intent on Marine's part to enter

into a satisfaction contract. 

15

The district court further erred by relying, at the outset, on

the rule of strict construction against the drafter to hold that

Marine was required to honor the "more binding" language drafted by

Norvet. We note that the rule contra proferentem "is not one of

the favored rules of construction. Indeed, it is said that it is

to be resorted to only when the other rules fail." Smith v. Davis,

453 S.W.2d 340, 344 (Tex.App.—Fort Worth 1970, writ ref'd n.r.e.)

(internal quotation marks omitted); see also id. (refusing to

apply the rule even though there was an ambiguity in the contract).

Certainly, "the rule has no application where ... the intent of the

parties is clear and a resort to the rule will defeat that intent."

Modular Technology Corp., Metal Bd. Division v. City of Lubbock,

529 S.W.2d 273, 276 (Tex.App.—Amarillo 1975, writ ref'd n.r.e.).

Accordingly, we find that the district court erred in concluding

that the letter agreement was a satisfaction contract. Because

there is no underlying satisfaction contract, there can be no

damages for breach of that contract. Accordingly, we vacate the

district court's award of damages on Clardy Manufacturing's

contract claim.

III

 On cross-appeal, Clardy Manufacturing contends that the

district court erred in concluding that it failed to state a claim

under the Texas Deceptive Trade Practices Act. TEX.BUS. & COM.

CODE.ANN. § 17.41 et seq. In order to state a claim under the DTPA,
16

the plaintiff must establish that he is a "consumer" as defined by

the Act. Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169, 173

(Tex.1980). The district court concluded that Clardy Manufacturing

did not qualify as a "consumer" under the Act. Whether a plaintiff

is a "consumer" under the Act is a question of law which we review

de novo. Schmueser v. Burkburnett Bank, 937 F.2d 1025, 1028 (5th

Cir.1991).

The Act defines "consumer" as an individual "who seeks or

acquires by purchase or lease, any goods or services." TEX.BUS. &

COM.CODE.ANN. § 17.45(4). Moreover, the purchased goods or services

must form the basis of the complaint. Cameron v. Terrell &

Garrett, Inc., 618 S.W.2d 535, 539 (Tex.1981). The DTPA defines

"goods" as "tangible chattels or real property purchased or leased

for use." TEX.BUS. & COM.CODE.ANN. § 17.45(1). And "services" are

defined as "work, labor or service purchased or leased for use,

including services furnished in connection with the sale or

repair." TEX.BUS. & COM.CODE.ANN. § 17.45(2). In Riverside, the

Texas Supreme Court has held that the extension of credit does not

constitute "goods" or "services" under the Act. Riverside, 603

S.W.2d at 175; see also FDIC v. Munn, 804 F.2d 860, 863 (5th

Cir.1986) (summarizing Texas law as holding that "goods" and

"services" do not include intangible chattel such as stocks, money,

or loans).

The court in Riverside, however, left open the question

whether activities related to the loan transaction, such as

financial counseling, could constitute "services" under the Act.
 

11See, e.g., Flenniken v. Longview Bank and Trust Co., 661

S.W.2d 705, 708 (Tex.1983) (concluding from a series of

transactions that plaintiffs sought to acquire a house, not a loan,

and that this formed the basis of their complaint); First Federal

Savings & Loan Ass'n of San Antonio v. Ritenour, 704 S.W.2d 895,

900 (Tex.App.—Corpus Christi 1986, writ ref'd n.r.e.) (concluding

that the plaintiff's claim was based on the purchase of financial

counseling separate from the certificate of deposit). 

 

12In fact, we agree with the district court that the "loan

services," or the due diligence, was solely for Marine's benefit,

and that Clardy Manufacturing would have gladly bypassed this step

and gone straight to the issuance of the commitment letter if

permitted. Nor is Clardy Manufacturing claiming that the due

diligence was not performed, or that it was performed inadequately.

Rather, the company is merely complaining that Putkonen, in

deciding not to recommend the loan application for approval,

reached the wrong conclusion based on this due diligence. 

17

Riverside, 603 S.W.2d at 175 n. 5. Texas courts have generally

limited Riverside 's holding to cases where the loan was the

plaintiff's main objective and forms the sole basis of the

complaint. See Munn, 804 F.2d at 864 (citing cases).11 Clardy

Manufacturing claims that it qualifies as a "consumer" under the

Act in that it sought to purchase the "loan services" Marine

provided. The loan application process, however, was never an

objective of Clardy Manufacturing's separate and distinct from the

credit facilities which the company hoped to obtain from Marine.12

The sole basis of Clardy Manufacturing's complaint is the denial of

the credit facilities. Accordingly, we affirm the district court's

determination that Clardy Manufacturing has failed to state a claim

under the Texas DTPA.

IV

Clardy Manufacturing also cross-appeals from the district

court's failure to address its alternative common law claims for
18

fraudulent misrepresentation, negligent misrepresentation, and

promissory estoppel. Evidence was submitted at trial in support of

each of these alternative theories of recovery. Having granted

Clardy Manufacturing full recover under its contract claim, the

district court declined to reach these alternative claims. If we

were to remand this case, it would only remain for the district

court to enter findings of fact and conclusions of law as to these

alternative claims. We conclude, however, that remand in this case

is unnecessary because Clardy Manufacturing's alternative claims

all fail as a matter of law. See Halbert v. City of Sherman,

Texas, 33 F.3d 526, 530 (5th Cir.1994) (declining to remand claims

to district court where plaintiff would be unable to prevail even

if afforded the opportunity to amend his pleadings); Brown v.

Texas A & M University, 804 F.2d 327, 334 (5th Cir.1986) (same).

A

Under Texas law, the elements of a cause of action for

negligent misrepresentation are:

(1) the representation is made by a defendant in the course of

his business, or in a transaction in which he has a pecuniary

interest; (2) the defendant supplies "false information" for

the guidance of others in their business; (3) the defendant

did not exercise reasonable care or competence in obtaining or

communicating the information; and (4) the plaintiff suffers

pecuniary loss by justifiably relying on the representation.

Federal Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442

(Tex.1991) (citing the Restatement (Second) of Torts (1977)); see

also Inglish v. Union State Bank, 911 S.W.2d 829, 837

(Tex.App.—Corpus Christi 1995, writ requested).

Clardy Manufacturing's claims of negligent or fraudulent
 

13Berman also testified that Norvet had reported that "he had

assured John Clardy, Jr., that we would be getting a commitment

letter within the next two to five days." 

 

14We note, however, that the agreement with Environmental

Products was not referenced in the letter agreement, and that

Berman acknowledged at trial that it would not have made any

difference with respect to the business he did with Environmental

Products whether the proposed loan went through or not. 

19

misrepresentation are based primarily on two sets of statements by

a Marine representative. As to one instance, John Clardy, Jr.,

testified at trial that at the Wednesday lunch meeting with Graeme

McDougall, the Chairman of the Australian company Environmental

Products, Norvet "stated that I would have a commitment letter by

Friday or the following Monday or Tuesday."13 McDougall testified

that Norvet had said that he "expected" a letter of commitment to

be issued within the next two to five days because "from Marine

Midland's point of view everything looked good. The audit was

good. All the other relevant documentation that had to be done

looked good." John Clardy, Jr., claims that he detrimentally

relied on this representation by entering into a licencing

agreement with Environmental Products two days later.14

A claim for negligent misrepresentation under Texas law

contemplates that the "false information" provided by the defendant

is a misstatement of existing fact. Airborne Freight Corp. v. C.R.

Lee Enterprises, 847 S.W.2d 289, 294 (Tex.App.—El Paso 1992, writ

denied). "Negligent misrepresentation does not occur when a

defendant simply makes a guess as to a future, unknown event."

Sergeant Oil & Gas Co. v. National Maintenance & Repair, Inc., 861

F.Supp. 1351, 1360 (S.D.Tex.1994) (applying Texas law); see id.
20

(holding that defendant's representation that the barge could be

loaded in eighteen to twenty-four hours was not actionable under a

theory of negligent misrepresentation); City of Beaumont v.

Excavators & Constructors, Inc., 870 S.W.2d 123, 138

(Tex.App.—Beaumont 1993, writ denied) (holding that statements as

to how long a work project would take to complete were not "false

information").

In at least one case, a successful claim for negligent

misrepresentation was based on a loan officer's statement that his

bank had approved plaintiffs' loan. Federal Land Bank Ass'n of

Tyler v. Sloane, 825 S.W.2d at 441-42. The facts of Sloane,

however, were distinguished by the court in Alpha Road v. NCNB

Texas National Bank, 879 F.Supp. 655 (N.D.Tex.1995). In Alpha

Road, the bank officer had represented that he needed additional

authority, but that the loan was a "done deal" and that it would be

renewed at the end of four months. 879 F.Supp. at 665. The court

in Alpha Road concluded that unlike the representation in Sloane,

the bank officer's assurances referred to the bank's future

performance, and were therefore not actionable under a theory of

negligent misrepresentation. Id. The facts in this case are in

accord with those in Alpha Road.

Clardy Manufacturing does not contend that Norvet represented

that the loan had in fact been approved, or that the commitment

letter had already been issued. Even if we assume that Norvet said

that the commitment letter would issue within two to five days, as
 

15In determining whether Clardy Manufacturing has presented

sufficient evidence from which a reasonable fact finder could find

in its favor on the alternative common law claims, we "must review

the evidence in the light and with all reasonable inferences most

favorable to" Clardy Manufacturing. Roberts v. United New Mexico

Bank at Roswell, 14 F.3d 1076, 1078 (5th Cir.1994) (internal

quotation marks omitted). "If the facts and inferences point so

strongly and overwhelmingly in favor of one party that the Court

believes that reasonable men could not arrive at a contrary

verdict, [judgment as a matter of law] is proper." Boeing Co. v.

Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc). There must be

a conflict in "substantial evidence" to create a jury question.

Id. at 375. 

 

16As will be discussed infra, there is also no evidence in the

record to indicate that Norvet did not believe what he said at the

time he made the representation. Nor did Clardy Manufacturing

present any evidence establishing that Norvet was reckless to

believe, at this time, that the commitment letter would issue

shortly. 

21

we must,15 rather than that he "expected" the letter to issue within

this time frame, we nevertheless conclude that this statement is

not actionable as a misstatement of existing fact. At most,

Norvet's representation was a misstatement as to a future action by

Marine.16

Moreover, under a claim for negligent misrepresentation, the

plaintiff must prove "justifiable reliance" on the

misrepresentation. Geosearch, Inc. v. Howell Petroleum Corp., 819

F.2d 521, 526 (5th Cir.1987) (applying Texas law). This

requirement, also known as the "materiality" element, has two

aspects: "the plaintiff must in fact have relied; and this

reliance must have been reasonable." Id. In other words, "there

must be a reasonable relation between the contents of the

defendant's misrepresentation and the action the plaintiff took in

reliance." Id. "The justifiableness of the reliance is judged in
 

17Evidence at trial established that McDougall, who had been

in the United States for two months by the time of the lunch

meeting, was anxious to return home to Australia for business and

personal reasons. McDougall also testified that it would have been

possible to sign the contract in Australia by fax machine and

teleconference, or to have signed an agreement in principle

conditioned on the issuance of the commitment letter, but that he

22

light of the plaintiff's intelligence and experience." Scottish

Heritable Trust, PLC v. Peat Marwick Main & Co., 81 F.3d 606, 615

(5th Cir.1996). A plaintiff's reliance is unjustified when the

reliance is in effect an act of negligence on the plaintiff's part.

Id.

When viewed against all of the surrounding circumstances and

the plaintiff's business experience, Clardy Manufacturing's

reliance on Norvet's representation was, as a matter of law,

unjustified. In other words, we find that no reasonable fact

finder could conclude otherwise. John Clardy, Jr., and his

advisor, Berman, knew at all times that Norvet had no credit

approval authority. From the time he graduated from college in

1977, John Clardy, Jr., had been involved in managing the company

his father founded, and as President of the company he had handled

the task of negotiating with lenders for additional financing since

1989. Berman, aside from holding the position as President of

Premier Air Parts, Inc., was also a former chairman of the board of

a commercial bank, with twelve years of lending experience prior to

that. Rather than waiting an additional two or three days to

verify that a commitment letter did in fact issue, John Clardy,

Jr., decided to enter into the licencing agreement with McDougall

that Friday.17 We find, as a matter of law, that there is no
"chose, while I was here, to complete the job that I came to do."

 

18John Clardy, Jr., testified that he felt it was important to

establish a personal relationship with the people making the credit

approval decision. We note that John Clardy, Jr., acknowledged

that Frank Mederos was introduced at the January 7 meeting as

someone from Marine's home office in Wilmington, Delaware, who

would be a significant factor in the home office evaluation of the

credit. Berman also acknowledged that Mederos was introduced to

him as someone from the home office who would have some input into

the credit package, and that Mederos told them that he would review

the credit package at his home office. 

23

reasonable relationship between Norvet's assurances and Clardy

Manufacturing's decision to enter into the licencing agreement two

days later. To the extent that John Clardy, Jr., in fact relied on

Norvet's representation, this reliance was, under the circumstances

and in light of John Clardy, Jr., and Berman's business

sophistication, an act of negligence.

The other set of misrepresentations underlying Clardy

Manufacturing's alternative claims focuses on what the company was

told regarding Marine's credit approval process. Both John Clardy,

Jr., and Berman testified that Norvet told them, prior to signing

the letter agreement, that the loan would be signed and approved in

the Dallas office, and then shipped to Wilmington, Delaware, to be

"rubber stamped," that is, reviewed for form and content. In fact,

no one in the Dallas office had credit approval authority, and a

loan application required two or more signatures by Marine

officials before it could be approved. John Clardy, Jr., testified

at trial that he would not have entered into the letter agreement

if he had known that the ultimate credit approval would have to

come from an office outside Dallas.18 We conclude, however, that
 

19Cf. Brown v. Ford Motor Co., 479 F.2d 521, 523 (5th Cir.1973)

(reversing the jury's verdict because no reasonable jury could have

disbelieved witness's uncontradicted testimony as to the alleged

defect). 

 

20In one instance, John Clardy, Jr., had traveled to Houston

in an attempt to seek financing from Hong Kong Bank, an affiliate

of the Hong Kong and Shanghai Banking Corporation. 

 

21Clardy Manufacturing also claims that it relied on Norvet's

representation at these early meetings that the loan could be

approved and closed as early as February 28 and as late as March

31, 1992. As discussed above, however, this statement is not

actionable inasmuch as it is merely an opinion as to a future

event, not a misstatement of existing fact.

In addition, Clardy Manufacturing claims that Marine

failed to disclose (1) that it was in the process of changing

its credit approval process in late 1991 and early 1992 from

a "committee process" to an individual signature process; (2)

that Marine, along with its five other regional offices, were

undergoing a reorganization that began in January 1992; and

(3) that Jim Ely had left the Dallas office and that Kurt

Putkonen, the credit manager for the Atlanta office, had

assumed Ely's responsibilities for evaluating Clardy

Manufacturing's loan application. Clardy Manufacturing has

failed to identify any affirmative duty on Marine's part to

disclose this information to Clardy Manufacturing. See

Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 403

(Tex.App.—Houston [1st Dist.] 1996, no writ) ("[A] failure to

disclose information is not fraudulent unless one has an

affirmative duty to disclose, such as where a confidential or

fiduciary relationship exists."); see also Federal Deposit

Ins. Corp. v. Coleman, 795 S.W.2d 706, 708-09 (Tex.1990)

(concluding that a duty of good faith is only imposed where a

24

no reasonable trier of fact would believe that John Clardy, Jr., in

fact relied on Norvet's representations regarding the loan approval

process.19 In other words, no reasonable trier of fact would

conclude that Clardy Manufacturing, which for several years had

been unsuccessfully seeking financing from numerous lenders,20 would

not have entered into the letter agreement if Marine had made

explicit the fact that final credit approval had to come from

outside of Dallas.21 Clardy Manufacturing can therefore not show
"special relationship" exists marked by a shared trust or imbalance

in bargaining power, and does not exist between a lender and its

borrower). 

25

that the representation was "material" to its decision to enter

into the agreement. Moreover, to the extent that John Clardy, Jr.,

would not have entered into the agreement had he known the full

extent of the credit approval process, we find that such reliance

would have been, as a matter of law, unreasonable. No reasonable

businessman in John Clardy, Jr., circumstances would have made such

an irrational decision. Accordingly, this second set of

representations will also not support a claim for negligent

misrepresentation.

B

Under Texas law, to recover for fraud, the plaintiff must

establish that:

(1) a material representation was made; (2) it was false when

made; (3) the speaker knew it was false, or made it

recklessly without knowledge or its truth and as a positive

assertion; (4) the speaker made it with the intent that it

should be acted upon; and (5) the party acted in reliance and

suffered injury as a result.

Roberts v. United New Mexico Bank at Roswell, 14 F.3d 1076, 1078

(5th Cir.1994). To be actionable, the misrepresentation must be

"one concerning a material fact; a pure expression of opinion will

not support an action for fraud." Transportation Ins. Co. v.

Faircloth, 898 S.W.2d 269, 276 (Tex.1995). An opinion may

constitute fraud, however, if the speaker knows that it is false.

Sergeant Oil & Gas Co. v. National Maintenance & Repair, Inc., 861

F.Supp. 1351, 1358 (S.D.Tex.1994). "An expression of an opinion as
26

to the happening of a future event may also constitute fraud where

the speaker purports to have special knowledge of facts that will

occur or exist in the future." Trenholm v. Ratcliff, 646 S.W.2d

927, 930 (Tex.1983). A promise to do an act in the future, on the

other hand, is fraud "only when made with the intention, design and

purpose of deceiving, and with no intention of performing the act"

at the time the promise was made. Airborne Freight Corp. v. C.R.

Lee Enterprises, Inc., 847 S.W.2d 289, 294 (Tex.App.—El Paso 1992,

writ denied).

 Clardy Manufacturing failed to present any evidence that at

the time Norvet allegedly represented that a commitment letter

would issue within two to five days: (1) that Norvet knew that his

representation was false; (2) that Norvet had special knowledge of

future facts bearing on the issuance of the commitment letter; or

(3) that Norvet or Marine had no intention of issuing the

commitment letter or approving Clardy Manufacturing's loan

application. "Failure to perform, standing alone, is no evidence

of the promisor's intent not to perform when the promise was made."

Id. Clardy Manufacturing has not presented any additional

circumstantial evidence which would permit a reasonable trier of

fact to find that Norvet's representation to John Clardy, Jr., and

McDougall was fraudulent at the time it was made. Cf. T.O. Stanley

Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex.1992)

(concluding that plaintiffs had presented insufficient evidence

that the bank had no intention to perform at the time its

representative made the promise that bank would loan plaintiffs
 

22Because the justifiable reliance element of a claim for

negligent misrepresentation is generally equated with contributory

negligence, some courts have concluded that "justifiable reliance"

in the context of fraud represents a lesser burden on the plaintiff

than in the context of negligent misrepresentation. See, e.g.,

Haralson, 919 F.2d at 1025 & n. 5; Dupuy v. Dupuy, 551 F.2d 1005,

1018 (5th Cir.), cert. denied, 434 U.S. 911, 98 S.Ct. 312, 54

L.Ed.2d 197 (1977). 

27

$50,000).

A plaintiff in a fraud action must also show that his

reliance was justifiable as well as actual. Id. "To determine

justifiability, courts inquire whether—given a fraud plaintiff's

individual characteristics, abilities, and appreciation of facts

and circumstances at or before the time of the alleged fraud—it is

extremely unlikely that there is actual reliance on the plaintiff's

part." Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1026

(5th Cir.1990).22 For the same reasons set out above under Clardy

Manufacturing's negligent misrepresentation claim, we also conclude

that Clardy Manufacturing has failed, as a matter of law, to

establish that Norvet's representations regarding the credit

approval process were material to its decision to enter into the

letter agreement. That is, no reasonable trier of fact could

conclude that Clardy Manufacturing's reliance was actual and

justifiable under the circumstances. Accordingly, neither set of

alleged misrepresentations will support a claim of fraud.

C

Clardy Manufacturing's final alternative common law claim is

for promissory estoppel. Under Texas law, the basic requirements

of a promissory estoppel claim are: "(1) a promise, (2)
28

foreseeability of reliance thereon by the promisor, and (3)

substantial reliance by the promisee to his detriment." English v.

Fischer, 660 S.W.2d 521, 524 (Tex.1983). Texas courts have also

established a fourth and separate requirement of a "definite

finding that injustice can be avoided only by the enforcement of

the promise." City of Beaumont v. Excavators & Constructors, Inc.,

870 S.W.2d 123, 137 (Tex.App.—Beaumont 1993, writ denied) (emphasis

in original). In addition, the courts have emphasized that

"estoppel requires a reasonable or justified reliance on the

conduct or statement of the person sought to be estopped by the

person seeking the benefits of the doctrine." Traco Inc. v. Arrow

Glass Co., 814 S.W.2d 186, 190 (Tex.App.—San Antonio 1991, writ

denied) (emphasis in original and internal quotation marks

omitted).

 The only alleged promise in this case is Norvet's assurance

to John Clardy, Jr., and McDougall that the commitment letter would

issue within the next two to five days. For the reasons set out

above, we conclude as a matter of law that Clardy Manufacturing has

not shown any reasonable or justified reliance on this alleged

promise. Cf. Bluebonnet Savings Bank, F.S.B. v. Grayridge

Apartment Homes, Inc., 907 S.W.2d 904, 912 (Tex.App.—Houston [1st

Dist.] 1995, no writ) (holding that there was no basis to support

a claim for promissory estoppel where the plaintiffs had failed to

establish justifiable reliance under a claim for negligent

misrepresentation). Accordingly, Clardy Manufacturing has also

failed to state a claim for promissory estoppel.
29

V

For the foregoing reasons, we REVERSE the district court's

judgment on Clardy Manufacturing's satisfaction contract claim. We

AFFIRM the district court's determination that Clardy Manufacturing

failed to state a claim under the Texas DTPA. Having found that

there is no theory under which Clardy Manufacturing could recover,

we RENDER judgment in favor of Marine.